REIMBURSABLE AGREEMENTS (IAAs)

1. REIMBURSABLE AGREEMENTS(IAAs) This presentation provides background information for the Inter-/Intra-Agency Agreement (IAA) within the NIH Business System (NBS). View the presentation in “notes” view to see the full scope of information. Review of the overview portion of the following information (slides 3 through 31) is required for users to prepare to complete the associated process simulations for the roles of IAA Seller User, IAA Seller Approver, IAA Buyer User, IAA Buyer Approver. The Appendix (beginning on slide number 32) provides additional in-depth information on the IAA process used at the NIH and is provided as a resource if more information is needed. Review of the Appendix is optional. 

2. Table of Contents

3. The Current State and Moving Forward

4. The Current State and Moving Forward Current State • Reimbursable agreements (IAAs) are negotiated work (services or goods) to be accomplished between federal organizations where monies will be transferred from one organization to another to support those agreements • NIH traditionally initiates the authority for and processing of reimbursable agreements beginning with a paper based form (1742) Moving Forward • A new paper based form (7600) continues as a requirement for the agreement specifics and associated financial authority • Processing of the agreements to record accounting will now require the NIH ICs to play a significant role in system processing to support the financial transactions • System process automation is being expanded to help NIH ICs to execute the financial transactions

5. Why Automate the Reimbursable Agreements (IAAs) Process?

6. Why Automate the Reimbursable Agreements (IAAs) Process? • The automation achieves: • Implementation of US Treasury Guidance for Reimbursable Agreements (also referred to as IAAs) including the major tasks of: • Providing systemic Funds Control for each agreement order • Using Inter-agency Payment and Collection system (IPAC) to bill and pay federal agencies with greater automation • Migration of current process into NBS • Support of internal NIH agreements (intra-agency agreements) with streamlined accounting for financial operations • Adherence to annual limitations of the Economy Act while enabling retention of the same Project/CAN across annual renewals

7. Funds Control and Authority

8. Funds Control and Authority:Treasury Requirements US Treasury Standard Reimbursable Management Processes (RMP)* state: • Agreements are funds controlled by each Order • Seller shall ensure reimbursable resources are sufficient to perform on the IAA Order [see RMP 5.2.2.4] • Buyer must deobligate their IAA Order when funds for it expire [see RMP 5.2.2.8} • Commitments are recommended • The Buyer records the commitment which is typically the amount of the Order [see RMP 5.2.2.10, RMP 5.1.4 and RMP 5.2.2.10] * http://fms.treas.gov/finstandard/reference.html

9. Funds Control and Authority:Treasury Requirements (cont.) • Unused budget authority must be returned to Buyer at fund expiration • The Economy Act requires that when the Buyer’s account expires, the Seller must return any unobligated authority to the Buyer. The Buyer, in turn, must deobligate their IAA Order when funds for it expire, to the extent that the Seller has not incurred an obligation [seeRMP 5.2.2.8] • Any amounts that have not been obligated by the Seller prior to the end of the appropriation’s period of availability shall be deobligated by the Buyer [see RMP 5.6.1] • Unused budget authority may be returned to Buyer before year end • The Seller will inform the Buyer via formal communication during the course of the IAA of any planned reduction to the unfilled customer order (UCO) balance. The Buyer may then decide, based on the amount, if they will deobligate prior to final closeout. The Buyer may determine that a deobligation is necessary during periods close to year-end. These situations should be prevented by actively monitoring the status of the IAA Order balances on a monthly basis, at a minimum [see RMP 5.6]

10. Funds Control and Authority:Implementation Highlights • NIH Funds Control policy for hard control at the Allowance level is maintained • Modification to the NIH Accounting Classification Structure (ACS) • Authority is created each year for one year duration using the Oracle Projects module. Each order is funds controlled within and across fiscal years if renewed • Uses features in multiple Oracle modules including Projects, FedAdmin and General Ledger • Project/CAN includes coding of Buyer’s fund expiration date (from form 7600, block 28) • IAAs may be written for multiple years but are funded annually • Renewal years are uniquely identified by incrementing the final three characters of the modification component of the IAA number • Allows continuing use Project/CAN as other features of Oracle Projects ensure the disbursements in prior years are against the original period of availability

11. Funds Control and Authority:Cross Citation • Internal IC/OD Sellers act on behalf of IC/OD Buyers to establish internal IAAs • Supports internal collaboration using the NIH cross fund (direct) citation authority • Seller IC/OD staff create all IAA documents in system (NBS) • One person sets up documents • Second person with authority to create IC/OD budget authority approves/rejects documents • Seller receives authorization from the internal Buyer as a business process • Seller creates and approves IAA Requisitions and Purchase Orders POs) in NBS citing the Buyer funds • Seller attaches the draft and final agreement documents including cross citation documentation as relevant, following OFM guidance on documentation • Buyers monitor the results of Seller actions

12. IAA Agreements: Terminology, Agreement Structures, Basic Models

13. IAA Agreements: Terminology The table below shows the As-Is and the To-Be agreement terminology.

14. IAA Agreement Types: Agreement Structures Inter-Agency Agreements Intra-Agency Agreements Type A Type X Type N • Definition: One Internal Buyer/One External Seller • Roles : Buyer User/Buyer Approver • Definition: One Internal Seller/One External Buyer • Roles : Seller User/Seller Approver • Definition: One Internal Buyer/One Internal Seller • or Many Internal Buyers/One Internal Seller • Roles: Buyer User/Buyer Approver/Seller User/Seller Approver NIH Seller NIH Buyer NIH Buyer NIH Buyer NIH Buyer External Buyer External Seller NIH Seller NIH Seller IAAs

15. IAA Agreements: Basic Models, Type A • Type A: One Internal Buyer and One External Seller • This is the simplest IAA in which an IC/OD uses any available fund to make a purchase from an external agency • Complete the IAA Requisition(s) and Purchase Order(s) in the NBS IAA Store • Enables NIH use of the required IPAC billing by OFM (GAB) • External partners bill NIH as costs accumulate • No reimbursable authority is created in the NBS Type A • Definition: One Internal Buyer/One External Seller • Roles: Buyer User/Buyer Approver NIH Buyer External Seller

16. IAA Agreements: Basic Models, Type X • Type X: One Internal Seller and One External Buyer • In this type, the external agency sends a Purchase Order (executed IAA) for NIH goods or services • The IC/OD creates an IAA Project/CAN to record the sale • A sale establishes the budget authority and Project/CAN for subsequent execution of agreed on work • Enables NIH use of the required IPAC billing by OFM (GLB). System functions will bill Buyers twice a month based on accumulated costs Type X • Definition: One Internal Seller/One External Buyer • Roles: Seller User/Seller Approver NIH Seller External Buyer

17. IAA Agreements: Basic Models, Type N • Type N: One Internal Buyer and One Internal Seller • Internal IAAs may be used when relationships are complex, long-term, or when the details are best supported by transactions in the accounting system • An example of the one to one internal IAA is supporting employees on reimbursable accounts in cross-servicing arrangements Type N • Definition: One Internal Buyer/One Internal Seller • or Many Internal Buyers/One Internal Seller • Roles: Buyer User/Buyer Approver/Seller User/Seller Approver NIH Buyer NIH Buyer NIH Buyer NIH Seller NIH Seller

18. IAA Agreements: Basic Models, Type N (cont.) • Type N: Many Internal Buyers and One Internal Seller • The Seller, acting on behalf of the Buyers, performs the NBS Buyer User and Approver tasks • On both Buyer and Seller tasks, Seller actions are supported with appropriate separation of duties • Individual Requisitions and Purchase Orders are created for each partner IC/OD • - Each buyer IC/OD separately tracks its specific IAA Purchase Order • Results are monitored by both Buyers and Sellers Type N • Definition: One Internal Buyer/One Internal Seller • or Many Internal Buyers/One Internal Seller • Roles: Buyer User/Buyer Approver/Seller User/Seller Approver NIH Buyer NIH Buyer NIH Buyer NIH Seller NIH Seller

19. IAA Buyers and Sellers

20. IAA Buyers and Sellers Key Actions

21. NBS IAA Buyers and Sellers Roles The are four new NBS roles for the IAA process. Below is a short description: • Role: NIH IAA Buyer User for type A and N IAAs • Create Requisition in iProcurement • System automatically approves iProcurement Requisition • Auto Create PO from iProcurement Requisition Note: One time setup requires defining the user as a Buyer and the user then setting a default delivery location in the iProcurement IAA Store • Role: NIH IAA Seller User for type X and N IAAs • Request IAA Project/CAN • Add IAA Project/CAN to the Customer Register as a funding line • Role: NIH IAA Buyer Approval User for type A and N IAAs • Approve/Do not Approve the IAA PO created by NIH IAA Buyer User • Role: NIH IAA Seller Approval User for type X and N IAAs • Release the Customer Register to create budget authority

22. IAA Responsibilities Summary forBuyer and Seller Buyer • Develop the IAA form offline • Open the IAA Store • Create Requisition for each partner • Auto-create Purchase Order • Approve Purchase Order • Receive goods • Monitor financial data • System pays partner via IPAC or internal bill and collect (type A, N) • Disputes or refunds require consultation with OFM Seller • Develop the IAA form offline • Request the Project/CAN in NBS • Enter amount of IAA in Customer Register and Release in NBS • Request non-billing projects and/or PCC 130 Codes • Perform agreed on work • Get paid via IPAC (type X only) or internal bill and collect (type N) • Close at year end/carryover if multi-year authority (consult with OFM) • If renewing, extend project (OFM) and task (IC/OD) dates

23. IAA Processes for Types A, X, and N

24. Type A – NIH is the Buyer Offline Prep 1 2 3 4 Commitment Obligation NIH IAA Buyer User approves the Requisition. The system reserves the funds and creates a commitment on the Buyer’s fund NIH IAA Buyer Usercreates an IAA Requisition in iProcurement citing the Project/CAN that funds the IAA (usually a direct fund) NIH IAA Buyer User (once both parties have signed the IAA form) creates Purchase Order. Attaches the PDF of IAA and other docs NIH IAA Buyer Approval User approves the PO, creating an IAA obligation on Buyer’s fund IAA form is drafted and signature process begins External agency completes Seller’s business process in coordination with the NIH Buyer

25. Type A – NIH is the Buyer (cont.) One Requisition and PO should be created with multiple lines to correspond to the Projects/CANs of each collaborating IC/OD (one PO per Federal partner) Both upward and downward modifications can be done by altering the amount on PO Line(s) and re-approving the PO

26. Type X – NIH is the Seller Offline Prep External agency completes Buyer’s business process in coordination with the NIH Seller IAA form is drafted and signature process begins 3 1 2 Budget Authority NIH IAA Seller Approval User releases project funding, creating Reimbursable Budget Authority NIH IAA Seller User sets up Oracle Project including budget amount NIH IAA Seller Userrequests/creates new Reimbursable Project/CAN

27. Type X – NIH is the Seller (cont.) • One NIH Seller and one federal agency • Create multiple type X if there are multiple federal partners and funds control each IAA separately. Use PCC130 to link for reporting • IC/OD provides the OFM Billing Contact in the form 7600 so that IPAC files from the external agency process correctly. The same OFM Billing Contact is also populated in the Project Request • Both upward and downward modification changes occur throughout the year by adding positive and negative funding lines to the Customer Register • If an IC/OD incorrectly uses a Project/CAN that belongs to a different Customer for procurement, IC/OD will use the IC/OD CAN Change form to enable OFM to make the necessary adjustments to debit and credit the correct Project/‘R’ CANs • This correction should be performed before the 5th and 20th of the month to avoid incorrect billing of customers. If errors occur, the following cycle after correction will generate a reversal of the billing. Thus, IC/OD monthly monitoring is essential to reconciliation as described in Treasury, chapter 5

28. Type X with Advances • Treasury and NIH OFM discourage the use of advances • When necessary: • IC/OD notifies OFM to create Deposit (Invoices) in Oracle Accounts Receivable (AR) • OFM will communicate to IC/OD what email address/ distribution list to communicate this request to • The deposit must be recorded before work occurs • OFM completes the Deposit in AR within 1 business day • If the Deposit in AR is dated after the Purchase Agreement invoice date, the deposit will not be available to be applied to the Purchase Agreement Invoices • In case of errors, while creating the Deposit, make the deposit date prior to purchase agreement Invoice Date. Also, the Deposit should not be interfaced to GL to make any subsequent changes such as date

29. Type N – One/Many NIH Buyer(s) to One NIH Seller Data entry performed by Seller on behalf of the Buyer (Cross Citation) 1 2 3 4 Commitment IAA form is drafted by Buyer and Seller organizations Obligation NIH IAA Buyer User approves the Requisition. The system reserves the funds and creates a commitment on the Buyer’s fund NIH IAA Buyer User (once both parties have signed the IAA form) creates Purchase Order, attaches the PDF of IAA and other docs NIH IAA Buyer Usercreates an IAA Requisition in iProcurement citing the Project/CAN that funds the IAA (usually a direct fund) NIH IAA Buyer Approval User approves the PO, creating an IAA obligation on Buyer’s fund Buyer authorizes Seller to use specified Project/CAN NIH Seller provides IAA number to NIH Buyer; both use the same number Offline Prep 7 6 5 Budget Authority NIH IAA Seller Approval User releases project funding, creating Reimbursable Budget Authority NIH IAA Seller Usersets up Oracle Project including budget amount NIH IAA Seller Userrequests/creates new Reimbursable Project/CAN

30. Type N – One/Many NIH Buyer(s) to One NIH Seller (cont.) • Seller IC/OD creates separate PO for each Buyer (customer) IC/OD • When the Buyer IC/OD wants to cite multiple Projects/CANs, then multiple Requisition and PO Lines are created within the Requisition and PO for the Buyer. Each line corresponds to the separate CAN under the particular buying IC/OD control • Seller acts on behalf of Buyer – obtain cross citation authority from the Buyer • Upward modification – can be done by creating a new Buyer IC/OD Requisition/PO and then adding the corresponding amount to the funding line in the Customer Register • For downward modification – IC/OD will send an email to OFM requesting modification • OFM will communicate the email content and address

31. Questions? • Inquiries should be forwarded to the NIH IT Service Desk - http://support.nih.gov/ Review of the overview portion of the following information (slides 3 through 31) is required for users to prepare to complete the associated process simulations for the roles of IAA Seller User, IAA Seller Approver, IAA Buyer User, IAA Buyer Approver. The Appendix (beginning on slide number 32) provides additional in-depth information on the IAA process used at the NIH and is provided as a resource if more information is needed. Review of the Appendix is optional. 

32. Table of Contents

33. The Current State and Moving Forward

34. The Current State and Moving Forward Current State • NIH initiates the authority for and processing of reimbursable agreements using form (1742) Moving Forward • New form (7600) • Processing of the agreements to record accounting will now require the NIH ICs to play a significant role • System process automation is being expanded to help NIH ICs to execute the financial transactions

35. Why Automate the Reimbursable Agreements (IAAs) Process?

36. Why Automate the Reimbursable Agreements (IAAs) Process? The automation is required to: • Implement US Treasury Guidance for Reimbursable Agreements (also referred to as IAAs) including the major tasks of: • Providing systemic Funds Control for each agreement order • Using Inter-agency Payment and Collection system (IPAC) to bill and pay federal agencies with greater automation • Migrate current process into NBS • Support internal NIH agreements (intra-agency agreements) with streamlined accounting that better supports financial operations • Adhere to annual limitations of the Economy Act while enabling retention of the same Project/CAN across annual renewals

37. Funds Control and Authority: Treasury Requirements, Solution Implementation Highlights, Current and Prior Year, Exceptions, and Cross Citation

38. Funds Control and Authority:Treasury Requirements US Treasury Standard Reimbursable Management Processes (RMP)* state: • Agreements are funds controlled by each Order • Seller shall ensure reimbursable resources are sufficient to perform on the IAA Order [see RMP 5.2.2.4] • Buyer must deobligate their IAA Order when funds for it expire [see RMP 5.2.2.8} • Commitments are recommended • The Buyer records the commitment which is typically the amount of the Order [see RMP 5.2.2.10, RMP 5.1.4 and RMP 5.2.2.10] * http://fms.treas.gov/finstandard/reference.html

39. Funds Control and Authority:Treasury Requirements (cont.) • Unused budget authority must be returned to Buyer at fund expiration • The Economy Act requires that when the Buyer’s account expires, the Seller must return any unobligated authority to the Buyer. The Buyer, in turn, must deobligate their IAA Order when funds for it expire, to the extent that the Seller has not incurred an obligation [see RMP 5.2.2.8] • Any amounts that have not been obligated by the Seller prior to the end of the appropriation’s period of availability shall be deobligated by the Buyer [see RMP 5.6.1] • Unused budget authority may be returned to Buyer before year-end • The Seller will inform the Buyer via formal communication during the course of the IAA of any planned reduction to the unfilled customer order (UCO) balance. The Buyer may then decide, based on the amount, if they will deobligate prior to final closeout. The Buyer may determine that a deobligation is necessary during periods close to year-end. These situations should be prevented by actively monitoring the status of the IAA Order balances on a monthly basis, at a minimum [see RMP 5.6]

40. Funds Control and Authority:Implementation Highlights • NIH Funds Control policy for hard control at the Allowance level is maintained • Modification to the NIH Accounting Classification Structure (ACS) • Authority is created each year for one year duration using the Oracle Projects module. Each order is funds controlled within and across fiscal years if renewed • Uses features in multiple Oracle modules including Projects, FedAdmin and General Ledger • Project/CAN includes coding of Buyer’s fund expiration date (from form 7600, block 28) • IAAs may be written for multiple years but are funded annually • Renewal years are uniquely identified by incrementing the final three characters of the modification component of the IAA number • Allows continuing use Project/CAN as other features of Oracle Projects ensure the disbursements in prior years are against the original period of availability

41. Funds Control and Authority:Cross Citation • Internal IC/OD Sellers act on behalf of IC/OD Buyers to establish internal IAAs • Supports internal collaboration using the NIH cross fund (direct) citation authority • Seller IC/OD staff create all IAA documents in system (NBS) • One person sets up documents • Second person with authority to create IC/OD budget authority approves/rejects documents • Seller receives authorization from the internal Buyer as a business process • Seller creates and approves IAA requisitions and purchase orders POs) in NBS citing the Buyer funds • Seller attaches the draft and final agreement documents including cross citation documentation as relevant, following OFM guidance on documentation • Buyers monitor the results of Seller actions

42. Funds Control and Authority:Current and Prior Year • Obligations (purchase orders) for goods/services must occur in the current year of budget authority • No upward adjustment of obligations are allowed in prior years • Charges occurring after budget authority is removed are moved to non IAA Project/CAN • Disbursements to vendors occur for the five cancelled years of a fund

43. Funds Control and Authority: Exceptions Interest is not an allowed charge to partners • Interest charges incurred on a reimbursable agreement must be moved to the Seller’s direct fund by the IC/OD financial management staff so that interest is not billed to the Buyer(s) • For X Types, CAN changes should be done prior to OFM’s IPAC billing schedule (currently, the 5th and 20th of every month) • Monthly monitoring can identify interest charges. Immediate action by the Seller to switch the charge to his IC/OD’s direct Project/CAN will ensure that the interest charge is not billed to the IAA Buyer(s) erroneously • Use existing standard business process for CAN change to move charges to direct fund timely

44. Funds Control and Authority: Exceptions Payroll • NBS records payroll files as received from the DHHS payroll provider • Adjustments should be corrected at the time of occurrence rather than held to the end of the Order (Sept.) to ensure proper spending and billing occurs • Accruals are recorded in the General Ledger but not charged to the IAA Project until disbursed • Billing is only for disbursements to avoid need for adjustments if accrual is high

45. Funds Control and Authority: Sponsored Travel Reimbursable apportionment controls both sponsored travel and IAA funding: • Existing sponsored travel structure is unchanged by this effort • OFM records allotment • IC/OD records allowance and operating budget • IAA allotment, allowance and operating budget are created by system functions upon approval of the IAA by the Seller and sufficient apportionment

46. IAA Agreements: Terminology, Agreement Structures, Basic Models, and Complex Structures

47. IAA Agreements: Terminology The table below shows the As-Is and the To-Be terminology:

48. IAA Agreement Types: Agreement Structures Inter-Agency Agreements Intra-Agency Agreements Type A Type X Type N • Definition: One Internal Buyer/One External Seller • Roles : Buyer User/Buyer Approver • Definition: One Internal Seller/One External Buyer • Roles : Seller User/Seller Approver • Definition: One or many Internal Buyer(s)/One Internal Seller • Roles: Buyer User/Buyer Approver/Seller User/Seller Approver NIH Buyer NIH Seller NIH Buyer NIH Buyer NIH Buyer External Seller External Buyer NIH Seller NIH Seller IAAs

49. IAA Agreements: Basic Models, Type A Type A • Definition: One Internal Buyer/One External Seller • Roles: Buyer User/Buyer Approver NIH Buyer External Seller Type A: One IC/OD (Internal Buyer) Buying Goods/Services from One External Agency (Seller) • This is the simplest IAA in which an IC/OD uses any available fund to make a purchase from an external agency • Complete the IAA requisition(s) and purchase order(s) in the NBS IAA Store • Enables NIH use of the required IPAC billing by OFM (GAB) • External partners bill NIH as costs accumulate • No reimbursable authority is created in the NBS

50. IAA Agreements: Basic Models, Type X Type X • Definition: One Internal Seller/One External Buyer • Roles: Seller User/Seller Approver NIH Seller External Buyer Type X: One IC/OD (Internal Seller) Selling Goods/Services to One External Agency (External Buyer) • In this Type, the external agency sends a purchase order (executed IAA) for NIH goods or services • The IC/OD creates an IAA Project/CAN to record the sale • A sale establishes the budget authority and Project/CAN for subsequent execution of agreed on work • Enables NIH use of the required IPAC billing by OFM (GLB). System functions will bill Buyers twice a month based on accumulated costs