Administrative Procedure 12.413 Administrative Procedure 12.413

Fixed Price Award Closeout and Residual Balance

Administrative Procedure Chapter 12, Research
Administrative Procedure AP 12.413, Fixed Price Award Closeout and Residual Balance
Effective Date:  September 2025
Prior Revision Dates: N/A
Responsible Office: Office of the Vice President for Research and Innovation
Governing Board or Executive Policy: EP 12.102, Authority to Sign and Execute Extramural Research and Training Contracts/Grants, Agreements and Contract Assignments and Releases
Review Date:  Three-Year Review Cycle

The purpose of this policy is to establish clear guidelines and procedures for closing out extramural fixed price awards and managing the disbursement of residual balances.  It ensures responsible financial management, compliance with university regulations, and the effective use of funds to support the university’s research and educational goals.

Fixed price awards provide a predetermined amount of funding to achieve specific project goals.  Accurate budgeting is essential to minimize residual balances and reflect a realistic estimate of project costs.  This ensures the project is adequately funded while demonstrating prudent financial management, fostering trust with sponsors.

Responsible financial stewardship of fixed price awards involves careful planning to avoid significant residual balances.  However, should such balances occur, this policy defines roles, responsibilities, and disbursement procedures to ensure accountability and consistency across departments.  This approach safeguards university resources and upholds its commitment to integrity and efficiency.

A.  Designated UH Official (DUO):  The Fiscal Administrator (FA) of a UH organizational unit or program.

B.  Executive Manager:  For the purposes of this policy, a broad term to refer to the University management personnel with the highest authority level for the major organizational unit to which they are appointed to.  This typically comes with the title of Dean, Director, Chancellor, Provost, Vice President, President, or similar.

C.  Extramural Fixed Price Award:  A type of funding agreement where an extramural sponsor provides a set amount of money to complete a specific project or set of deliverables.  The total payment amount is fixed and does not vary based on actual project costs incurred.  “Fixed Price” and “Fixed Amount” are used interchangeably.

D.  Fixed Price Residual (FPR) Account:  An institutional account that holds remaining adjusted residual balances transferred from fixed price extramural awards after all project-related expenses have been paid, the project is completed, and IDC is fully recovered and assessed. These accounts are used to manage and utilize residual balances in accordance with University policies.  Further details are provided in this policy.

E.  Full Negotiated Indirect Cost Rate:  The on-campus research rate published by the Office of Research Services, which represents the indirect costs of both facilities and administrative costs -- this is regardless of subject project’s waivers, purpose, type, or other distinctions.  For the Kakaako campuses (e.g., Cancer Center and the John A. Burns School of Medicine), this rate is the Kakaako rate.  For the purposes of these procedures, the single applicable rate shall be determined by the award’s end date inclusive of internal extensions.

F.  Indirect Cost (IDC):  Expenses that are not directly attributable to a specific project or activity but are necessary for the general operation of an organization, such as administrative support, facilities maintenance, and utilities.  Also known as overhead costs or facilities and administrative (F&A) costs.

G.  Residual Balance:  The remaining surplus funds from a fixed price extramural award account after all project-related expenses have been paid and the project is completed.  This cash balance is not returned to the sponsor and becomes property of the University.
H.  Significant Residual Balance:  A residual balance that is equal to or greater than $20,000.00 or 20% of the total fixed price funds received, whichever is less.

A.  Objectives
      To establish guidelines and procedures for the closeout of extramural fixed price awards and handling of any residual balances.

B.  Applicability
      These guidelines and procedures shall apply to all extramural fixed price awards and Fixed Price Residual (FPR) accounts.  This policy shall prevail in the event of conflict with other UH Administrative Procedures on the subject matter.

C.  Responsibilities
      A.  The Principal Investigator (PI):
          a.  Ensures accurate budgeting and financial planning for the fixed price award project.
          b.  Monitors project expenses to ensure alignment with the approved budget and award terms.
          c.  Provide timely and accurate confirmation of completion of project deliverables to FA and ORS to facilitate closeout and processing of any residual balances.
          d.  Assists the FA to or directly prepare and submit necessary forms for account creation, internal account extensions, and residual balance closeout.
      B.  The Fiscal Administrator (FA):
          a.  Assists the PI to or directly prepare and submit necessary forms for account creation, internal account extensions, and residual balance closeout.
          b.  Ensures all project-related financial transactions are properly recorded and documented.
          c.  Ensures FPR account is never in a cash deficit.
          d.  Assists in managing and reconciling residual balances, ensuring compliance with University policies.
          e.  Provides guidance and support to the PI on financial management and compliance issues.
          f.  Monitors and enforces compliance with University policies, addressing non-compliance issues and notifying ORS.
          g.  Prepares financial reports and documentation for internal and external audits as requested by ORS.
      C.  The Dean or Director or Equivalent Role:
          a.  Directs and manages the usage of available funds in assigned FPR account(s).
          b.  Ensures that all FPR accounts within or reporting to their organization adhere to University policies and financial guidelines.
          c.  Addresses and resolves any financial management issues or non-compliance within their unit.
      D.  The Office of Research Services (ORS):
          a.  Reviews and processes request forms for the internal account extension or financial closeout of awards.
          b.  Administers the creation of Fixed Price Residual accounts.
          c.  Reviews, approves, or processes residual balances in accordance with this policy.
          d.  Conducts audits to ensure adherence to guidelines and financial management practices.
          e.  Manages the policies and procedures related to fixed price awards and residual balances.

D.  Fixed Price Residual (FPR) Account
      A.  One (1) parent FPR account per major organizational unit shall be allowed, subject to ORS determination and approval.  This account shall be under the management of the entity’s top executive manager (e.g., Dean, Director, Provost, Chancellor, Vice President, or equivalent role).
          a.  One child (1) account per department reporting to the major organizational unit (officially recognized in the University organizational charts) may be requested with the approval of the executive manager, for consideration and final approval by ORS.  This account shall be under the supervision of the department chair or equivalent role.
          b.  Further tiers of child accounts, or accounts for individual personnel or projects shall not be considered.  Units may utilize KFS sub-account codes or sub-object codes at their discretion for these purposes. 
          c.  Requests for accounts shall be submitted via the form or method designated by ORS.
      B.  Account shall exclusively contain funds originating solely from the residual balance of fixed price extramural awards.  Once expended from the account, it is no longer considered fixed price funds and cannot be returned to the account except for valid refunds from the original vendor.
          a.  Department-level child accounts below the organization’s parent account may only receive fund transfers-in from its parent FPR account or closed extramural fixed price account residual balances processed by ORS.
          b.  ORS shall use object code 1535 or 1555, respectively, to transfer from a closed extramural account, and object code 1419 to transfer to a recipient FPR account.
            1)  ORS does not create budget allocations for FPR accounts.  FA may do so as a departmental matter to manage the account, however, total budget amount must never exceed available cash balance.
          c.  Transfers between FPR accounts shall use object code 1519 to transfer from an FPR account, and object code 1419 to transfer to an allowable recipient FPR account.
      C.  Account shall not have a deficit cash balance at any time.
          a.  Accounts in deficit shall be suspended immediately without notice regardless of circumstances. 
            1)  If the delinquent account is a primary account, ORS may also suspend all child accounts until all deficits are cleared.
            2)  If the delinquent account is a child account, ORS may also suspend its parent primary account and all associated child accounts until all deficits are cleared.
            3)  ORS shall reduce the Research Training and Revolving Funds (RTRF) allocation of the unit to which the deficit account belongs to in order to clear any remaining deficits.
          b.  After the deficit is cleared, the unit must submit a written request for ORS’ consideration if they wish to reactivate a suspended account.
      D.  Funds shall be used to further University research or educational related activities.
      E.  Expense transactions shall be posted directly to the account to expend funds.
      F.  Data exchange links between the UH and Research Corporation of the University of Hawaiʿi (RCUH) systems are established for FPR accounts, providing an automatic service order, consequently, the internal service order form is no longer required for FPR accounts.
          a.  There shall be a one-to-one correspondence between a UH service order account and an RCUH project account.
          b.  Service orders to RCUH for procurement and hiring shall adhere to AP 12.203 Service Orders to the Research Corporation of the University of Hawaiʿi as it applies to intramural funds.
          c.  Funds shall not be advanced from UH to RCUH.
      G.  Account shall not be used to operate commercial/auxiliary enterprise, program income, or revenue-generating activities.
      H.  Account is subject to audit by ORS. 
      I.  Non-compliance to policy or account dormancy (twenty-four (24) consecutive months without expenditures) shall result in closure of account and forfeiture of any surplus balance to the higher tier account that it falls under. 

E.  Disbursement Methodology
      A.  Full IDC recovery and assessment on balance:
          a.  Residual balance of any tier shall be assessed an IDC recovery expense, equal to the difference between the full indirect cost of actual IDC-eligible expenses calculated at the full negotiated indirect cost rate in effect at time of the final award end date and the actual IDC recorded, up to the available gross residual balance of the award.
          b.  Thereafter, any remaining residual balance will be assessed an IDC expense corresponding to the full negotiated indirect cost rate in effect at time of the final award end date.  Any remaining balance, thereafter, is the adjusted residual balance. 
      B.  The adjusted residual balance shall be disbursed as follows:
          a.  50% transferred to the primary organizational entity’s main parent FPR account under the Executive Manager.  The Executive Manager may further distribute to other FPR accounts.
          b.  25% transferred to the Provost’s, 4-year campus Chancellor’s, or System office Vice President’s FPR account, respective to where the organizational entity reports to.
          c.  25% transferred to the Office of the Vice President for Research and Innovation’s general FPR account.

F.  Procedures
      A.  Internal Account Extensions.  Sixty (60) days prior to project termination date, the PI shall determine if an internal account extension is warranted:
          a.  If an internal account extension is not allowed or desired, the standard closeout procedures governed by AP 12.412 shall be adhered to.
          b.  If an internal account extension is requested, the PI shall submit the “Fixed-Price - Internal Account Extension Request” Form (ORS Form 3) to ORS for consideration.
            1)  If extension is rejected, the standard closeout procedures governed by AP 12.412 shall be adhered to.
          c.  Consideration of internal extensions shall require the following minimum criteria of the award to be met:
            1)  Is a fixed-price award.
            2)  Termination date is not stated in award documents.
            3)  No change in scope or to the sponsor-approved budget is being requested.
            4)  The project is not complete.
      B.  Closeout Procedures.  When ready to closeout the extramural fixed price award but no later than the due date to closeout:
          a.  The FA shall submit the standard Closeout Certification notice to ORS, per AP 12.412, to confirm project deliverables are complete and all financial amounts are final.
          b.  If the award has a surplus residual cash balance, the department shall prepare and submit the ORS Form 2 along with the Closeout Certification.
            1)  The completed ORS Form 2 is equivalent to the Closeout Certification email for purposes of certifying final expenditures and project deliverables completion.
          c.  Department shall close out the award within ninety (90) days after the end date of the project period.
      C.  Residual Balance Transfer.  Upon completion of award closeout:
          a.  ORS shall review the ORS Form 2.
            1)  An authorized ORS personnel shall approve or disapprove the request.
                (a)  If the request is approved, the Disbursement Methodology shall be applied and adjusted residual balances disbursed accordingly.
      D.  A PI found to have repeat occurrences of awards ending with significant residual balances or failure to close fixed price awards in a timely manner may be subject to restrictive measures, which may include barring the acceptance of fixed price payment terms in future proposals or awards.
      E.  ORS may withhold processing any residual balance transfer request if the PI has any fixed price awards overdue for final closeout. 
          a.  A closeout is considered overdue if ORS has not received the PI’s confirmation of project completion and the FA’s confirmation of final expenditures within ninety (90) days after the project period end date.

There is no administrative procedure specific delegation of authority.

Office of the Vice President for Research and Innovation
Phone: (808) 956-5006
Email: uhovpri@hawaii.edu

A.  Link to the UH Office of Research Services (ORS) web page for fixed price closeout
https://research.hawaii.edu/ors/resources/closeout/

B.  Link to AP 12.203, Service Orders to the Research Corporation of the University of Hawaiʿi
https://www.hawaii.edu/policy/docs/temp/ap12.203.pdf

C.  Link to superseded Executive Policies in old format
https://www.hawaii.edu/policy/archives/ep/

D.  Link to Administrative Procedures in old format
https://www.hawaii.edu/policy/archives/apm/

A.  Link to FPAR form
https://research.hawaii.edu/files/ors/Form_2_Fixed-Price-Residual_Balance_Closeout_Form.pdf

    Vice Pres for Rsch & Innovation