University Policies and Procedures Manual (previously Business Policies and Procedures Manual)

Fixed Price Agreements

UPPM 40.27

For more information contact:
   Sponsored Programs Services
   509-335-2058 / sps@wsu.edu

1.0    Overview and Purpose

Fixed price agreements are defined as agreements for which the sponsor provides a set price for the work. Fixed price awards are usually established as contracts with scheduled payments.

2.0    Characteristics of Fixed Price Agreements

Fixed price agreements normally have the following characteristics:

  • Are similar to purchase orders for delivery of work products, e.g., containers of chemicals or computers
  • Are routine in nature
  • Include a well-defined statement of work
  • The outcome is relatively certain
  • The failure rate is nearly zero
  • The University bears the risk that a routine project may incur costs that are higher than the set price and that the University would have to cover those costs
  • Are normally short term in nature, e.g., less than one year
  • The costs are normally known
  • Itemized budgets are not included

3.0    Processing Facilities and Administrative / Indirect Costs

Principal investigators (PIs) and administrators are expected to request the full facilities and administrative (F&A)/indirect rate for on-campus or off-campus activities related to sponsored projects under fixed agreements, in accordance with UPPM 40.25.

Upon completion of a fixed price agreement, Sponsored Programs Services (SPS) applies the applicable F&A/indirect cost rate to the cash balance, which reduces the remaining total of funds available. F&A/indirect costs are distributed according to established University policies. See UPPM 40.09, 40.25, and UPPM 40.30.

3.1      Distribution of Residual Balance

Any funds remaining after the F&A/indirect costs are removed from the cash balance are referred to as the residual cash balance. SPS may distribute the residual cash balance as described below, if all of the following conditions are met:

  • All required technical reports have been filed with the sponsor;
  • The sponsor has indicated that the work is acceptable; and
  • The full amount of the agreement has been collected from the sponsor.
3.1.a      Conditions Met Within 90 Days

If all three of the conditions listed under Section 3.1 are met within 90 days of the agreement end date, the residual cash balance is first used to offset any uncollectible or overdrawn accounts for which the principal investigator (PI) was the project director.

Sponsored Programs Services (SPS) distributes any remaining residual amount as follows:

  • If the residual amount is less than $10,000 and comprises less than 50 percent of the total project revenue, SPS transfers the funds to the departmental fixed price consolidation account. The utilization of these funds may be predetermined through an agreement between the department chair and the principal investigator (PI).
  • When the residual amount exceeds 50 percent of total project revenue or surpasses $10,000 (whichever is greater), the PI must provide a written justification for the distribution of the residual funds. The justification must:
    • Include detailed account information; and
    • Receive approval from both the department chair/director and the dean/chancellor; and then
    • Be submitted to the campus Office of Research (OR) grants manager.
    • The OR grants manager reviews the justification and then submits it for approval consideration to the:
      • Associate Vice President for Research (AVPR); and
      • Vice President for Finance and Business Services (VPFBS).                                           

Upon receiving the request, the AVPR and VPFBS assess the need for retaining a residual of that magnitude. Their decision-making options include:

  • Approval of the entire residual: The full amount is retained.
  • Partial retention: A portion of the residual is retained, with specific instructions on where the remaining portion should be directed (including potential refunds to the sponsor).
  • Disapproval of the entire residual: The remaining portion is directed, including any necessary refunds to the sponsor.

Additionally, the AVPR and VPFBS may engage the Vice President for Research (VPR) and the Executive Vice President for Finance and Operations (EVPFO) in the disposition process.

SPS transfers the residual to the account(s) specified by the AVPR and SAVPFA.

3.1.b    Conditions Not Met Within 90 Days

If all three of the distribution conditions listed under Section 3.1 are not met within 90 days of the agreement end date, SPS transfers equal shares of the residual cash balance to an account identified by the AVPR and an account identified by the VPFBS regardless of whether the remaining funds exceeded 50 percent or $10,000. SPS then closes the departmental account. There is no recourse or appeals process for accounts that do not meet the conditions within 90 days of the project end-date.

3.2     Use of Retained Residual Balances

The Office of Research uses the funds to support a variety of research initiatives. The Office of Finance and Operations uses the funds to reduce the fiscal burden of uncollectible sponsored receivables, treasury offset, etc.

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Revisions:  Sept. 2025 (Rev. 648); January 2021 (Rev. 560); June 2018 (Rev. 516); Jan. 2008 – new policy (Rev. 314).