The following guidance is intended for University of Rochester (UR) faculty and staff to (1) plan and implement international research activities in a manner that is compliant with applicable sponsor and federal regulations and (2) assist the department research administrator and Principal Investigator (PI) with pre- and post-award issues and considerations for sponsored projects with a foreign component.

Administrators and PIs must refer to the appropriate regulations and requirements applicable to their sponsored awards that involve international research and/or international travel. Requirements, such as seeking prior approval from the sponsor, are found in the notice of award or award agreement issued by the funding sponsor. For federal assistance awards, the Federal Demonstration Project (FDP) prior approval matrix can be found here.

Federal grants must be managed in accordance with 2 CFR Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance). These guidelines pertain to federally sponsored projects and should be used as guidance for all sponsors unless specifically addressed in a non-Federal sponsor’s policies.

Research administrators and PIs should contact the Director of Research Compliance with any questions regarding this guidance.

BUDGET PLANNING FOR INTERNATIONAL RESEARCH CONDUCTED IN A FOREIGN COUNTRY

Budget development for research that includes an on-site international component will require more time to prepare and include costs that are not typically included in research conducted locally. Prior to beginning the budget process, administrators and PIs must review sponsor guidelines as well as the University Business Expense and Travel Reimbursement Policy to identify the types of costs that might be allowable for inclusion in the project budget.

The following lists reflect costs that may be allowable, depending on the direct benefit that the cost provides to the activity proposed. As required by 2 CFR 200 and University policy, direct costs must be necessary and reasonable in order to be allocable to a project or activity.  In preparing the budget, PIs and administrators may wish to consult with the Director of Research Compliance or the Assistant Controller, ORACS.

Communication Expenses

• Electronic converters and adapters
• International cell phones and calling plans
• International conferencing platforms
• Internet access fees and charges
• “Clean” laptops for research purposes
• Technical support

Contracted, Purchased and Other Services

• Currency conversion fees (see Currency Fluctuations below)
• Value Added Taxes
• In-country security including leased vehicles
• Translator costs
• Wire fees for payments to vendors, independent contractors and/or other service providers
• Payments to drivers and guides
• Payment to a required host to accompany the researcher
• Required fees to hosts

Personnel Expenses

• Currently, the University is not able to directly hire expatriates (U.S. citizen’s abroad), local nationals (citizens of the country where the activity is located) or third-country nationals (citizens of a country other than the U.S. and country of activity) located in a foreign country. See the University’s guidance on International Employment Considerations for more details. [Link] Personnel expenses should be budgeted in subawards to international partners whenever feasible (See Considerations for Subawards to International Organizations below).

Travel Expenses

• Airfare may need to be made through American-based airlines (see Fly America Act below)
• Country entry and departure fees
• Customs fees
• Immunizations or medications required for entry into the international location
• Passport, extra pages if needed for business purposes to accommodate business travel for the project (initial passport costs are typically unallowable)
• Costs for ground transportation (e.g., train, bus, ferry, rental car)
• Visa costs (visa expediting costs are typically unallowable)

Payments to Human Subjects

• Typically, payments to human subjects will be made by the international collaborator or subawardee. If payments to human subjects will be made directly by the University or UR PI, please review [link to Finance guidance] or contact Accounts Payable for guidance.

If expenses are not included in the application or proposal, but occur during the life of the award they may still be allowable, but appropriate documentation will be required and these expenses will likely reduce available funding in other direct cost budget categories.

CURRENCY FLUCTUATIONS

In planning your research project, you need to consider how your expenses will be paid and how you will pay for any services or items abroad. This planning must include considering what the costs will be in both United States dollars and the local foreign currency. Where you are purchasing goods or services, you should first consult University Procurement or review this guidance. [to come]

Currency fluctuation can greatly affect the costs of goods or services over the period of performance. The currency conversion rate should be based on the published conversion rate from the United States Department of the Treasury, Bureau of the Fiscal Service as of the sponsor’s contract date (if applicable). The responsible UR department should carefully consider the risk of fluctuation in currency rates, and should be aware that the University and many grant sponsors require that expenses incurred in a foreign currency must be converted into United States currency as of the date that the expenses were incurred. That conversion rate may not be the same as the rate on the payment date for the contract. Any foreign currency fluctuation losses are the responsibility of the Department.

For research collaborations where a foreign party is funding at least some of the cost, the University expects to be paid in United States dollars. Review the UR’s Electronic Funds Transfer Policy if wire transfers will be necessary to or from international collaborators.

FLY AMERICA ACT 

All flights (domestic and international) supported with federal funds must be taken on U.S. flag air carriers, regardless of cost or convenience unless an exception, as listed in the Federal Travel Regulation (FTR), is authorized. Any exceptions require the UR’s Fly America Act Exception Form to be completed. See the Travel Arrangements – Fly America Act section of the UR’s Business Expense and Travel Reimbursement Policy for more information.

CONSIDERATIONS FOR SUBAWARDS TO INTERNATIONAL ORGANIZATIONS 

UR’s Policies and Procedures for the Administration of Subagreements to a Third Party provides an overview of issues that need to be considered when subcontracting to an international research partner. Overall, subcontracting to an established international entity can be an optimal way to effectuate a successful research program. When federal grant funds are involved, the FDP Template Subaward to Foreign Institutions is used by ORPA to enter into contractual relationship with the entity.  When non-federal sponsored funding (New York State, industry sponsor, foundation) is involved, ORPA will tailor the subaward to reflect the flow-down requirements of the funding agency.  If sponsored funding is not involved, review this guidance, or contact University Procurement or Global Engagement to discuss the optimal agreement to be used.

However, when subcontracting to a foreign entity, especially when federal funds are involved and the entity lacks significant research experience or research administration infrastructure, there are many issues that need to be considered. These issues include:

• There may be restrictions imposed by federal or industry sponsors on supporting international subrecipients.
• Under federal awards, subrecipients will need to meet various U.S. public policy requirements (e.g., conflict of interest, research misconduct). A list of US public policy requirement applicable to foreign subrecipients can be found here. For subrecipients under NIH awards, ORPA will ensure that the subrecipient has a compliant conflict of interest policy, or it will require that the subrecipient adhere to the UR’s Policy on Conflict of Commitment and Interest.
• Budgets will need to be scrutinized to ensure compliance with 2 CFR 200 as international collaborators may not be familiar with these requirements. In addition, the entity will need to provide documentation that it has adequate internal controls for financial oversight.
• Method of payment will need to be considered to adequately address cash needs.
• If human subjects are involved, internal RSRB review and approval will be required.
• Fluctuations in currency exchange rates could cause budgetary issues.
• Accounting practices may vary from those accepted in the United States.
• Subrecipient monitoring will require more time and resources. It is the PI’s responsibility to verify the terms and conditions, as well as to ensure regulatory requirements and assurances, are being followed.

RISK ASSESSMENTS IN SUBAWARD PROCESS

If the University has not subcontracted with the foreign entity before, a risk assessment of the entity is required by UR and federal policy. The subrecipient’s financial management system must provide for: records that identify adequately the source and application of funds for sponsored activities; effective control over, and accountability for, all funds, property and other assets; comparison of expenditures with budget amounts for each award; written procedures regarding payment methods; and written procedures for determining the allowability of costs in accordance with 2 CFR 200. The Pre-Qualifying Questionnaire provided to the foreign entity by ORPA will request records, such as financial audits, financial statements and policies to meet the requirements of the risk assessment. The risk assessment process is described in full in the Policies and Procedures for the Administration of Subagreements to a Third Party.  The time required to complete a risk assessment is dependent upon the receipt of records and information from the foreign entity. Once the University receives relevant records and documentation, the University’s review is usually completed within 2 business days. This review will either result in issuing the subaward, or requesting additional information from the subrecipient.

Depending on the nature of any proposed risk-mitigation actions and the deemed amount of residual risk, the ORPA RA, Assistant Controller, Director of Research Compliance and the respective UR department will need to apply professional judgment in deciding whether or not to issue the subcontract or if additional subcontract terms and conditions may be required to mitigate potential risk. PIs and administrators should recognize that the risk assessment is a time-consuming but necessary process to ensure a successful research partnership.