Response: The Institute declines to make this change because it describes a process that is inconsistent with the peer review process set forth in Chapter 703. Furthermore, a real-time assessment of the success or failure of a project to reduce cancer deaths over a sample population may be impossible, rendering the recommendation unduly burdensome to implement.

The Crosetto Foundation proposes a change to subsection (e)(1) that requires the Peer Review Panel chairperson to determine the applications that should move forward for further review based on the Crosetto Foundation's proposed standard evaluation criteria rather than the preliminary evaluation score.

Response: The Institute declines to make the change because the Crosetto Foundation's recommended standard evaluation criteria will not be used in the Institute's application evaluation and funding recommendation process. (See the Institute's response to the Crosetto Foundation's proposed standard evaluation criteria and suggested revisions for §703.3.) It is within the Institute's discretion to establish the evaluation criteria used to score grant applications, as guided by the statute.

The Crosetto Foundation recommends changing the text of subsection (e)(2) that requires the Review Council members to confirm or provide objections supported by scientific arguments in regard to the calculations, references, material, and logical reasoning that was provided by the reviewers.

Response: The Institute declines to make this change because it describes a process that is inconsistent with the peer review process set forth in Chapter 703.

The Crosetto Foundation proposes a change to subsection (g)(1) that requires the third party observer to record all comments/remarks from any observer from the public that "provides useful information" in comparing and identifying projects with the highest potential to reduce cancer deaths and cost.

Response: The Institute declines to make this change because it describes a process that is inconsistent with the peer review process set forth in Chapter 703. Specifically, the only individuals permitted to participate in peer review discussions are Scientific Research and Prevention Program committee members; peer review panel meetings are not open to the public.

§703.10. Awarding Grants by Contract.

UH comments that the requirement in subsection (c)(15) that grant recipients provide supporting documentation for expenses submitted for reimbursement creates an administrative burden and is redundant because all projects will be audited at different stages. TTUS elaborated on this point, asserting the submission of supporting documentation is time consuming and will require additional resources. TTUS reports that providing this level of documentation is not typical of external funding agencies, which rely upon external audits and compliance functions to identify reimbursement concerns. TTUS suggested amending the proposed rule to make the supporting information necessary "upon request."

Response: The Institute declines to make this change. In the State Auditor's Office report on the Institute's grant management practices issued in January 2013, the State Auditor determined that, "CPRIT cannot ensure the accuracy and appropriateness of grantees' reported expenditures without obtaining detailed information and adequate documentation to support expenditures reported on [spreadsheets summarizing expenditures to be reimbursed] for the applicable reporting period." (See pg. 24, Report No. 13-018, An Audit Report on Grant Management at the Cancer Prevention and Research Institute of Texas and Selected Grantees, January 2013.) Subsection (c)(15) fulfills the State Auditor's recommendation that CPRIT obtain sufficient documentation to support the appropriateness of all payments it makes to grantees.

The Crosetto Foundation proposes two changes regarding subsection (c). First, the Crosetto Foundation suggests adding language related to its standard evaluation criteria including "measurable milestones in the contract that should be verified as the project is funded and implemented."

Response: The Institute declines to make this change because the requirement is already addressed in subsection (c)(22). Specifically, project deliverables as described in the grant application must be included in the contract's scope of work. In addition, verification of the progress made by the grant recipient related to the information included in the scope of work and grant award timeline is addressed in proposed rule §703.21(b)(3). Grant recipients are required to provide a report, at least annually, for the Institute's review regarding the progress made toward completing the scope of work, including information, data, and program metrics regarding achievement of project goals and timelines.

The second proposed change to subsection (c) is to delete subsection (c)(1) in its entirety. The Crosetto Foundation asserts that grant funds should be used to support the research project and not for building capital improvements that are not directly used for the research project.

Response: The Institute declines to make the change. Building capital improvements is a statutorily-authorized use of grant funds, subject to specific approval by the Institute and pursuant to certain terms and conditions. This subsection reflects the statutory requirements.

§703.11. Requirement to Demonstrate Available Funds for Cancer Research Grants.

UH comments that subsection (c)(5) should clarify that institutions of higher education are not eligible to use unrecovered indirect costs as matching funds. TTUS also suggests clarifying that the entire subsection (c)(5) is not applicable to institutions of higher education.

Response: The Institute declines to make the change because subsection (c)(5)(D) explicitly excludes public and private institutions of higher education from using subsection (c)(5). Public and private institutions of higher education may not rely upon subsection (c)(5) to demonstrate available matching funds because the statute permits these entities to use the dollar equivalent of the individual entity's federal indirect cost rate as credit toward the required matching funds obligation. This option is unique to the institutions of higher education. Subsection (c)(5) explicitly excludes the institutions of higher education in order to avoid double-counting the benefit of the indirect cost rate credit.

The Crosetto Foundation proposes deleting §703.11 in its entirety, contending that the Institute's creation and statutory authority to award grant funds do not require the grant recipient to show that it has matching funds dedicated to the cancer research project.

Response: The Institute declines to make the change. The constitutional amendment creating the Institute includes a provision that prohibits the Institute from issuing grant funds until the recipient of the grant has an amount of funds equal to one-half the amount of the grant dedicated to the research that is the subject of the grant request. The matching funds requirement for all cancer research projects is also reflected in the statute.

The Institute notes a change to be made to §703.11(b) to correct a typographical error. The statutory reference to "§102.2003(c), Texas Health and Safety Code" inadvertently contains an extra "0". The subsection has been changed to reflect the correct statutory reference, §102.203(c), Texas Health and Safety Code.

§703.13. Audits and Investigations.

TTUS proposes amending length of the period following the termination of the contract that the Institute, the State Auditor, and/or the Comptroller of Public Accounts may review, inspect, or audit the grantee's grant contract records. TTUS recommends replacing the four-year period set forth in subsection (a) with "a fiscal year-end plus three years" period to make this section consistent with the State record retention requirement.

Response: The Institute agrees with the change and the text of §703.13(a) has been revised to reflect the time period that the Institute or other associated auditors or investigators may review, inspect, audit, copy or abstract the grantee's records pertaining to the specific grant contract for the "three year period following the end of the Grant Recipient's fiscal year during which the Grant Contract was terminated."

UH and TTUS both propose amending subsection (b) so that the requirement to obtain a single audit does not apply to state agencies. UH reports that state agencies that are recipients of federal funds rely on the statewide audit to meet the audit requirements of federal sponsors. UH contends that obtaining a single audit for a state agency would be redundant and expensive, costing "in excess of $500,000 and probably closer to $1,000,000." TTUS cited the cost-savings to the State when the Single Audit Act was implemented, eliminating the individual independent audits of each state agency. TTUS asserts that a single audit would be an audit of the institutions' financial statements. Both UH and TTUS recommend requiring that for state agencies, program specific audits should be clarified to include an Agreed-Upon Procedures Engagement, as defined by the American Institute of Certified Public Accountants, and report on findings on specific procedures performed on subject matter.

Response: The Institute declines to make this change because the use of an Agreed-Upon Procedures Engagement is not addressed in the Uniform Grant Management Standards (UGMS). The Institute previously accepted the Statewide Single Audit by state institutions of higher education to fulfill the audit requirement in this section. However, the State Auditor's Office determined that submission of the Statewide Single Audit by grantees did not comply with the audit requirement of the Uniform Grant Management Standards (UGMS) because the Statewide Single Audit does not include a review of state-funded grant awards, such as Institute grants. UGMS would need to be revised to allow for an Agreed-Upon Procedures Engagement.

§703.14. Termination, Extension, and Close Out of Grant Contracts.

UH proposes a change to subsection (c)(2) that would replace the six-month no cost extension period with a one year term. UH asserts that there are a variety of reasons not controlled by the grant recipients that may justify more time to complete projects.

Response: The Institute declines to make this change because the rule as proposed permits additional time beyond the standard six-month no cost extension period so long as the grant recipient can demonstrate special circumstances justifying additional time to complete the work of the project.

UH proposes replacing the term "termination date" with "expiration date" to better describe the official end of the project.

Response: The Institute declines to make the change because the term "termination date" encompasses all of events that may cause the grant contract to end, including termination for an event of default, as well as a natural termination under the terms of the contract.

§703.21. Monitoring Grant Award Performance and Expenditures.

UH proposes deleting the requirement included in subsection (b)(3)(B)(iii) that grant recipients report on the number of new jobs created and the number of jobs maintained as a result of grant award funds. UH contends that the requirement to track the number of jobs created was part of the American Recovery Reinvestment Act Fund and is not one that is usually done by the university. Collecting and reporting the information would be burdensome and deviate from the main goal of conducting research. Similarly, TTUS supports deleting subsection (b)(3)(B)(iii), contending that these are generally not appropriate measures of success for research and cancer prevention projects.

Response: The Institute declines to make this change. The creation and maintenance of jobs through the use of grant funds is one of the metrics the Institute must report annually to the Legislative Budget Board; the proposed subsection assists the Institute in complying with its reporting requirements. One of the statutory purposes for the Institute is to attract, create, or expand research capabilities of institutions of higher education and other entities in order to substantially increase cancer research and to create high quality new jobs in the state. Similarly, the statute emphasizes the importance of creating high quality jobs in the state by designating it as one of the priorities for funding grant proposals.

The Crosetto Foundation suggests two changes to subsection (b)(3)(C). First, the Crosetto Foundation recommends adding the words, "demonstrating the completion of the construction of the project," following the words "a final Grant Progress Report." The Crosetto Foundation provides no explanation for the additional text.

Response: The Institute declines to make the change because the information sought by the additional text is already encompassed by the proposed subsection's requirement that the grant recipient provide a comprehensive description of the progress made completing the scope of work. Furthermore, adding the proposed text may unduly limit the information to be included in the final progress report to only that information addressing construction projects.

The second change to subsection (b)(3)(C) proposed by the Crosetto Foundation is to include a "report of the measurements on a sample population that will quantify how successful the project was..."

Response: The Institute declines to make this change because it is based on the Crosetto Foundation's suggested standard evaluation criteria that is inconsistent with the peer review process described elsewhere in Chapter 703. (See the Institute's response to the Crosetto Foundation's proposed standard evaluation criteria and other suggested revisions for §703.3.) The Institute notes that information about the project results, including efficacy metrics, will be required as part of the final progress report even without the suggested change.

The Oversight Committee approved the final order adopting the amendments and new section on January 24, 2014.

The amendments and new section are adopted under the authority of the Texas Health and Safety Code Annotated, §102.108 and §102.251, which provide the Institute's Oversight Committee with rulemaking authority and direct the Institute to adopt rules relating to grant award procedures.