The Cancer Prevention and Research Institute of Texas ("CPRIT" or "the Institute") adopts without changes the amendments to §§703.3, 703.5 - 703.8, 703.10 - 703.17, and 703.21 regarding institutional limits on grant applications, grant application resubmissions, competitive renewals, submitting more than one application, submission deadline extensions, sources of funding, grant ineligibility, application fees for product development research grantees, review of grant recipient progress reports, when grant application recommendations must be acted on by the Oversight Committee, requirements of Institute employees and Oversight Committee members who attend peer review meetings, Program Integration Committee recommendations sent to the Oversight Committee, how the Chief Executive Officer may recommend considering applications with variations, how the Oversight Committee votes on grant recommendations, grantee responsibilities, single audit determination, no cost extensions, final Financial Status Reports, revenue sharing, who within the Institute is responsible for directing grant award monitoring, grantee documentation of Financial Status Reports, and various typographical corrections that do not substantively change administrative rules. Additionally, the Institute adopts without changes new rules §§703.23 - 703.26 relating to disbursement of grant award funds, financial status reports, grant award budgets, and allowable costs. The adopted amendments and new rules were published in the September 2, 2016, issue of the Texas Register (41 TexReg 6641).

Reasoned Justification

The adopted rule changes and new rules provide clarity for grant applicants and grant recipients related to the review, approval, disbursement, and monitoring of Institute grant award funds.

§703.3 has several adopted amendments affecting grant applications. The first adopted amendment adds §703.3(b)(3) allowing the agency to set a limit on the number of applications that may be submitted by an entity for a particular grant award mechanism. Section 703.3(e) is amended to allow the Institute to limit the number of times a grant application may be resubmitted to the Institute. Section 703.3(g), which explains the process for requesting an extension to the application deadline, is amended to clarify that any extension is at the discretion of the Chief Program Officer and any request for such an extension must be made to the CPRIT Helpdesk via electronic mail within 24 hours of the closure of the application submission deadline. An extension to the submission deadline will only be granted for good cause, which will be documented by the Institute. Section 703.3(i) is amended to clarify that only product development applicants are required to provide a capitalization table that includes individuals or entities that have an investment, stock or rights in the company. Section 703.3(j) is amended to clarify that any grant application submitted by an entity or personnel that is debarred, suspended, and ineligible or otherwise excluded form participation in federal or state grant awards is not eligible to receive a grant from the Institute. Section 703.3(k) is amended to allow the agency to withdraw a product development application if the application fee is not received within seven business days of the application submission deadline.

§703.5 is amended to expand peer review activities of Scientific Research and Prevention Program Committee members to include post award evolution of grant progress reports submitted to the Institute by grant recipients.

§703.6 is amended to clarify that a final grant award recommendation by a review council must be acted on by the Oversight Committee within the same state fiscal year. Section 703.6 is also amended to clarify that Oversight Committee members may attend peer review meetings as non-participating observers. If an Institute employee or Oversight Committee member attends a peer review meeting, the individual must certify in writing that the employee or Oversight Committee member complied with the Institute's conflict of interest rules.

§703.7 is amended to clarify that a list of deferred grant award recommendations, if any, must be provided at the same time the Program Integration Committee submits its list of grant award recommendations to Oversight Committee.

§703.8 is amended to clarify the variances in the grant review process as well as any grant applications that the Chief Compliance Officer is required to identify at the time that the Chief Compliance Officer certifies the grant award recommendations. Section 703.8 is further amended to clarify that the Chief Executive Officer may recommend good cause for considering a process variance reported by the Chief Compliance Officer. The adopted amendment to Section 703.8(3) clarifies that the Oversight Committee may vote on more than one grant award recommendation at a time unless an Oversight Committee member requests taking up a grant recommendation individually. Lastly, Section 703.8(4) is amended to replace "failure to follow" with "not approving."

§703.10 is amended to add two grant contract requirements. The first adopted change requires the grantee to accept legal responsibility for the integrity of the fiscal and programmatic management of the organization. The second adopted change requires the grantee to acknowledge responsibility for the actions of its employees and other research collaborators, as well as enforcing the grantee's standards of conduct.

§703.11 is amended clarify that matching funds may be certified on a project year basis. Additionally, the consequences for not providing matching certification are expanded to include suspension of reimbursements an advances for project costs. Section 703.11 is further amended to clarify that the project year is the period to use when determining whether a grant recipient appropriately expended matching funds.

§703.12 is amended to delete text related to unauthorized expenses. Guidance regarding allowable costs, including a list of unauthorized expenses, is now provided in the new adopted rule Section 703.26.

§703.13 is amended to clarify when a single audit determination form is due. The adopted amendment also increases the annual threshold that triggers the grantee's requirement to submit an audit from $500,000 to $750,000 in state award funds. This section is further amended to include a description of acceptable agreed upon procedures agreement sufficient to fulfill the audit requirement.

§703.14 is includes several adopted amendments. The first amendment adds the de-obligation of grant award funds to the title of §703.14. As reflected in the adopted amendment for new subsection (h), the rule change authorizes the Institute to de-obligate unspent grant award funds when the grant award contract is terminated and make those funds available for any purpose authorized by Texas Health and Safety Code Chapter 102. Section 703.14 is also amended to clarify the process for requesting, considering and approving no-cost extensions. Section 703.14(d) is amended to clarify that the final Financial Status Report is due within 90 days following the end date of the last state fiscal quarter that includes the grant termination date. This adopted amendment distinguishes a final Financial Status Report from other close out documents and clarifies for grant recipients the specific due date of the final Financial Status Report. Section 703.14(e) is amended to clarify that the Institute may make upward or downward adjustments to allowable costs requested for reimbursement up to 90 days following the approval of close out documents or the final Financial Status Report, whichever is later.

§703.15 is amended to replace the current title with "Financial Policies Applicable to Grant Awards." The adopted amendment replaces the current text with requirements related to the grant recipient's financial management systems, fiscal controls and accounting procedures.

§703.16 is amended to clarify how grant award proceeds may be used to pay for costs associated with commercialization activities. Section 703.16 is further amended to remove text that requires a grant recipient to report at least annually describing commercialization activities for the project results. If a grant recipient has received a product development grant award, the grant recipient is already required to provide this information pursuant to terms of the grant award contract. Deleting subsection (d)(6) makes it clear that other grant recipients are not required to report this information.

§703.17 is amended to add a new subsection clarifying that the revenue sharing obligation is continuous so long as the product resulting from the Institute supported project enjoys governmental exclusivity.

§703.21 is amended to clarify that grant award monitoring activities are under the direction of the Chief Compliance Officer. Section 703.21(b)(2) is further amended to remove text concerning financial status reports. The deleted text is moved to new rule §703.24, related to Financial Status Reports. Section 703.21(b)(3)(E) is amended to remove the grant manager as the reviewer of progress reports.

§703.23 is an adopted new rule concerning disbursement of grant award funds. The new rule incorporates text that has been moved from §703.19 (advance payment of grant funds) and clarifies Institute practices concerning reimbursement and advancement of grant funds. The new rule provides limits on the amount of award funds that may be advanced and guidance regarding expending award funds prior to seeking additional advances. The rule makes it clear that the Institute maintains the right to limit or restrict advance funds and may disburse the last 10% of total award funds using reimbursement instead of advancement. The adopted rule also provides guidance related to disbursing grant funds as a reimbursement for expenses already incurred.

§703.24 is an adopted new rule related to a financial status report (FSR). The adopted rule incorporates text that has been moved from §703.21(b)(1) and (2) as well as clarifies requirements for preparing and submitting FSRs, including deadlines and the waiver appeals process.

§703.25 is an adopted new rule related to grant award budgets. The adopted rule addresses appropriate budget categories, budget transfers, and carry forwards of unspent budget funds during a project year.

§703.26 is an adopted new rule concerning allowable costs and incorporates text that has been moved from §703.12. The adopted new rule defines an allowable costs and lists examples of expenses that the Institute considers unallowable costs. The rule clarifies that an allowable costs must be incurred during the contract term, unless a grant recipient has received written approval from the Institute's Chief Executive Officer. The Institute makes it clear that the Institute's decision regarding whether an expense is allowable is final.

Summary of Public Comments and Staff Recommendation

CPRIT received one comment from the public regarding the proposed rule changes. Kimberly Turner, Chief Audit Executive with the Texas Tech University System, indicated that Texas Tech agrees with the proposed rule changes but noted that a reference in §703.13 to OMB Circular A-133 has been superseded. Ms. Turner suggested an updated reference to "Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart F." CPRIT supports the suggested change; however, the proposed change may be outside of the scope of this rulemaking. CPRIT declines to make the change at this time and will instead address the change in a future rulemaking project.

The rule changes are adopted under the authority of the Texas Health and Safety Code Annotated, §§102.108 and 102.251, which provides the Institute with broad rule-making authority to administer the chapter, including rules for awarding grants.