Strategic Supplier Program and Federal Sponsored Projects

Frequently Asked Questions

 

1. What is the Strategic Supplier Program and how does it benefit the university community?

U-M’s Strategic Supplier Program involves establishing relationships with certain suppliers that provide negotiated discounts on a wide variety of products and services to the university community. The program enables U-M to reduce costs, enhance supplier/contract management, reduce the number of competitive bids, and provide better customer service to purchasers at the university. Examples of some items covered by the program include office supplies, lab equipment, catering, and computer hardware and software. On an annual basis, the Strategic Supplier Program saves units across the university millions of dollars.

2. What is the issue with the Strategic Supplier Program as it relates to federal sponsored projects awarded to U-M?

The Strategic Supplier Program includes a two-percent program fee that is charged to participating suppliers. An internal review of U-M’s accounting practices for federal sponsored projects determined that the program fee is actually a discount that should be passed onto any federal organizations that sponsor research and other activities.

3. Does the federal government require that all discounts be passed onto agencies that sponsor research and other activities?

Yes

4. When will U-M begin passing the program fee discount onto federal sponsored projects and how will it be reflected on my Statement of Activity?

U-M began passing the program fee discount onto federal sponsored projects on April 1, 2019. There will be a separate credit transaction on the Statement of Activity by Project/Grant Voucher Detail Expense Report.  This transaction will reflect the applicable percentage discount, original transaction date, and original transaction voucher ID in the Invoice ID and Reference fields.

5. Has U-M notified the federal government about the issue?

The university self-reported the issue to the federal government in February 2019 and is awaiting a response.

6. What is the program fee and how much is it?

The program fee funds the cost of the Strategic Supplier Program, which includes, among other things, software, hardware, and personnel. The program fee represents two percent of the invoice price and is charged to suppliers participating in the Strategic Supplier Program.

7. How—and when—was the issue discovered?

In 2018, a team in Finance conducted an internal review of U-M’s accounting practices for federal sponsored projects and determined that the program fee is actually a discount that should be passed onto any federal organizations that sponsor research and other activities.

8. Will any units receive refunds for the program fee discount for purchases made with non-federal dollars?

No

9. When will U-M begin passing the program fee discount onto non-federal sponsored projects?

May 1, 2019

10. Will the program fee discount be passed onto all purchases made under the Strategic Supplier Program?

U-M leadership is currently evaluating ways to apply the program fee discount to all purchases made under the Strategic Supplier Program.

11. How do I prepare a Journal Entry (JE) for transactions impacted by the program fee?

Review this linked document for detailed information on how to prepare a JE for these transactions. If you have further questions after reviewing the document, contact your Sponsored Programs Customer Service Coordinator.

If you have other questions, please contact the Procurement Solutions Team at (734) 764-8212, prompt 2, or procurement.services@umich.edu.

                                                                                                                                                                         APRIL 2019