ASU has as part of its charter and mission to be a global center for interdisciplinary research, discovery and development. In order to achieve this standing, ASU must deal with the complexities of doing business internationally, which can present challenges as it relates to contracting, operations, appropriate planning for expenses, etc. Also, there may be language and cultural barriers to overcome in order to negotiate and execute agreements. In addition to the information below, Global Operations maintains up-to-date resources, policies and practices for international projects. Global Operations can help identify foreign legal, tax, employment, financial, procurement, and health and safety issues and deliver solutions to address them. To contact Global Operations, email email@example.com, or visit research.asu.edu/globalops.
- Foreign Personnel
- Materials and Supplies
- Upfront Payments
- Outgoing Agreements
- Intellectual Property
- Governing Law
Can a proposal be submitted in a foreign currency?
ASU’s preference is for proposal submissions and payments to be in United States (U.S.) dollars. Reasons for avoiding other currency either in proposal submissions or awards include:
Currency values rise and fall and when ASU engages in international business transactions. A swing in currency value can have an impact on the project's bottom line cost. What is budgeted today may be completely inadequate six months from now and may result in the ASU principal investigator’s department having to internally fund a project to ensure successful project completion.
ASU may also be subject to foreign-transactional fees, also called currency-conversion fees. These fees could be between 2 and 3 percent of the payment made to ASU and may not be reimbursed as a miscellaneous expense. If categorized as unreimbursable, the ASU principal investigator’s unit will be required to cover the cost.
B. FOREIGN PERSONNEL
What is a foreign worker?
A foreign worker is defined as a person who works in and is a citizen of a country other than the U.S.
The project requires foreign workers. What’s the best way to proceed?
ASU preference is to not have any foreign workers on a project; however, when required, a subcontract with an in-country educational institution may be possible. Due to limited visibility into the subcontractors’ operations, ASU will flow-down clauses from the prime award that will require the same obligations and responsibilities that ASU has with the sponsor. If a subcontracting arrangement is not possible, contact KED Global Operations for other possible options on how to acquire the expertise of a foreign worker.
C. MATERIALS/SUPPLIES - BUY AMERICAN ACT
What is the Buy American Act?
U.S. Government funded projects require that any materials/supplies purchased be a U.S. domestic product and that manufacturing processes take place in the U.S. When a material/supply or manufacturing process is not available in the U.S., is unreasonable in cost, or it is not in the public’s best interest, a justification should be included in the proposal. If awarded, ASU will request a waiver from the sponsor.
The project requires the transport of materials/supplies to a foreign worker or entity. Can these costs be directly charged to the sponsor and what should be considered before transporting these materials/supplies?
Shipping costs can be charged directly to a sponsored project. These costs should support the activity that is directly related to the special purpose or circumstance. Before transporting any materials/supplies, ASU must ensure it is in compliance with federal export laws. A Material Transfer Agreement (MTA) may also be necessary. An MTA is an agreement between two parties which describes the transfer of materials (i.e., biological and research), how they will be used, and the responsibilities of each party. If there are questions about whether an MTA is needed, contact firstname.lastname@example.org. For questions about export controls, contact email@example.com.
Is prior sponsor approval required for foreign travel?
Foreign travel should be included in the proposal. If included in the proposal, the sponsor is considered to have been notified. However, the sponsor may still require their written approval before ASU can proceed with making travel arrangements. Refer to the award’s terms and conditions to determine the sponsor's foreign travel requirements. Remember to request any approvals required far enough in advance so there is enough time to make the travel arrangements.
Should additional funds be budgeted for foreign travel?
Depending upon the destination, additional costs may need to be budgeted for danger pay, security, extraction and gap insurance coverage. It is recommended countries with a State Dept warning warrant specific review for additional safety/security costs that should be (if allowable) budgeted for in the proposal. For questions regarding budgeting these costs in the proposal, please work directly with the assigned PNT GCO.
What is the Fly America Act?
Federally-funded projects require ASU faculty, staff and students to use U.S. flag air carriers for all air travel and cargo transportation services, regardless of cost and convenience, to the extent that service by those carriers is available. For more information, see the Foreign Travel Topical Guide.
Where can additional information about foreign travel be found?
- sanctioned countries
- emergency travel assistance services
- workers’ compensation
- safety and security
- process to file claims
What is Value-Added Tax (VAT) and is ASU subject to this tax?
VAT is a sales tax that may be assessed on goods and services. ASU may be responsible for payment of this tax. ASU's preference is for this tax condition to not flow-down to ASU and it remains preferable to not pay the VAT as a prime or pass-through recipient of Federal funds.
The sponsor will include this requirement in the Funding Announcement (FOA) and is responsible for making determination of when and when it would not apply. VAT can be a significant and an unexpected cost. ASU may not be able to reclaim a full or partial refund from a foreign country. VATs are widely debated on their effectiveness and when they would apply. If a full refund is not available, the ASU’s principal investigator will be contacted by ASU Research Operations to discuss options for payment.
During proposal development, it is recommended to check if the sponsor resides in a country where VAT could be applied to ASU, see Value-Added Tax Country List
If yes, ASU University Tax Office recommends providing a justification in the proposal on the premise ASU is not liable for a potential VAT for the following reasons:
- ASU is public institution of United States and exempt. ASU's proposed costs are exclusive of Host Country VAT.
- ASU does not have a permanent business location in __(foreign country)_________.
- ASU is not registered for doing business in __(foreign country)_________.
- ASU is not doing business in __(foreign country)_________.
- ASU should not be charged VAT on orders shipped into the U.S. for use in the U.S.
Are payments or gifts to officials in foreign countries allowed?
They are unallowable and this policy is enforced by The Foreign Corrupt Practices Act (FCPA). The FCPA prohibits payment or gifts to any foreign government official for the purpose of obtaining an advantage in securing business or influencing the individual to conduct business. Examples of payment or gifts are payment to entertainment, expensive meals, upgrades on hotel, airfare etc.
Questions about the FCPA should be referred to ASU Office of General Counsel.
Can payments also known as cash advances be provided to a foreign entity or individual prior to a legal agreement being signed?
ASU’s preference is to not transfer funds prior to a legal agreement being signed. When working in developing countries, cash-advances, up-front payments and other similar or unusual financial approaches may be requested. When requested, ASU must balance its risks with the needs of the foreign entity or individual. It will be necessary to establish reasonable caps for cash advances. Ensure the payment structure is explicit in the proposal and establish mechanisms for reconciling cash advances with expenditures. Please note, there are also limitations on the amount of cash that can be brought into a foreign country. For additional information about currency limitations, contact the country’s embassy or consulate.
G. OUTGOING AGREEMENTS
Who should be contacted if funds need to be sent outside of the U.S.?
For guidance on determining the type of agreement, please visit Subrecipient vs Vendor / Contractor vs Consultant page. It also notes who within ASU should be contacted to begin the process and/or to answer questions.
If the entity is categorized as a subrecipient, will sponsor approval be needed prior to issuance of an agreement?
With this categorization, the entity will be performing a substantive portion of the programmatic effort. The ASU sponsor may disallow, require ASU to place restrictions on, or require their approval of a foreign subcontractor before ASU can start the contractual process. ASU Research Operations recommends seeking explicit written approval from the sponsor before engaging a foreign subcontractor or any subcontractor. It has been ASU’s experience that it should not be assumed that a subrecipient is approved because they were included in the proposal that was awarded.
Are there additional approvals, which may be needed?
Possibly. This is dependent upon the relationship and oversight the foreign government has with the entity. In a few instances, ASU has experienced a requirement to seek approval of the foreign government power. For further questions, contact Global Operations.
What steps can be taken at the proposal stage with the foreign entity so that an agreement can be issued?
Steps which can be taken to expedite the process include:
- Obtaining the signed Subrecipient Commitment Form;
- Finalizing the scope of work and the budget; and
- Assisting international subcontractors (often unfamiliar with U.S. government requirements/processes) with obtaining a DUNS Number, registering in System for Award Management (SAM), and the completion of a W-8 form.
Are there options in what types of agreements can be issued a subrecipient?
Yes, there are options. Many international subrecipients do not have the mature system or infrastructure to document payroll, purchases and overhead costs, which may be a requirement of ASU’s sponsor and which flow-down to the subrecipient. In these instances, ASU Research Operations will assess the risk level with the subrecipient and make a recommendation on what agreement type would minimize ASU’s risk and work for the subrecipient. For further questions, contact firstname.lastname@example.org.
Are there lessons learned that ASU Research Operations could share in working with international subrecipients?
Yes, and there is a growing knowledge-base. Lessons learned include recognizing that:
The verification and contractual process may take longer than with domestic subrecipients.
The processes are impacted by language and cultural barriers, distance, time zone, and the need to have documents translated.
As ASU Research Operations is working through these and rely on the expertise and relationship of the principal investigators and other ASU staff. To share an experience or a thought on how ASU could do better, contact the ASU’s Research Operations' Proposal and Negotiation Team (PNT).
What office handles the legal review and negotiation of incoming and outgoing sponsored agreements?
The Proposal and Negotiation Team (PNT) has a team of Grant and Contract Officers (GCO) who have experience and expertise in reviewing and negotiating agreements.
Can PNT share the legal terms which are challenging and ASU’s preference?
Yes. Examples include:
Intellectual Property (IP) - Foreign entities may treat the project as work for hire and request ownership or a license to IP as a condition of doing business with ASU. Work for hire is where the entity treats ASU as a vendor and wants to have ownership of ASU’s IP. ASU’s preference is for the university’s IP rights to be preserved. ASU wants what it develops to be the university’s alone. When a request outside of ASU’s preference is made, PNT will work with Skysong Innovations - ASU's exclusive technology transfer organization and the principal investigator to reach an agreeable arrangement.
Governing Law – Foreign entities may include language for the agreement to be governed by the laws of the foreign country. This inclusion of the foreign country law is to reduce their potential financial costs in the event of a dispute. It may also be necessary to comply with the foreign law which governs the entity. ASU’s preference is to be silent or have the agreement governed by the laws of the State of Arizona. A foreign law or venue can be accepted by ASU; however, prior to acceptance, PNT will need to work with the ASU Office of General Counsel, perform a risk assessment, have a discussion with and obtain approval from the department on what it would mean to the unit, financially, in the event of an unfavorable outcome.
Indemnification – Foreign entities may include language where ASU is requested to be liable for their actions and for ASU to protect them against any improper actions. ASU’s preference is to be silent or include language where neither party agrees to indemnify the other party or hold harmless the other party from liability.
Publications – Foreign entities may request ASU not publish results or place restrictions on ASU before proceeding with a publication. ASU’s preference is to protect the mission of the university to carry out research in an open and unrestricted manner; specifically, to protect the rights of principal investigators to publish the results of their research and other sponsored activities. If and when ASU cannot reach agreement on publication rights, the GCO will make an assessment with the principal investigator on whether a publication waiver is appropriate and if yes, start the process with ORIA.
For further questions on the legal terms above, contact email@example.com or the assigned PNT GCO.
Which office can assist with creating and submitting a Trafficking in Persons Compliance plan?
The Office of Research Integrity and Assurance (ORIA) maintains the compliance plan template and can assist in putting the plan in place. For additional information, see combating trafficking in persons page on the ORIA website.