Negotiating an Award/Subaward with a developing …//. Challenges and way out 18 Way out: 1.Give a...

2017 SRA International Annual MeetingOctober 14-18, 2017

Mir Khan, MRA, MBASenior Manager, Research and Grants Management

The Aga Khan University, Karachi, Pakistan

Negotiating an Award/Subawardwith a developing country institution from Canada!

Getting to know each other a bit

• How many of us are “actually dealing” with negotiating an award/subaward from Canada with a developing country institution?

• How many of us “plan” getting engaged in near future?

• How many are here just because the topic sounds interesting?

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A few basics first• Award• Subaward• Proposal• Project Budget• Grant Bank Account• Budget Category Change• Eligible and Ineligible expenses• Committed expenses• Currency exchange• Global access and data access

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What are the general challenges we face during negotiations?

Let’s hear from you first!

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Challenges and way out1. Currency Fluctuation – CAD to PKR

5Source: http://www.x‐rates.com/graph/?from=CAD&to=PKR&amount=1

7%

Challenges and way out1. Currency Fluctuation – CAD to LKR (Sri Lankan Rupee)

6http://www.x‐rates.com/graph/?from=CAD&to=LKR&amount=1

14%

Challenges and way out

7Source: http://www.x‐rates.com/graph/?from=CAD&to=PKR&amount=1

Challenge 1:

Currency fluctuation may put the implementation of the Project in a developing country at risk!


8Courtesy: Grand Challenges Canada


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Way outs:

1. Staying silent at the time of negotiations;2. Keeping some buffer funds at your end for any such possible outcomes;3. Giving greater flexibility to manage budget changes at their end;4. If the grantee is really credible, give them most of the funds upfront so they can earn interest income and have that as their back-up


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Challenge 2:

Opening and maintaining separate bank accounts for grants funds at times becomes difficult.


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Way outs:

1. Check if they have provision to track grant funds transparently through their accounting software;

2. Cash basis versus Accrual basis of accounting provision;


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Challenge 3:

Different legal instruments in difference countries for grant agreement’s validity.


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Way outs:

1. Let them top up the document at their end;2. Keep yours same as per Canadian/US requirements


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Challenge 4:

Difference in withholding tax laws in developing countries may add up your cost of subawarding.

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Examples:

In Pakistan, its 15% on any and all wires that are sent to foreign institution AS WELL AS individuals.

In Kenya, its 20% on any and all remittances that are sent to foreign institutions and individuals.

Source: http://www.pkrevenue.com/inland‐revenue/withholding‐tax‐card‐20162017‐payment‐to‐non‐residents/http://www.kra.go.ke/incometax/incometaxtypesoftaxes.html


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Way out:

1. Give a direct award from Canada/US to the planned subawardee(s) in the Project;


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Challenge 5:

Different export regulations pertinent to Human Biological Material may add to the costs as well as time of project completion.


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Example: HBM Export regulations in Pakistan

Source: http://www.nbcpakistan.org.pk/


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Example: HBM Export regulations in Bangladesh

Source: http://dbtbiosafety.nic.in/act/Bangladesh.pdf


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Way out:

1. Plan it ahead of the start of the Project;2. Add the requisite costs in the subaward budget;3. Its good to take blanket approvals for any export that

you envisage doing later stages during or after the study.


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Challenge 6:

Retention of financial records for longer period may incur additional costs at the subawardee’s end.


24Source: http://dbtbiosafety.nic.in/act/Bangladesh.pdf


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Way out:

1. Negotiate to let them cover the additional cost (if any) from the Overheads (F&A) that you might be giving them;

2. See if electronic record retention is acceptable to you which incurs relatively less cost;

3. Think again. Do you really need records for 10 years?


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Challenge 7:

The famous fight of “applicability of law” (jurisdiction) may lead to a deadlock in subawards/awards.


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The grantee argues, that the project is being implemented in his Country (or province) so those laws shall be applicable. The grantor insists that we are giving the money so our laws should be applicable.


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Way out:

1. Staying Silent at the time of negotiations;2. Adding statements under the clause of

Arbitration/Termination that the law suit (if any) will be pursued at the “defendant’s” country.

Negotiating an Award/Subaward with a developing country institution from Canada!

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Questions?

Mir KhanThe Aga Khan University

Pakistan

[email protected]: +92 300 827 9739

Negotiating an Award/Subaward with a developing …//. Challenges and way out 18 Way out: 1.Give a...

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