Departmental Guarantee Memorandum (DGM)

1. Purpose

This Standard Operating Procedure (SOP) is issued under University Policy 19.045 Administering External Grants and Contracts.  It provides the required procedures and timelines for implementing a Departmental Guarantee Memorandum (DGM) at risk account.

2. Scope

This procedure applies to all sponsored projects subject to OU Policy 19.045 Administering External Grants and Contracts Administering External Grants and Contracts set up as separate accounts in the OHIO Financial Management System (FMS).

3. Procedure

A Departmental Guarantee Memorandum (DGM) conveys a request to secure an at-risk account that can be utilized for essential, time sensitive, spending prior to receipt of an award. To use this mechanism, there must be a high expectation the award is forthcoming, and the department must guarantee to cover the expenditures incurred, in the event the sponsor rejects the proposal, does not confer the award, or denies the expenditures. Setting up a DGM is a complex, labor-intensive process. Therefore, the first consideration should be to charge an operational account and then move expenses once the award account is set up.

1. Request and Timing
   The Principal Investigator (PI)/Project Director (PD) may submit a request for a DGM for dean and chair level approval as the department assumes the financial risks. The DGM must include a start date of the ninety (90) day term of the at-risk account, detailed information about why an at-risk account is needed, and a budget not to exceed 20% of the expected award amount.  In addition to meeting the conditions for validation listed below, a fully approved Cayuse proposal formset that records the submission of a proposal by the OSP must be included. The OSP will review and submit the approved DGM to Grants Accounting within one business day of validation, when received before 3:00 PM EST. Once Grants Accounting has set up a valid DGM in Oracle, OSP will notify the PI/PD of the account number. The DGM is valid for 90 days. Only one (1) DGM may be approved per project, and the DGM is not eligible for an extension.
2. DGM Expenditures
   Grants Accounting will not issue invoices for expenditures incurred on an at-risk award spending account.  While Grants Accounting will periodically check for and close overspent DGMs, ultimately it is the PI’s responsibility to ensure that spending does not exceed the 20% approved limit.
3. Compliance Approval
   If relevant, compliance approval (e.g., IRB, IACUC, and IBC) must be obtained before research activities can be performed. If IRB or IACUC approval is required but has not been obtained, the PI will assert in writing that they will not engage in any activity that requires regulatory approval prior to receipt of approval by the Office of Research Compliance.
4. Conditions for Validation
   1. The Cayuse proposal formset must be approved by required signatories
   2. The proposal must be submitted to the sponsor by OSP
   3. The DGM will be initiated by the PI/PD, and all required signatories must approve
   4. The PI/PD or delegate must provide a justification for the DGM
   5. PI/PD must provide assertion that they will not engage in any activity that requires regulatory approval prior to approval by Research Compliance
   6. The DGM must include a valid account number to guarantee the transfer of expenditures, in the event the sponsor rejects the proposal, does not confer the award, or denies the expenditures.
5. Required Signatories
   1. PI/PD
   2. Department Chair/School Director
   3. Dean/VP
   4. Director of OSP or designee

This Standard Operating Procedure will be reviewed for accuracy, completeness, and compliance with Federal Regulations at minimum upon each new issuance of Uniform Guidance 2 CFR 200.