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Due Diligence for Research Collaborators

From the 1st August 2018 the University of Manchester has introduced due diligence checks for certain research collaborators on all public and/or charity funded research projects.

These due diligence checks do not apply to the following collaborators:

  • Collaborating Universities from the UK, EU, US, Canada and Australia
  • UK public organisations e.g. NHS Trusts, UK Local Authorities and UK Government Departments
  • UK Charities registered with the Charities Commission
  • UK industrial collaborators subject to a collaboration or other contractual agreement

Frequently Asked Questions

What is due diligence?

Due diligence is the process by which the University mitigates some of the risks inherent to the sub-contracting or passing on of research funds to third parties, shares good practice and gains assurance that research collaborators have the capacity and expertise to carry out the research with us and manage the funding associated with the project to the standards set by the funder.

The University has chosen to adopt a risk-based approach. As such, these checks should be applied in a proportionate fashion taking account the nature of the collaboration, the value of the funding and the level of risk associated with the research.

Detailed guidance on the full process can be found here.

Why is due diligence being introduced now?

It is a requirement of an increasing number of research funders that due diligence checks are undertaken on all collaborators (or sub-contractors) to whom the university is passing grant funding. This means the University must have a process in place to assure that all sub-recipients of research grant funding are fit to execute the research and manage funding to the standards required by the terms and conditions of the funder.

Is due diligence required on all collaborators?

No – the university has chosen a risk-based approach and as such due diligence only is required when:-

The collaborator is engaged on a public or charity funded research project

AND

The collaborator is not one of the following:

  • Collaborating Universities from the UK, EU, US, Canada and Australia
  • UK public organisations e.g. NHS Trusts, UK Local Authorities and UK Government Departments
  • UK Charities registered with the Charities Commission
  • UK industrial collaborators subject to a collaboration or other contractual agreement

Do these due diligence checks apply to collaborators on an industry funded research project?

No - these due diligence checks are not required for collaborators or sub-contractors on industry funded research projects, as these are subject to the full contracting process.

Does due diligence apply to consultants?

Due diligence applies to external consultants who are engaged on a public or charity funded research project where the university will be passing £25K or more to them over the lifetime of the project.

These checks do not apply to industry funded consultancies.

I am a reviewer, what should I be looking for?

No one reviewer is expected to ‘green light’ a collaborator. The purpose of the due diligence process is to build up a picture of a potential collaboration. Each reviewer should consider any potential risks to the university but also any evidence to support the strength of the collaboration. The review is divided into four parts: -

PROJECT MANAGEMENT: A review of the project management section should consider how far the answers in the questionnaire evidence the partner’s capacity to deliver the research. Do they have sufficient resources and systems in place already and if not what do they need to put in place?

FINANCIAL: A review of the financial section should consider the financial probity of the partner. Are they financially stable, do they have sufficient processes and systems in place to receive and manage the funds, and report and evidence the spend? If not, is there any assistance we can provide, for example by providing reporting and reconciliation templates etc.?

GOVERNANCE: A review of the governance and legal section will consider the collaborator’s “Governance and Control” mechanisms.

LEGAL: A review of this section will consider the set-up of the organisation and how it manages sub-contractors (if applicable).

Why do we record the corruption index of the country?

The corruption index can indicate the wider fiscal context in which the collaborator is operating. For this reason it is important that the corruption index is recorded for the country in which the research will be conducted. This may be different to their registered address.

Who “signs off” a due diligence review?

No one person “signs off” the due diligence review; the purpose of a due-diligence review is to build up a picture of a collaboration, and identify and mitigate against potential risks, in order to facilitate the collaboration. In order to facilitate a collaboration, additional financial and/or contractual measures may be recommended.  Where a project is identified as high-risk, it may be forwarded for additional review, so that the case to proceed can be considered and recorded. During the lifetime of the project RS Finance and the PI are responsible for ensuring any mitigating financial or project clauses are adhered to.

What if an organisation fails the checks?

The due diligence process is not intended as a pass/fail exercise. The purpose of pre-award due diligence is to gather information in order to facilitate and reinforce a collaboration. When potential risks are identified early, the University can put measures in place to mitigate against these risks. These measures may be contractual (eg: payment against evidence of expenditure) but also procedural (eg: providing reporting templates).

If a collaboration is identified as particularly risky, the due diligence process allows the decision to proceed (or not) to be escalated to the appropriate level of seniority. 

What if responses are not received before the research starts?

Collaborators should be advised to complete and return the questionnaire as soon as possible after receipt to ensure that the mitigating actions required in the sub-contract are agreed as soon as possible. This process can be lengthy, but must be completed before the research begins and sub-contracts are issued. PI and partners should be made aware that contracts will not be signed until questionnaires are in place.

What happens if the collaborator can’t/doesn’t provide enough information?

The university recognises that there are many reasons a collaborator may not be in a position to provide adequate information and it does not mean that a collaboration will be automatically halted. On the contrary it indicates that the University may need to help the partner to meet the funder’s terms and conditions and provides an opportunity to do so from the start. 

What if there is a change to the budget?

If at any point during the project, a budget uplift, virement or alteration, means that the university will be passing more than £25K to a collaborator over the lifetime of the project, the full due diligence process will be required. In this case the RS Finance and/or the PI will be responsible for alerting the relevant RSO/RSM who will then initiate the process. 

Due diligence was completed for a previous application / grant, do we need to do it again?

In short yes. This is because the collaborator’s situation may have changed since the original due diligence was carried out. The research project and budget may differ too, which will affect how the risk is assessed.

Will there be a central registry of due diligence reviews?

For the moment due diligence reviews will be retained with the application/grant file and all copies must be retained in accordance with the Records Retention Schedule.

What help is available?

The central Research Support Team is on hand to answer your queries at researchoperations@manchester.ac.uk