Receiving error when setting up Grants Internal Project

We are receiving the message, “Cannot create a Contract for an interunit Customer when the Classification is Standard.  The Customer selected in the Proposal is defined as an Interunit Customer.  An interunit Customer may not be used with a Contract Classification other than internal.”, when trying to generate an award.

This is the first time that we've had to setup an internal project since upgrading to Financials 9.2.    I have attached a copy of the screen shot.  The navigation is Grants --> Sponsors -->  General Information, click on the "Bill To Options" and it is located under the InterUnit Billing Header.