Procedure
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Governing Policy
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Introduction
Sponsored projects funded by external awards are usually performed exclusively by the University’s own faculty, staff and students. Periodically, however, a significant portion of the required work may need to be provided outside the University by a third party. The third party is responsible for a discrete portion of the project, providing the leadership and direction of a responsible investigator and the resources necessary to conduct that portion of the work. Costs associated with this work may include personnel costs, supplies, equipment, travel, facilities and administrative (F&A) costs, and other direct costs as may be allowed by the sponsor. Such an arrangement is carried out through the issuance of a subaward agreement.
Differentiating Types of Relationships: Contractor/Vendor vs Subrecipient
The proper classification of a collaborator as a contractor or subrecipient is initially done by the Principal Investigator (PI) during the proposal process. The PI will determine whether the classification is that of a contractor (contractor/vendor) – an entity that is providing goods/services within its normal business operations and where the compliance requirements need not be flowed down or adhered to by the contractor/vendor – or that of a subrecipient – an entity that will have responsibility for programmatic decision making and/or an intellectually significant portion of the programmatic effort of the overall project. This determination is critical to ensure proper accounting for costs and compliance with requirements. There are laws and regulations surrounding subawards, and the University follows the Uniform Guidance 2 CFR 200 for all of its outgoing subawards, regardless of the funding source. For assistance see the FDP checklist to determine subrecipient or contractor classification (PDF). Departmental staff may also take advantage of the subaward classes in the SPECTRUM training program to help their faculty properly classify this type of transaction. SPA has the final responsibility for determining the classification of the transaction. Misclassification may result in delays of subaward processing and failure to include or exclude Facilities and Administrative (F&A) costs will lead to significant errors in budget calculations.
Pre-Award/Proposal Development: Inclusion of Subaward in Proposal
The prospective subrecipient submits required documents (including but not limited to a signed Commitment Form (PDF), budget, budget justification and statement of work) to the Principal Investigator (PI). The PI reviews these documents and approves the subrecipient to be included in the proposal. The Fair and Reasonable Cost Analysis Form (DOC) is available to assist the PI in assessing the subrecipient’s costs when conducting their review. The PI through their department’s administrative staff includes subaward details in the proposal that is submitted to Sponsored Projects Administration (SPA).
In instances where a need for a subaward is determined after the award is made, the new subaward must typically be approved by the sponsor before the subaward process explained above can begin.
Any revised subaward documentation from the potential subrecipient must be forwarded to SPA for review and, if necessary, submission to the sponsor.
Subaward Roles and Responsibilities should be used as a reference tool for guidance through the entire subaward process.
Post-Award/Time of Award: Subaward Initiation
Upon receiving a sponsored award that includes a subaward, SPA will work closely with the PI and Department Research Administrator (DRA) to issue each subaward. To initiate the subaward process, SPA will contact the PI and DRA requesting updated subaward information and asking for any special requirements (e.g., special reporting) desired for the subaward.
The University is required to perform a risk assessment in order to evaluate the likelihood that a subrecipient will fail to comply with the requirements of the subaward agreement. This risk assessment is handled by SPA prior to the issuance of the subaward agreement in addition to other agency specific requirements (i.e. FFATA, FCOI, Debarment, Audit and Financial Questionnaire review, etc.).
If sponsor approval of the subaward document is needed, SPA will obtain that approval. SPA will also validate the classification prior to issuing the subaward to make sure it meets the definition of a subaward; SPA has the final responsibility for determining the classification of the transaction. If the transaction was misclassified at time of proposal, sponsor approval may be required, and F&A charges may need to be adjusted. Once all of the required subaward documents are received and reviewed, a subaward agreement or subcontract is executed by the University, through SPA, and the subrecipient. SPA provides a copy of the fully executed subaward to the PI and department administrator and processes the subaward to establish a purchase order.
Subawards cannot be issued and the University will not agree to cover costs for a subrecipient prior to the University receiving its own award from the sponsor. In some cases, however, subrecipients may use their own institutional pre-award spending authority to begin spending funds they anticipate under a subaward.
Managing Subawards
Subrecipient Monitoring
The University has the responsibility throughout the life of the subaward to monitor the activities of subrecipients in accordance with the subaward agreement, to ensure that awarded funds are used for authorized purposes in compliance with the provisions of the prime sponsored award terms and conditions, and to ensure the statement of work is achieved. The PI and DRA should jointly determine the frequency and scope of departmental monitoring procedures. A risk-based approach to subrecipient monitoring is recommended with the frequency and intensity of monitoring driven by the terms of the prime sponsor award. PIs are responsible for regularly monitoring the technical progress of the subrecipient using a variety of means to make this determination. The PI might receive informal progress reports via phone conversations, email communication, face-to face discussions, or more formal written technical reports or other deliverables with specific due dates. If written progress reports are required, PIs must request that SPA includes the reports needed and frequency in the terms of the subaward. More information may be found in the Subaward PI Quick Guide (PDF).
Invoice Processing
When a subaward is issued under a sponsored award, the University, as the pass-through entity and the PI have obligations for oversight of the entire project. The PI is responsible for the subrecipient’s performance, including appropriate monitoring of a subrecipient’s costs based on the payment terms and subaward budget. Subaward invoices are submitted to [email protected] for review and processing, and are paid by SPA after the review and approval of the PI.
Subaward Modifications
The PI/DRA must notify SPA of modifications to the subaward. Modifications may be issued for a variety of circumstances, including changes to the statement of work, incremental funding, no-cost extension, PI leaving, or early termination.
SPA will issue modifications to the subrecipient in order for a modification to a subaward agreement to be considered official.
Subaward Closeout
The close-out process of subawards can be initiated by one of two occurrences. The first is the receipt of a final invoice, and the second is following the conclusion of the project as determined by the period of performance. The PI should contact the subrecipient 90 days prior to the end of the period performance to confirm the status of the project. The University is typically required to submit its final report(s) (financial and technical) within a specific time frame after project termination, as specified in the prime award. In order to comply with this award requirement, the subaward final invoice, final technical report(s) and Subaward Release Form (DOCX) must be submitted to SPA within the specified time frame identified in the subaward agreement following termination of the subaward.