Subcontract Management

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Subcontract Management
2
Objectives

• Understand the distinction between a subaward and
  a purchased service
• Know your monitoring and compliance
  responsibilities
• Be able to create and amend a purchase
  requisition for a subaward agreement
• Understand the process of FA recovery when
  subawards are involved

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Definitions

• Award
• Subaward
• Prime Recipient
• Subrecipient
• Statement/Scope of Work

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Federal Award

• Financial assistance that provides support or
  stimulation to accomplish a public purpose.
• Awards include grants and other agreements in the
  form of money or property in lieu of money, by
  the Federal Government to an eligible recipient.
• It does not include procurement contracts, used
  to buy goods or services from vendors.

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Subaward

• Subaward means an award of financial assistance
  in the form of money, or property in lieu of
  money, made under an award by a recipient to an
  eligible subrecipient or by a subrecipient to a
  lower tier subrecipient.
• It does not include procurement contracts, used
  to buy goods or services from vendors.

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Prime Recipient

• The prime recipient is the entity that is the
  direct recipient of the sponsors funds and in
  this capacity assumes a number of
  responsibilities, including management of
  subawards.

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Subrecipient

• Subrecipient means the legal entity to which a
  subaward is made and which is accountable to the
  recipient for the use of the funds provided.

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Statement of Work

• The statement of work outlines the procedures and
  methods the subrecipient will employ in
  accordance with the goals of the project proposed
  by the prime recipient.

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Purchased Service vs. Subaward Agreement

• Usually the distinction between the two is clear
  but when its notlook out
• It is important to understand the relationship in
  order to use the proper mechanism
• Statutory requirements for procurement of
  services is quite different from those of
  subawards

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Definitions of Purchased Service

• US Code, Title 31, Subtitle V, Chapter 63,
  Section 6303, Using procurement Contracts
• The principle purpose of the instrument is to
  acquire (by purchase, lease, or barter) property
  or services for the direct benefit or use of the
  US Government

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Definitions of Purchased Service

• OMB Circular A-133, Section ___210
• (c) Payment for goods and services.
  Characteristic indicative of a payment for goods
  and services received by a vendor are when the
  organization
• (1) Provides the goods and services within
  normal business operations
• (2) Provides similar goods or services to many
  purchasers
• (3) Operates in a competitive environment
• (4) Provides goods or services that are
  ancillary to the operation of the Federal
  program and,
• (5) Is not subject to compliance requirements of
  the Federal Program.

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Definitions of a Subaward

• US Code, Title 31, Subtitle V, Chapter 63,
  Section 6304, Using Grant Agreements
• The principle purpose of the relationship is to
  transfer a thing of value to the State, local
  government, or other recipient to carry out a
  public purpose of support or stimulation
  authorized by a law of the US instead of
  acquiring (by purchase, lease, or barter)
  property or services for the direct benefit of
  the US Government and,
• Substantive involvement is not expected between
  the executive agency and the State, local
  government, or other recipient when carrying out
  the activity contemplated in the agreement.

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Definitions of a Subaward

• OMB Circular A-133, Section ___210
• (b) Federal award. Characteristics indicative of
  a Federal award received by a subrecipient are
  when the organization
• Determines who is eligible to receive what
  Federal financial assistance
• Has its performance measured against whether the
  objectives of the Federal program are met
• Has responsibility for programmatic
  decision-making
• Has responsibility for adherence to applicable
  Federal program compliance requirements and,
• Uses the Federal funds to carry out a program of
  the organization as compared to providing goods
  or services for a program of the pass-through
  entity.

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Tips for Determining the Best Mechanism

• Where a preponderance of the funding is being
  spent
• Avoid trying to circumvent the charging of FA
• Focus on the nature of the relationship
• Can you defend it to the auditors, prime
  sponsors, the news media, and the general public
• Beware of consultants they will not be subawards

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Subaward Process - Proposal Phase

• For NIH grant applications or other programs
  using NIH forms - ORSP will need a signed
  application face page and checklist from the
  organization to which we are subcontracting.
• For non-NIH applications ORSP will need a
  signed letter of intent to form a subcontract
  agreement
• Scope of work is also helpful.

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Subaward Process - Proposal Phase

• New NIH budget pages
• Be careful when calculating FA costs when
  subcontracts are involved
• The subrecipient will request their full FA rate
  from the prime recipient
• Consequently, the amount up to 25,000 that is
  passed through is charged FA by both the prime
  recipient and the subrecipient

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Subaward Process

• ORSP will need budget, scope of work, and contact
  information.
• Mailed to subcontract organization along with
  disclosure forms
• When returned, PI signs, Tim Atkinson signs
• ORSP sends out an ORSP Cover Page to
  department.
• Purchase Order sent to ORSP who sends to
  subcontractor.
• Please be patient!

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Subcontract Amendments

• ORSP will need budget for new year, carryover
  amount (if any), changes to scope of work (if
  any).
• Same process as original subcontract, just fewer
  pages.

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Responsibilities

• ORSP is responsible for the development of the
  subaward and for inclusion of all applicable OMB
  requirements, disclosures, and for obtaining the
  proper signatures on the subaward
• PI/Department Administrators are responsible for
  monitoring periodic progress reports and invoices
  from the subrecipients for compliance with the
  terms of the agreement.

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Responsibilities

• Grants Accounting is responsible for monitoring
  the subrecipients compliance with audit,
  financial and equipment reporting requirements.
• Desk Audits
• Financial Reporting
• A-133 Audit results

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Basis for FA

• FA costs shall be distributed to applicable
  sponsored agreements . consisting of all
  salaries and wages, fringe benefits, materials
  and supplies, services, travel, and subawards up
  to the first 25,000 of each subaward

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How to Calculate FA for Subawards

• What would the indirect cost recovery be for each
  year of the grant under the following conditions,
  presuming a 10 indirect cost rate with three
  subawards?

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FA Calculation
Year 1 Year 1 Year 2 Year 2 Year 3 Year 3
Contract Invoiced Contract Invoice Contract Invoice
1 10,000 10,000 10,000 10,000 10,000 5,000
2 25,000 15,000 25,000 25,000 25,000 35,000
3 30,000 10,000 30,000 30,000 30,000 35,000
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FA Calculation
Year 1 Year 1 Year 2 Year 2 Year 3 Year 3
Contract Invoiced Contract Invoice Contract Invoice
1 10,000 10,000 10,000 10,000 10,000 5,000
2 25,000 15,000 25,000 25,000 25,000 35,000
3 30,000 10,000 30,000 30,000 30,000 35,000
35,000
3,500
All
All
All
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FA Calculation
Year 1 Year 1 Year 2 Year 2 Year 3 Year 3
Contract Invoiced Contract Invoice Contract Invoice
1 10,000 10,000 10,000 10,000 10,000 5,000
2 25,000 15,000 25,000 25,000 25,000 35,000
3 30,000 10,000 30,000 30,000 30,000 35,000
35,000 35,000
3,500 3,500
All
10,000
15,000
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FA Calculation
Year 1 Year 1 Year 2 Year 2 Year 3 Year 3
Contract Invoiced Contract Invoice Contract Invoice
1 10,000 10,000 10,000 10,000 10,000 5,000
2 25,000 15,000 25,000 25,000 25,000 35,000
3 30,000 10,000 30,000 30,000 30,000 35,000
35,000 35,000 5,000
3,500 3,500 500
All
none
none
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Questions?