Subagreements The Ties that Bind UCR and Third Parties

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Subagreements - The Ties that Bind UCR and Third
Parties
UCR Contract and Grant User Group Meeting January
10, 2006

• Prepared by the Office of Research
• And
• UCR Accounting Services

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Key Terms and Definitions
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Key Terms and Definitions

• Subagreements any type of third-party agreement
  under a prime UCR extramural award
• It is the nature of the work performed by the
  third-party relative to the prime award scope of
  work that determine the appropriate form of
  subagreement to be used
• Subagreement examples include Subgrant,
  Subcontract, Purchase Order, Consulting Agreement

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Key Terms and Definitions

• Vendor agreements
• Used for acquiring goods and services from
  commercial entities
• Examples include purchase orders and consultant
  agreements
• Subawards
• Used to obtain research or research-related
  services from third parties or the performance of
  a substantive portion of the prime award scope of
  work (SOW)
• Examples include subcontracts and subgrants

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Definitions Visual Representation
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Federal Regulations Applicable to Subawards

• OMB Circular A-110
• Uniform Administrative Requirements for Grants
  and Agreements with Institutions of Higher
  Education, Hospitals, and Other Non Profit
  Organizations
• Includes a section on procurement standards and
  addresses UCRs requirements regarding subaward
  administration

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Federal Regulations Applicable to Subawards

• OMB Circular A-133
• Audits of States, Local Governments, and
  Non-Profit Organizations
• Includes an annual supplement to auditors
  directing them how to perform audits of grantee
  recipients and the expectations for monitoring
  subrecipients (a type of third party)
• Federal Acquisition Regulations (FAR)
• Requirements for subawards under prime federal
  contracts

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Process and Responsibilities Proposal
Development and Submission
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Third-Partys Proposal Whats Needed for the
Proposal?

• The minimum needed
• Depends on sponsor requirements
• A budget, a scope of work and approval of the
  third-partys institutional official
• This is rarely the third-partys PI
• Information from third-party is usually
  incorporated in UCRs proposal

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Third-Partys Proposal What is Reviewed and by
Whom?

• Principal Investigator
• Secure third partys proposal
• Assess technical capabilities, qualifications of
  research team, facilities resources
• Reasonableness of costs

• Research Office
• Compliance with cost principles
• Reasonableness of cost
• Verify F A cost rates
• Certifications assurances
• Secure entity identification numbers
• Verify debarment and suspension status
• Authorized officials approval

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Process and Responsibilities Once the Prime
Award is Received
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Authorization to Issue Subaward

• Sponsor authorization - general rule
• If prime is a grant or cooperative agreement and
  the subaward was included in the proposal, then
  absent any special sponsor requirements, no prior
  approval is required
• If prime is a contract, prior approval is
  required most of the time even if the proposed
  subaward was included in the proposal

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Authorization to Issue Subaward

• PI authorization
• Secured by OR usually via e-mail
• Closely audited element
• OR is developing form to help facilitate securing
  the PIs authorization and confirming subaward
  details

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Assessment of Third-Party

• A risk assessment needs to be conducted to
  determine the level of risk and assist in
  determining the appropriate terms and
  requirements
• More risk special requirements and close
  monitoring
• Less risk standard requirements and routine
  monitoring

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Assessment of Third-Party

• Past experience?
• First time or history of collaborations?
• Designated cognizant audit agency?
• Negotiated and approved FA cost rate?
• If not, what is the basis for the proposed rates?
• A-133 audit report or audited financial
  statements?
• Resolution of findings
• Appropriate financial controls systems?
• Approved purchasing equipment management
  systems?

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Assessment of Third-Party

• Size of subaward and complexity of program
  relative to third partys capacity
• Does the third party have a central Sponsored
  Programs Office?
• Domestic v. foreign
• Cost sharing commitment - tracking reporting

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Selection Structure of Subaward

• FDP Subaward Agreement
• Template used for subawards to FDP participants
  under FDP award terms
• Complete form fields and include special
  conditions from prime award
• Non-FDP Subaward Agreement
• Template used for subawards to non-profits not
  participating in the FDP and can be used with
  either FDP or non-FDP prime award terms
• Complete form fields and include special
  conditions from prime award
• January 4, 2005, Memorandum from the Executive
  Office of the President
• Endorses broad use of the model agreements
  created by the FDP

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Selection Structure of Subaward

• Subcontract
• Used for subawards to for-profits and state,
  local and tribal governments under federal prime
  awards
• Cost-reimbursement v. fixed price
• Payment method and schedule
• Invoicing - level of detail
• Reporting requirements
• Type, frequency and formats
• Compliance requirements
• Human and animals subjects, rDNA, human embryonic
  stem cells conflicts of interest
• Exchange of research materials
• Flow downs
• Prime award terms
• Certifications and assurances

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Subaward Negotiations

• FDP Subaward Agreement
• Widely accepted
• In general, requires little to no negotiation
• Non-FDP Subaward Agreement
• Widely accepted
• In general, requires some negotiation
• Subcontracts
• Negotiations may range from none to extensive

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Subaward Notice of Award

• Subaward documents are scanned and made available
  through PAMIS
• E-mail notification is sent to PI, Department and
  Accounting
• OR is working to automate this notification
  process

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Process and Responsibilities Monitoring the
Third Party
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Subaward Monitoring

• Starts with the third partys proposal and
  extends through close out
• Shared responsibility
• PI responsible for technical, performance and
  financial monitoring
• Department responsible for assisting in
  performance and financial monitoring
• OR responsible for institutional monitoring and
  resolving non-performance and non-compliance
  concerns

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Subaward Monitoring

• Technical monitoring
• Progress commensurate with claimed costs?
• Project delays or results leading in unexpected
  direction?
• Timely submission of progress reports?
• Prior approval for SOW changes?
• Assessing impact of prime SOW change on third
  partys work plan
• Concerns reported to OR?

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Subaward Monitoring

• Institutional issues
• Debarment / suspension status
• A-133 audit verification and resolution of
  findings, if any
• Compliance issues Human and animals subjects,
  rDNA, human embryonic stem cells conflicts of
  interest
• Annual approvals, training, continued FWA
• Invention, property, SB/MBE/WBE reporting

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Subaward Monitoring

• Financial issues
• Does the amount to be paid exceed the amount
  obligated?
• Are invoice dates within subaward dates?
• Were agreed upon F A costs rates used?
• Are costs allowable, allocable and reasonable?
• Have cost sharing commitments been fulfilled?
• Does the third partys invoice request
  reimbursement for any disallowed costs?

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Subaward Monitoring

• Report any of the following to the OR if the
  third party
• Fails to perform the SOW
• Requests to change SOW
• Fails to fulfill reporting obligations or provide
  deliverables
• Breaches any material terms of the subaward
• Request a change in their PI or provides notice
  that their PI will leave (or has left) the third
  party entity

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Process and Responsibilities Post-Award
Changes, Accounting Issues and Close-out
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Post-Award Changes to Subaward

• May result from
• Information derived from subaward monitoring
• Necessity to flow down prime award changes
• Coordinate all post-award changes through OR
• Examples of changes
• No cost extension
• Increase/decrease in allocated funds, usually
  associated with change in scope
• Release of incremental funds
• Termination
• For convenience or breach

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Accounting Issues

• Invoice processing
• Contractor invoice to Accounts Payable
• Accounts Payable to PI for approval
• PI to Accounts Payable for processing
• Lien removal
• Process has changed in UCRFS 8
• Procedures being finalized

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Subaward Closeout

• Financial reviews
• Disallowances, proper rates, restricted costs,
  final payment withheld pending closeout
• Project performance
• Project deliverables, timely report submission,
  verify completion of project tasks
• Fulfilled obligations
• Patent, Property, SB/MBE/WBE reports
• Compliance issues
• A-133 reports, debarred/suspended, compliance
  committee approvals, certifications and assurances

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Keys to Success

• Communication with PI
• Communication with third party
• Communication with OR
• Communication with Accounting
• Knowing the correct office to which questions
  should be directed
• Knowing the flow of subaward processes

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Questions Continued Discussion