Workshop Outline Building Blocks – Definitions Proposal Stage Lunch Break Subawards Subcontracts

Workshop Outline Break FDP Subaward Agreement Monitoring, Invoicing, and Billing A-133, Closeouts and Audits

Definitions

Basic Concepts Financial Assistance– Provides support or stimulation to accomplish a public purpose. Award is a grant or cooperative agreement.

Basic Concepts Procurement – Purchase of goods and services to accomplish a government purpose; services can include research. Award is a contract.

Definition of Award Financial assistance that provides support to accomplish a public purpose. Includes grants and other agreements in the form of money or property in lieu of money by the federal government

Definition of Award Award does not include –Technical assistance –Loans, loan guarantees, interest subsidies, insurance –Direct payments of any kind to individuals, nor…

Definition of Award –Contracts, which are required to be entered into and administered under procurement laws and regulations

Definition of Subaward Financial assistance made by a recipient to an eligible subrecipient –Includes any financial assistance when provided by legal agreement, even if the agreement is called a contract

Definition of Subaward –Does not include the purchase of goods and services

Definition of Pass-Through Entity A non-federal entity that provides a federal award to a subrecipient to carry out a federal program

Definition of Recipient Organization receiving financial assistance from a federal agency to carry out a project or program

Definition of Recipient Term may include commercial, foreign or international organizations which are recipients and subrecipients

Definition of Subrecipient The legal entity to which a subaward is made and who is accountable to the recipient for the use of funds provided

Definition of Subrecipient See agency implementations of A-110 to determine what type of entity can be a subrecipient Note guidance on distinguishing between a subrecipient and a vendor

Subrecipient Agreements Funding from a prime recipient to a subrecipient to carry out specific program activities –May be termed a subgrant from an assistance award, or…

Subrecipient Agreements –May be termed a subcontract from a procurement award

Reference Documents OMB Circular A-21 OMB Circular A-110 OMB Circular A-113 FDP Subrecipient Template Code of Federal Domestic Assistance

Subrecipient vs. Vendor See OMB Circular A-133, __.210 Subject to same audit standards as recipients

Subrecipient vs. Vendor Payments received for goods and services are vendor agreements and not subject to audit as subrecipient agreements

Characteristics of a Recipient Also applies to subrecipients Determines who is eligible to receive what federal financial assistance

Characteristics of a Recipient Has performance measured against whether objectives of federal program are met Has responsibilities for programmatic decisions

Characteristics of a Recipient Responsible for adherence to applicable federal program compliance requirements

Characteristics of a Recipient Uses federal funds to carry out a (research), compared to providing goods or services for a program

Characteristics of a Vendor Provides goods and services within normal business operations and to many purchasers

Characteristics of a Vendor Operates in a competitive environment Provides goods and services ancillary to the operation of the federal program

Characteristics of a Vendor Not subject to compliance requirements of the federal program

Both Subrecipient and Vendor Substance of the relationship governs – need to know the detail of the relationship and desired outcomes Use judgement

In Practical Terms Use subaward when intent is to have another organization carry out the scope of work described in the proposal

In Practical Terms Generally, two or more qualified entities work collaboratively on a sponsored project, each with its own principle investigator

In Practical Terms Performance measured against scope of work Decides how to carry out own activities PI may be author/coauthor on publications

In Practical Terms Retention of title to intellectual property it develops is common

For-Profit Subrecipients A-133 does not apply Pass-through entity must establish requirements to ensure compliance by for profit subrecipient

For-Profit Subrecipients Include in agreement –Applicable requirements and responsibilities –May use pre- and post-award audits, ongoing monitoring, reporting, etc.

Today’s Terminology Subaward: Award to a subrecipient when prime award is assistance (grant or cooperative agreement) Subcontract: Award to a subrecipient when prime award is procurement (contract)

Case Studies 1 & 2

Proposal Stage

Reason For Subs Increasing emphasis on: –Big Science – Big Solutions –Multidisciplinary Research –Inter-Institutional Research –Shift Administrative Burden

Stages of Development Early Warning System Forging Partnerships Proposal Preparation

Early Warning System Pro-active Administration –Office of big grants –Dissemination of announcement

Early Warning System Pro-Active Faculty –Tell the right people –Inform them early on

Forging Partnerships Connected Faculty Connected Institutions Teaming Agreements

Address Relationship Address Responsibilities –Lead or sub Address Timing

Proposal Preparation Lead Institution –Provide schedule –Coordinate writing –Prepare complete budget

Proposal Preparation Subrecipient Institution –Provide statement of work –Provide budget –Provide institutional approval

Budgets Prime Budget –Your institution’s costs –Subrecipient’s budget as a line item

Budgets Sub Budget(s) –Each subrecipient is separate –Each with own F&A and cost-sharing

Checklist Statement of Work Budget Authorized Official’s Approval

Case Studies 3 & 4

Subawards

Purpose of a Subaward Legal instrument Protects agency’s and recipient’s interests Flow-down necessary requirements of prime award

Prior Approval Prior approval is required “for transfer of any work under an award” (A-110, __.25(c)(8)) –excludes supplies, material, equipment or general support services [vendor agreement]

Prior Approval Inclusion in proposal constitutes prior approval If for “research,” prior approval waived (A- 110, __.25(e)(4)) Some agencies have specific implementations.

Documentation Subawards are not subject to procurement requirements of OMB A-110 (__.40 to __.48), such as: –Open competition –Cost/price analysis

Documentation Stewardship - documentation for subawards should be consistent with good management practices…

Documentation Scope of Work Budget, consistent with federal sponsor’s requirements All required representations, certifications, and assurances

Documentation Signature by authorized official of subrecipient (not PI), indicating commitment to SOW, assuring reasonableness and accuracy of proposed costs, and agreeing to negotiate a subaward if proposal is awarded

Subrecipient Assessment Ability to perform successfully: Integrity Past performance Technical/financial resources Debarment/Suspension

Types of Subawards Cost-Reimbursement –Standard Fixed-Price –Rarely used

Subaward Content Identifying information –CFDA number –Prime funding source –Prime award number

Subaward Content –Statement of Work –Key Personnel –Period of Performance –Subaward Type (CR/FP) –Amount

Subaward Content –Invoicing/payment –Prior approval requirements –Cost-sharing requirements –Reporting requirements –Audit requirements

Subaward Content –Intellectual property terms –Equipment terms –Indemnification –Termination –Applicable cost principles

Subaward Content –Certs/Reps/Assurances –Flow-down requirements

Flow-Downs Substitution of nomenclature –Flow-downs must accurately reflect relationship between parties –Can be implemented by introductory paragraph

Subrecipient Issues Foreign Subrecipients –Public policy requirements (HS/AS, Assurances) –Payment, accounting practices

Subrecipient Issues Commercial/Industrial –Cost principles (FAR 31.2) –Profit/Fee (unallowable under some awards) –Intellectual Property

Subrecipient Issues Small Business –Potential conflict of interest (PI/institutional) –Cash flow/advance payments –Intellectual property

Case Studies 5 & 6

Subcontracts

Regulations Federal Acquisition Regulations (FAR) –Title 48 of the Code of Federal Regulations

Documentation Basis for subcontract selection –Open competition/sole-source –Subcontractor Reliability –Cost/Price Analysis

Documentation Difference between proposed and final amounts Contract Type Non-standard requirements

Prior Approval Addressed at FAR Required for all subcontracts: –Cost-Reimbursement –Time & Material –Labor Hour

Prior Approval Or, are fixed-price and exceed –greater of $100,000 or 5% (DoD, NASA, Coast Guard); or –$100,000 or 5% (civilian)

Prior Approval Unless, purchasing system has been approved through CPSR Contractor Procurement System Review (FAR 44.3)

Types of Subcontracts Cost-Reimbursement – normal for R&D Fixed-Price – normal for service & supply contracting. May be used for greater control over subcontractor performance

Flow-Downs As written By content By operation of law That assist in compliance with requirements of prime

For-Profit Subcontractors Cost-Principles – FAR 31.2 Admin. Requirements – FAR Verify rates with DCAA Profit/Fee needs scrutiny (7% is normal, 15% is maximum)

Subcontracting Plan If over $500,000, and required of contractor Review plan for completeness Incorporate into subcontract Incorporate their data into yours

Case Study 7

FDP Subaward Agreement

Subaward Agreement Form Federal Demonstration Partner-ship Project Applicable to all A-110 institutions, not just FDP

OMB Circular A-110 Remember Definitions Award – financial assistance Contract – procurement Subaward financial assistance, not procurement

Subaward Agreement Form Refer to Handout

ID Section Identify Parties Identify Prime and Sub Numbers Identify Sponsor and CFDA Number

ID Section Identify Period of Performance Identify Amount Identify Project Title Identify Non-Financial Reporting Requirements

Terms and Conditions Award Identification –Cost reimbursable –Identify statement of work

Terms and Conditions Financial Terms Notifications Liability Termination and Extensions Other Terms

Signatures Authorized Officials

Attachment 1 Required Certifications –Lobbying –Debarment –A-133

Attachment 2 Agency Specific Terms Special Terms and Conditions Institutional Variations

Attachment 3 Contacts Page

Attachment 4 Reporting Requirements

Attachment 5 Statement of Work Budget

Case Studies 8, 9 & 10

Monitoring, Invoicing & Billing

Basic Considerations Advance payment allowed in A-110 when prime gets advance payments

Basic Considerations Timing Issues –Payments and invoices –Financial status reports –“Expenditure rate” issues

Format of Invoices Specify level of detail desired in subrecipient agreement, but it should normally include…

Format of Invoice –Salaries –M&S –Travel –Cost-Sharing Equipment F&A (rate and amount Totals Current month and cumulative:

Subaward Monitoring – Financial Track subrecipient allocations separately Assessment of correct F&A, first $25K

Subaward Monitoring – Financial Process for review and approval of invoices –PI for programmatic –OSP for administrative/ financial

Subaward Monitoring – Financial Reimbursement for disallowances Verify cost-sharing commitments

Subaward Monitoring – Technical Scientific Progress Invention Reports Timely Submission of Deliverables Final Reports

Cost-Sharing Issues What did the proposal promise? What is in the subrecipient agreement? What documentation? Who monitors?

Closeout and Audit Close sub before closing prime Documentation –Assistance awards –Contract awards Audit

Assistance Awards Closeout Final Invoice Final Technical Report Final Invention Report Final Property Report

Assistance Awards Closeout PI Certification –Technical aspects –Expenditures reasonable

Contract Awards Closeout Subcontractor’s Certification Subcontractor’s Release Subcontractor’s Assignment of Rebates, Credits, Other Amounts

Contract Awards Closeout Small Business Contracting Report, if required

Audit Responsibilities Prime sets forth formal procedures for audit and monitoring Certificate of compliance with A-133 compliance supplement

Audit Responsibilities Documentation for subrecipients not subject to A-133 Issue management decision/ follow up

Audit Responsibilities Determine whether repayment and adjustment to pass-through entity’s records is appropriate

Cost/Price Analysis Assessment required of total costs –Desk review –Full audit of direct and F&A costs Formal Audit over $500K

Cost/Price Analysis –Risk Assessment  Amount of agreement  Subs performance under other awards  Type of subrecipient organization

Audit Steps Verify F&A Rate Review most recent A-133, where appropriate If not subject to A-133, may request assist audit, or perform audit yourself

Steps in Desk Review Compare and verify F&A Within total cost of subrecipient agreement Reasonable and accurate Cost-sharing

Steps in Desk Review Confirm programmatic work completed Special requirements for other types of agreements, used sparingly for research

Case Studies 11 & 12

Q & A