Subcontract Management

Objectives Understand the distinction between a subaward and a purchased serviceUnderstand the distinction between a subaward and a purchased service Know your monitoring and compliance responsibilitiesKnow your monitoring and compliance responsibilities Be able to create and amend a purchase requisition for a subaward agreementBe able to create and amend a purchase requisition for a subaward agreement Understand the process of F&A recovery when subawards are involvedUnderstand the process of F&A recovery when subawards are involved

Definitions AwardAward SubawardSubaward Prime RecipientPrime Recipient SubrecipientSubrecipient Statement/Scope of WorkStatement/Scope of Work

Federal Award Financial assistance that provides support or stimulation to accomplish a public purpose.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.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.It does not include procurement contracts, used to buy goods or services from vendors.

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.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.It does not include procurement contracts, used to buy goods or services from vendors.

Prime Recipient The prime recipient is the entity that is the direct recipient of the sponsor’s funds and in this capacity assumes a number of responsibilities, including management of subawards.The prime recipient is the entity that is the direct recipient of the sponsor’s funds and in this capacity assumes a number of responsibilities, including management of subawards.

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.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.

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.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.

Purchased Service vs. Subaward Agreement Usually the distinction between the two is clear – but when it’s not…look outUsually the distinction between the two is clear – but when it’s not…look out It is important to understand the relationship in order to use the proper “mechanism”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 subawardsStatutory requirements for procurement of services is quite different from those of subawards

Definitions of Purchased Service US Code, Title 31, Subtitle V, Chapter 63, Section 6303, Using procurement Contracts: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…

Definitions of Purchased Service OMB Circular A-133, Section ___210: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.

Definitions of a Subaward US Code, Title 31, Subtitle V, Chapter 63, Section 6304, Using Grant Agreements:US Code, Title 31, Subtitle V, Chapter 63, Section 6304, Using Grant Agreements: (1)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, (2)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.

Definitions of a Subaward OMB Circular A-133, Section ___210:OMB Circular A-133, Section ___210: (b) Federal award. Characteristics indicative of a Federal award received by a subrecipient are when the organization: (1)Determines who is eligible to receive what Federal financial assistance; (2)Has its performance measured against whether the objectives of the Federal program are met; (3)Has responsibility for programmatic decision-making; (4)Has responsibility for adherence to applicable Federal program compliance requirements; and, (5)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.

Tips for Determining the Best Mechanism Where a preponderance of the funding is being spentWhere a preponderance of the funding is being spent Avoid trying to circumvent the charging of F&AAvoid trying to circumvent the charging of F&A Focus on the nature of the relationshipFocus on the nature of the relationship Can you defend it to the auditors, prime sponsors, the news media, and the general publicCan you defend it to the auditors, prime sponsors, the news media, and the general public Beware of consultants – they will not be subawardsBeware of consultants – they will not be subawards

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 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”For non-NIH applications – ORSP will need a signed “letter of intent to form a subcontract agreement” Scope of work is also helpful.Scope of work is also helpful.

Subaward Process - Proposal Phase New NIH budget pagesNew NIH budget pages Be careful when calculating F&A costs when subcontracts are involvedBe careful when calculating F&A costs when subcontracts are involved The subrecipient will request their full F&A rate from the prime recipientThe subrecipient will request their full F&A rate from the prime recipient Consequently, the amount up to $25,000 that is passed through is charged F&A by both the prime recipient and the subrecipientConsequently, the amount up to $25,000 that is passed through is charged F&A by both the prime recipient and the subrecipient

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

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

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 subawardORSP 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.PI/Department Administrators are responsible for monitoring periodic progress reports and invoices from the subrecipients for compliance with the terms of the agreement.

Responsibilities Grants Accounting is responsible for monitoring the subrecipient’s compliance with audit, financial and equipment reporting requirements.Grants Accounting is responsible for monitoring the subrecipient’s compliance with audit, financial and equipment reporting requirements. –Desk Audits –Financial Reporting –A-133 Audit results

Basis for F&A F&A 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 …F&A 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 …

How to Calculate F&A 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?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?

Year 1Year 2Year 3 ContractInvoicedContractInvoiceContractInvoice 110,000 5, ,00015,00025,000 35, ,00010,00030,000 35,000 F&A Calculation

Year 1Year 2Year 3 ContractInvoicedContractInvoiceContractInvoice 110,000 5, ,00015,00025,000 35, ,00010,00030,000 35,000 3,500 F&A Calculation All

Year 1Year 2Year 3 ContractInvoicedContractInvoiceContractInvoice 110,000 5, ,00015,00025,000 35, ,00010,00030,000 35,000 3,500 F&A Calculation All 10,000 15,000

Year 1Year 2Year 3 ContractInvoicedContractInvoiceContractInvoice 110,000 5, ,00015,00025,000 35, ,00010,00030,000 35,000 5,000 3, F&A Calculation All none

Questions?