Subcontracts Subcontractor or Vendor How do you know?

Vendor A Vendor is a person or organization that provides the same or similar services to any customer without altering its product. A Vendor will not have any creative input to the completed project and its services are considered ancillary to the project. Special reports from the Vendor are normally not required (such as patent or inventory reports).

Subcontractor When a portion of the scope of work is split off from the principal investigator's project, to be conducted off-site under the direction of a third party, usually another University or Company, this is considered a Subcontractor rather than a Vendor.

Characteristics of a Subcontract include: The Subcontract has its performance measured against the objectives of its portion of the scope of work of the UA's program. The Subcontractor has responsibility for programmatic decision making. The Subcontractor has responsibility for adherence to applicable sponsor program compliance requirements.

The Subcontractor uses the funds to carry out its own portion of the scope of work, as contrasted with providing goods or services to the University.

Sole Source Justifications Why do we need an SSJ if we name a Subcontractor in the proposal? The State of Arizona has requirements in place that require that each purchase is appropriately justified either by going out to bid, using an approved vendor, or through a sole source justification. Since most Subcontracts are a collaborative effort, a SSJ is the most appropriate type of justification.

Sole Source Justifications The SSJ asks the UA PI to answer three questions: Why was this particular Subcontractor selected to perform the work? Were competitive bids sought? Do you or any member of your project staff, or any member of your immediate families, have any personal or financial interest in the proposed Subcontractor?

Subcontract Monitoring

Why is Monitoring Required? State and Federal regulations require that funds be spent appropriately, in benefit of the project that is being funded. State laws precludes any University employee from using University funds to “gift” any other person or organization. Monitoring the Subcontractor performance ensures that no “gift” has been given and there is no perception that this has occurred.

Risk Assessment At the beginning of each new Subcontract, ORCA assigns a level of risk based on: Dollar Amount Type of Subcontractor Previous agreements with Subcontractor Previous performance of Subcontractor Deliverables of the Subcontract

Why is a Risk Level Assigned? It makes good sense to have different levels of monitoring occur based on the deliverables or outcomes of a Subcontract project Federal regulations require that a prime award recipient monitor the activities of its Subcontractor

Low Risk Subcontract is valued <$100,000 Subcontractor is an FDP school Subcontractor has had previous Subcontracts and has completed them in a cost effective and timely manner Deliverables are modest or only a final report

Medium Risk Subcontract is valued between $100,000 and $1,000,000 UA has not previously subcontracted to this organization Subcontractor is using new personnel or substantially changed systems Deliverables are embedded in UA output to the Sponsor (not just reports) Subcontract is subject to environmental concerns

High Risk Subcontract is valued at >$1,000,000 Large percentage of award is passed through to Subcontractor The project is complex with a higher risk to UA if Subcontractor does not perform and provide the deliverables of the Subcontract scope of work or is non compliant with requirements of the Subcontract

Subcontractor has a history of non compliance either as a Subcontractor or as a recipient of a prime award

PI and Department Responsibilities in Monitoring Subcontractors Ensure that only Allowable Costs are being claimed Was it approved in the budget? If not, is the deviation reasonable? Does it benefit the project? Is the timing of the expenditure appropriate for the project? Is the expenditure within the project period? Is there enough documentation to support the decision to make payment?

Ensure that Project performance measures are being met Are any necessary reports being received in a timely manner and is the Subcontractor in compliance with terms of the agreement? Are the deliverables progressing as required by the Scope of Work? Can the UA portion of the work continue as required in our Scope of Work?

Ensure that all documentation that was used to determine appropriateness of payment is maintained for at least five years after the closeout of the Subcontract Ensure that all cost sharing documentation is maintained in accordance with the guidelines as delineated in the Principal Investigators Handbook