1. University Research Services and Administration Subawards May 27, 2010 1

2. Agenda  Training objective To provide an overview of the subcontracting process through topics covering: To provide an overview of the subcontracting process through topics covering: Establishing a subcontract relationshipEstablishing a subcontract relationship Issuing a SubcontractIssuing a Subcontract Budgeting and Spending on a SubcontractBudgeting and Spending on a Subcontract Subcontractor MonitoringSubcontractor Monitoring

3. Definition and Character  Defined by OMB A 110: “Subaward means an award of financial assistance in the form of money or property in lieu of money, made under an [prime] award by a recipient to an eligible subrecipient.... may be called a contract but does not include procurement of goods and services” “Subaward means an award of financial assistance in the form of money or property in lieu of money, made under an [prime] award by a recipient to an eligible subrecipient.... may be called a contract but does not include procurement of goods and services”  Sometimes referred to as subcontracts, subagreements, subgrants, and purchase orders 3

4. Establishing the Relationship  Risk Assessment Matrix  New Subcontractor – check the federal and state debarment websites  Determine if role is “subcontractor vs. consultant vs. vendor”  Important to classify the relationship properly because: a. Impacts the budget b. Potential audit finding 4

5. What’s the Difference Subcontractor - Key person is acting as a collaborator or co-investigator and contributing to a significant portion of the scholarly/scientific work of the project Key person is acting as a collaborator or co-investigator and contributing to a significant portion of the scholarly/scientific work of the project The work to be accomplished is an identifiable segment of the project with a separate scope of work The work to be accomplished is an identifiable segment of the project with a separate scope of work Adheres to applicable program compliance requirements Adheres to applicable program compliance requirements Responsible for assisting in the completion of project deliverables and/or technical reports Responsible for assisting in the completion of project deliverables and/or technical reports Terms and conditions of prime award flows down to the subcontractor Terms and conditions of prime award flows down to the subcontractor 5

6. Establishing A Subcontract Consultant - Individual who provides professional or highly technical advice, an expert who sets own work hours; considered “work for hire” Individual who provides professional or highly technical advice, an expert who sets own work hours; considered “work for hire” University controls the results but not the manner in which the service is performed University controls the results but not the manner in which the service is performed Vendor - Provides goods and services within normal business operations ; similar goods or services are provided to many different purchasers; operates in a competitive environment Provides goods and services within normal business operations ; similar goods or services are provided to many different purchasers; operates in a competitive environment Program compliance requirements do not pertain to the goods or services provided Program compliance requirements do not pertain to the goods or services provided 6

7. Scenario One Dr. Howard with Building Great Minds (BGM) will conduct six professional development training workshops for math and science teachers participating in STEM, a program designed to train educators how to teach science, technology, engineering and math to students in urban high schools. The total annual costs of $125,000 includes travel, per diem, and costs per workshop. CO NSULTANT 7

8. Scenario Two  Dr. Hilliard, faculty member at the University of Texas, will serve as a collaborator on a five year NSF grant with Dr. Williams in Risk Management and Insurance. He will be responsible for identifying the sample group, collecting and analyzing the data, and writing research findings. His total budget is $225,000 over the grant period at $45,000 annually. SUBCONTRACT 8

9. Scenario Three Dr. Diaz in the Department of Real Estate has a project with the Georgia Real Estate Commission for the purpose of creating and maintaining an internet-based real estate information database. Computer services are being provided by Dataliant, Inc., who has extensive experience in creating and maintaining sites for colleges and universities. 9 VENDOR

10. Establishing Subcontractor in Spectrum  Separate budget lines are created for each subcontractor on an award during the “generate award” process  PS Grants have the capability to create 18 subcontractors  753111-753119 Subcontracts > $25,000  753121-753129 Subcontracts ≤ $25,000 10

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12. Issuing a Subcontract  Complete Request for Subcontract form, attach budget and statement of work, secure PI’s signature on form, and send to the Office of Sponsored Proposals & Awards (OSPA)  OSPA Staff creates a subcontract using the FDP template  OSPA Staff attaches to the subcontract the statement of work, budget, and prime award  OSPA Officer reviews the subcontract for accuracy before sending electronically to subcontractor for signature 12

13. Executing A Subcontract  Subcontractor reviews agreement for accuracy if agreeable, signs the agreement and return to OSPA if agreeable, signs the agreement and return to OSPA If not, negotiates terms and conditions, before signing and returning to OSPA If not, negotiates terms and conditions, before signing and returning to OSPA 13

14. Executing A Subcontract  GSU’s AOR signs the agreement and a copy of the fully executed agreement is sent back to the subcontractor for official records  OSPA sends an electronic copy to PI and Business Manager along with pink sheet  Business Manager must enter a PO in Spectrum to encumber funds 14

15. Budgeting and Spending  It is best practice to encumber the funds associated with the subaward to ensure that the funds are obligated on the overall project budget  A purchase requisition should be initiated in Spectrum+ prior to submission of invoices and PO issued to establish the encumbrance of the funds  Subaward invoices should be processed against the PO and encumbrance reduced accordingly 15

16. Budgeting and Spending  On Subawards, Georgia State University is only allowed to calculate indirect cost on or up to the first $25,000 expended on each subaward.  G/L Expense Codes are used to properly allocate Subaward Expenditures 753111-753119 Subcontracts > $25,000 753111-753119 Subcontracts > $25,000 753121-753129 Subcontracts ≤ $25,000 753121-753129 Subcontracts ≤ $25,000 16

17. Budgeting and Spending  Subawards should be budgeted and expended based on the Subaward No. assigned by the Office of Sponsored Proposals & Awards on the “Research Subaward Agreement”. 17

18. Budgeting and Spending  For example, if the Subaward No. is SP00010201-03 has an award amount of $75,000, the funds should be budgeted on as: SUB003 - $50,000 SUB003 - $50,000 SUBX03 - $25,000 SUBX03 - $25,000  And should be expended as: 753113 - $50,000 753113 - $50,000 753123 -$25,000 753123 -$25,000 18

19. Case Study  The Dr. Yu in the Chemistry Depart has a NIH project that has issued three subawards. SP00010302-01-Emory University-$24,000; SP00010302-02-Baylor University-$105,000; SP00010302-03-Chemtech, Inc-$27,500.  How should the subawards be budgeted: Emory - SUBX01 -$24,000 Emory - SUBX01 -$24,000 Baylor - SUBX02-$25,000 and SUB002-$80,000 Baylor - SUBX02-$25,000 and SUB002-$80,000 Chemtech-SUBX03-$25,000 and SUB003-$2,500 Chemtech-SUBX03-$25,000 and SUB003-$2,500 19

20. Case Study  Dr. Yu received invoices for subaward reimbursements from Baylor University-$35,000 and Chemtech, Inc.-$20,000  What expenses codes should be reflected on the vouchers for payments? Baylor University - 753122 -$25,000 Baylor University - 753122 -$25,000 -753112 -$10,000 -753112 -$10,000 Chemtech,Inc. - 753123 - $20,000 Chemtech,Inc. - 753123 - $20,000 20

21. Budgeting and Spending  Subcontractor Invoices: Review all invoices prior to processing payment Review all invoices prior to processing payment Check to make sure that invoices are accurate, sent in timely and detail out work and expenses Check to make sure that invoices are accurate, sent in timely and detail out work and expenses Clarification of unusual, miscellaneous or apparently excessive charges Clarification of unusual, miscellaneous or apparently excessive charges Obtain all required approvals prior to submitting for payment Obtain all required approvals prior to submitting for payment Retain copies of all invoices, approvals and supporting documents Retain copies of all invoices, approvals and supporting documents 21

22. Monitoring  The Subrecipient Matrix Developed by OSPA as a means to evaluate the risk levels of GSU subrecipients. Developed by OSPA as a means to evaluate the risk levels of GSU subrecipients. The overall subrecipient is evaluated, as well as the individual project. The overall subrecipient is evaluated, as well as the individual project. Risk levels are low, medium, high, and nuclear. Risk levels are low, medium, high, and nuclear. 22

23. Monitoring  The Subrecipient Matrix Examples of criteria for the overall sub: Examples of criteria for the overall sub: Foreign v. DomesticForeign v. Domestic Audit Report (Number of findings)Audit Report (Number of findings) Previous experience working with GSUPrevious experience working with GSU Examples of criteria for the individual project: Examples of criteria for the individual project: Amount of the subcontractAmount of the subcontract Award lengthAward length Sponsor typeSponsor type 23

24. Monitoring  Sampling Monthly reviews (centrally) of invoices. Monthly reviews (centrally) of invoices. Looking for: Looking for: Requested payments falling within subaward datesRequested payments falling within subaward dates Cumulative amounts invoiced compared to total authorized.Cumulative amounts invoiced compared to total authorized. Fringe rates and F&A accurate per terms of award.Fringe rates and F&A accurate per terms of award. Unusual and/or unallowable charges.Unusual and/or unallowable charges. Invoices that are behind/lateInvoices that are behind/late Use of proper 8.9 account codes.Use of proper 8.9 account codes. 24

25. Monitoring  Databases Review Federal Audit Clearinghouse (FAC) database for audit results Review Federal Audit Clearinghouse (FAC) database for audit results Ensure that subrecipient is not on the federal or state debarment list Ensure that subrecipient is not on the federal or state debarment list 25

26. Monitoring  A-133 Monitoring A-133 certification letters sent out every March to our subrecipients. A-133 certification letters sent out every March to our subrecipients. If findings exist, review the audit report and subcontract to ensure findings do not relate to GSU/GSURF. If findings exist, review the audit report and subcontract to ensure findings do not relate to GSU/GSURF. If findings are applicable, create monitoring plan. If findings are applicable, create monitoring plan. 26

27. Monitoring  Non A-133 Monitoring Request that supporting documents (technical performance reports, deliverables, update reports etc.) be submitted with invoices Request that supporting documents (technical performance reports, deliverables, update reports etc.) be submitted with invoices Review supporting documents and obtain approval/sign off that the work is being completed per the scope of work, on schedule and satisfactorily Review supporting documents and obtain approval/sign off that the work is being completed per the scope of work, on schedule and satisfactorily Monitor subcontractors’ work/progress via phone calls or site visits Monitor subcontractors’ work/progress via phone calls or site visits 27