Subaward Monitoring for the Departmental Administrator

Jeremy Forsberg, University of Texas at ArlingtonDavid Ngo, University of Wisconsin-Madison

Melanie Jacobs, University of Wisconsin-Madison

Agreement Types• Prime/Prime Recipient – the legal entity awarded the sponsored project (ultimately

responsible for performance and compliance) • Prime Agreements

– Grants– Contracts– Cooperative Agreement (substantial involvement of the sponsor)– Purchase Order

• Subrecipient - Legal entity to which a subaward is made and is accountable to the recipient for the use of the funds provided.– Performs part of the project, like the recipient– Terms applicable to the recipient generally flow down to the subrecipient– Administrative requirements (15 C.F.R. Part 14 or 24), cost principles, and audit requirements apply

• Subaward Agreements– Subrecipient Agreement/Subcontract– Subaward/Subgrant (FDP Template)– 3rd Tier Subs

Slide 2

Other Agreement Types• Interagency Contract• MOU• Collaborative Research Agreement• Consortium Agreement• Contract Agreements (Vendor Relationship)

– Purchase Order• 3rd Party Contributor (partners obligated to provide cash or in-

kind contributions towards the project)

Slide 3

What is a Contractor?• In the context of Federal financial assistance,

or grants and cooperative agreements, a contractor or subcontractor involves procurement, or a vendor relationship with the recipient or subrecipient

• Provides goods, equipment, supplies, or services to the recipient or subrecipient

Third Party Contributor (TPC)

• High Risk Management

• SOW• Roles &

Responsibilities• Valuation of

Contribution• Success Factor

(measure(s)• OMB Cost

Principles

Sub-Recipient (SRA)

• Recipient of Federal $

• Flow-down of Federal Regulatory Requirements

• Roles & Responsibilities

• Resources• SOW• OMB Cost

Principles

Contractor/Vendor

• Procured Services• selling goods or

services to the Award Recipient

• Competition encouraged

• Maintain records on selection, rationale, basis for price

• Ensure compliance with procurement regulations

5

The Process

Proposal Stage• Subaward starts

– PI realizes a need for additional expertise– PI is familiar with someone who can perform the scope of work or shops around for

someone who has the expertise the PI is seeking

• PI requests proposal from subrecipient(s)– SOW, Budget, Justification, Documents required to establish a

subaward, Commitment of participation by Subrecipient Institution

Slide 7

Award Acceptance Stage• Sponsor Approval

– If subrecipient is in the proposal, no additional documention is usually needed– If subrecipient is not in the proposal, sponsor approval may be required– FAR 52.244-2 (alt 1)

• Federal Primes may require an additional review– Detailed written cost analysis of subrecipient’s proposal– Certificate of cost and pricing data– Small business subcontracting plan (FAR 52.219-9)– Sole source justification– Fixed price subcontract exceeding the simplified acquisition threshold ($100k) or

5% of the total estimated cost of the contract– Description of supplies or services to be subcontracted– Type of subcontract that can be used– Identification of the proposed subcontractor– The proposed subcontractor price

Slide 8

Subaward Review (Prior to Issuance)• Check financial adequacy of the subrecipient

– Acceptable A-133 or DCAA audit or financial questionnaire– Obtain satisfactory evidence of F&A rates/FB rates– Conduct and document formal or informal cost & pricing analysis and

certificate if needed• Verify subrecipient is not debarred or suspended• Verify all necessary approvals have been received

– Agency prior approval – Agency review of subaward

• Ensure all compliance approvals are obtained• Make high/low risk determination

Slide 9

A-133 Audit Obligations (Circular A133, Part 3, Section M: Subrecipient Monitoring)

• Pass Through Responsibilities– Ensure federal awards are used for authorized purposes in compliance

with laws, regulations and provisions of the prime– Ensure that performance goals are achieved– Ensure that subrecipient expending >$500K annually have met the

audit requirements for that fiscal year– Issue a management decision on audit findings within 6 months of

receipt of the subrecipients audit report– Ensure that subrecipient takes appropriate and timely corrective

action– Require each subrecipient to permit the pass through entity and

auditors to have access to records and financial statements, as necessary Slide 10

A-133 Audit Obligations (Circular A133, Part 3, Section M: Subrecipient Monitoring)• Tests from Auditors

– Effectiveness, reliability, compliance– CFDA title/number– Award name/number– Name of Fed Agency– Applicable requirements– Approval of allowable activities

Subaward Issuance• Science

– Deliverables, expected form/format, timetables

• Allocation of funding/dollar amounts and dates– Where to send invoices

• Cost sharing information (type and amount)• Any restrictions that need to be flowed down• Draft Agreement: Include language to ensure subrecipient:

– Fulfills the program’s technical goals– Spends in accordance with Terms & Conditions and applicable OMB Circulars (A-21, A-110, A-133)– Monitors both program and financial aspects of the program (technical reports, financial reports,

human subjects, animals, biosafety, patents, inventions, etc…)

• Draft Agreement: Provide the subrecipient with:– Prime award info: CFDA #, name, number, award year, agency, fed law/regulation requirements,

agency requirements, provision requirements (in award), supplmental requirements.Slide 12

PI and Dept Administrator

Roles and Responsibilities- The Subaward process begins at the Proposal Stage

• Accurate contact information for subrecipient• Detailed work scope• Detailed budget for salary, fringe, supplies, …• Detailed budget justification• A letter of commitment from the subrecipient

Central Office

Requirements from Award Stage: Do we have Prime Sponsor approval of this Subaward?What should be in included in the subaward agreement: • Detailed reporting requirements• Detailed invoicing instructions• Ability to request additional clarifying financial documents• Ability to audit & complete on-site visits to review technical and financial progress• Prime award terms and conditions What needs to be obtained from the recipient at award stage is based on the Prime Award.• F&A and Fringe Rate Agreements?• Subrecipients most recent A-133 audit information?• SAM/CCR registration?• FFATA reporting documentation? • E-Verify?

Roles and Responsibilities- The Subaward Issuance

Risk Analysis

• Prime Recipients should develop a plan for how to monitor the funds it awards and the subrecipient activities for which it awards those funds. Monitoring plans should be based on a risk assessment, as certain subrecipients may require closer scrutiny.

• Risk Assessment: What factors determine the methods and frequency of monitoring subrecipients and programs?

Risk Analysis Multiple combinations of subrecipient characteristics can change aSubrecipient risk level.

Consider the Following: Is the subrecipient domestic or foreign? What is the subrecipient organization Type? - University, Non-Profit, Industry? How mature is the organization? How large (# of employees)? What is our prime award type? Grant or Contract? Federal or NonFederal?What is the amount of the subaward?What percentage of our prime award is going to the subrecipient?Does the subrecipient have an annual audit report? Do we have prior experience working with the subrecipient? Positive / Negative?Are there cost-sharing requirements for the subrecipient?Is the subrecipient a direct recipient of US federal funds?

Low Risk example:

Recipient: • Mature• Domestic • Institution of Higher Education• Receives a yearly A-133 audit as a direct recipient of federal funds

The subrecipient is receiving a $25,000 award under a Foundation Award. The award has no cost-share or match requirement.

High Risk Example

Recipient:• Foreign • For Profit • Organization established this year with less than 50 established

employees• Does not receive an annual A-133 Audit

The Subrecipient is receiving a subaward for $800,000 that includes a1:1 match. The Prime award is a DOD Contract

Subawards may still be issued to high risk entities:• May require increased monitoring of activities and expenditures. • May require more stringent termination language for failure to comply

with financial or technical requirements.• May require additional terms for detailed invoices and additional

supporting documentation.• May require additional reporting requirements

*payments tied to deliverable?

Would require greater communication Between Prime recipient and the SubrecipientBetween Department and Central Office Between Pre-award and Post-award

PI and Dept Administrator

Roles and Responsibilities- Completing the Research

• Scientific Progress – tasks are satisfactorily being completed• Monitoring expenses and invoices are in line with SOW aims• Project Management• Communication

Central Subaward Monitoring• What subawards should have been modified by now (ex: add time/money, but

haven’t)• What subawards haven’t had an invoice paid in the last 4 months? Overdraft?• What subawards have ended but haven’t been closed out?• Which subrecipients haven’t invoiced in a timely manner?• Has UW paid invoices in a timely manner?• Have costs on subawards been appropriately reviewed/approved?• Are compliance approvals current?• Were rebudgeting requests received and approved?• Are modifications being issued timely?• Has subrecipient complied with provisions of subaward?

Slide 21

Invoice Review: Reviewing the invoice is more than just processing it for payment

The Department Administrator should initiate the review and processing of invoices.

Department Administrators should work with Principle Investigators to determine theallowability of the costs submitted for payment.

Items to review and pay attention to: • Billing Period • Billing Period and Cumulative Expense Totals• Signature and Certification Statement (if required)• Detailed or additional information if required or attached (example: receipts or effort documents)• Review the original executed subaward or related amendment for terms of award. • Is this a Final invoice?

The invoice should be consistent with the subaward budget and the progress reportsreceived to date. The PI should be aware of the progress made on their subawards.

Invoice Review

The PI Reviews and Approves• Dept. Administrator should provide the PI a copy of the invoice and any supporting

documents• The PI should review the invoice to confirm that the amount invoiced is consistent

with and reasonable for the subcontractor work completed during the billing period• Dept. Administrator should follows up with subrecipient counterpart at the request

of PI if there are questions on billing amounts or work progress.

Invoice review is an important step in subrecipient monitoring• Confirm that additional detail or backup required is included and reconciles to the

invoice totals• Make sure the PI is aware of the risks before approving the invoice • Do not process for payment if there are any concerns about the invoice or the work

being performed!

Group exercise: Review a sample invoice

Subaward Closeout• Verify cost share requirements are fullfilled• Verify receipt of final invoice• Obtain all final reports (including property reports)• Obtain signed refunds, rebates, credits form (if needed)• Verify clear understanding about record retention• Audit subaward (if needed)• Verify subrecipient has filed an audit report (or equivalent) through subaward end

date• Adjust Pass-Through entity’s records if necessary to reflect changes in subaward

costs

Slide 25

Best Practices for Department Administrators

• Work with subrecipient at proposal stage to ensure we have accurate information, solid SOW, Budget and Budget Justification.

• Work with Central Office putting together the agreement at award stage to ensure any known issues are identified. We can add terms!

• Work together with the PI in reviewing invoices and reports. Compare subrecipient invoices with the approved subaward budgets and maintain evidence of the invoice review by the PI and Administrator.

Evidence can be as simple as maintaining email approval strings or having PI’s and Administrators initial or sign the approvals or copies of invoices for internal files.

Best Practices for Central Office Administrators Drafting and completing outgoing subaward agreements.

• Assess Risk of Subawardees • Make no assumptions. If there are questions, ask! - Ask the PI- Ask the Department- Ask the Subawardee- Ask the Prime Sponsor

Slide 28

The subrecipient:• Fails to fulfill the requirements of the SOW– According to PI vs. the Agreement

• Fails to submit expenses to you in a timely manner• Hires their brother to work on your subcontract

What happens if…………

The PI refuses to approve payment to the sub because he/she:– Just doesn’t like the sub PI– Believes the sub PI does not do good research– Does not like the research results– Has fired the sub but has not shared that information with

research administration

What happens if…………

• engages in unauthorized expenditures• Contacts the funding agency without asking you• Is accused of or notifies you of misconduct in science• Continues to incur expenses on a subcontract or subaward that has

terminated• Fails to get IRB or IACUC approval

What happens if the Subrecipient:

• Have the correct agreement for the relationship• Be specific in the SOW• Be explicit in Sub’s responsibilities and reference Sponsoring agency

requirements• Insert controls you are comfortable with• Continually Evaluate Risk

Communication & Coordination:

• UW Forms• UW Portal

• Questions?• Contact Info– Jeremy Forsberg j.forsberg@uta.edu– Melanie Jacobs mrjacobs3@rsp.wisc.edu– David Ngo dvngo@rsp.wisc.edu