Agenda 1. Introductions 2. Definitions 3. Contract Types 4. Pre-Award Stage Break* (10 minutes) 5. Award Stage 6. Post-Award Stage 7. Close Out 8. Electronic Tools (InfoEd, Insight) 9. Resources *Please save cell phone use for the break.
Basic Definitions Awarding Agency / Sponsor: Government or non-profit entity that provides financial support (via a grant or contract) to accomplish the goals set forth in a proposal. Prime Awardee: An entity that receives a grant or contract (“Prime Award”) and issues a subcontract to another institution or organization. Also known as a “Pass-through entity” or “Prime Recipient.” Subcontractor: An institution or organization that works with the Prime Awardee to carry out the research project funded by the Prime Award. Provides technical assistance and expertise. Also known as “Subrecipient.” Subcontract: A written agreement signed by authorized officials of the Prime Awardee and the Subcontractor. Legally memorializes the rights and responsibilities of each party with respect to the Subcontractor's work.
Basic Definitions cont. Department: Principal Investigators are responsible for the scientific oversight and direction of a Prime Award. Department Administrators aid Principal Investigators in writing proposals, gathering required internal documentation and financially and scientifically monitoring Subcontractors. Central Office: Ensures that sponsored awards are administratively and financially managed in compliance with law and Sponsor requirements. Institutes standardized policies and procedures to monitor Subcontractors. AKA: Research Management, Office of Sponsored Projects, Office of Sponsored Research, Research Administration…
Contract Types Subcontracts: Prime Awardee and the Subcontractor collaborate on scientific research Principal Investigator for the Prime Awardee and a Co-Investigator for Subcontractor. intellectually contribute to the scientific aims of the research and are responsible for the design of the project Subcontractor may be instrumental in Sponsor's determination to fund the Prime Award because of special qualifications/resources Change in Subcontractor usually must be approved by the Sponsor
Contract Types Cont’d. Research Service/Site Agreements: Used for clinical trial sites and/or specimen collection where the data and/or the material is being collected by the site and submitted to the Prime Awardee for further analysis or use. Listed in the “Other” category in the Prime Awardee's budget Generally, site may be changed without Sponsor approval Agreement issue by RM Vendor Agreements: Vendors provide goods or services within normal business operations and operate in a competitive environment providing similar goods or services to many different purchasers. Monitoring requirements of A-133 and 45 CFR part 74 do not apply. Listed in the “Other” category in the Prime Awardee's budget Generally, vendor may be changed without Sponsor approval Agreement issued by Materials Management
Contract Types Cont’d. How do you choose a contract type? Use your judgment! The contract type should match the relationship between the Prime Awardee and the third party performing the research or service. OMB Circular A-133 § 210 (d): “...the substance of the relationship” controls whether or not A-133 applies. A-133 only applies to Subcontractors. Today we’re only going over subcontracts, but there’s a lot more to learn about vendor and research service/site agreements. Consult with the appropriate RM Contracts Specialist if you have any questions about which type of agreement applies to your situation.
Subcontract Process Award -finalize budget and SoW -draft Subcontract -obtain signatures Post-Award -monitor spending and scientific progress -adjust budget and period of performance Close Out -receive final invoice and final reports Proposal -choose Subcontractor(s) -prepare documentation
Adding a Subcontract at the Proposal Stage: First Steps When submitting the proposal, the Principal Investigator (PI), in conjunction with the Department Administrator (DA), should –Select the Subcontractor If this is a new Subcontractor, work with Research Management to determine if any additional documents should be collected (i.e. F&A agreement and most recent A-133 audit report) –Collect the following from the Subcontractor scope of work (SOW) budget / budget justification bio-sketches and other support pages for key personnel statement of intent (SOI)
The F&A Rate Agreement Each Subcontractor will have its own, unique F&A agreement with the government – Rate structures may differ depending on the items included as part of Institution’s indirect costs – Example: Some Institutions include animal housing in their F&A agreement and therefore cannot charge animal housing as part of their direct costs
What does the Central Office do with Subcontractor Documents? When the Pre-Award Officer receives a proposal they –review materials for completion and compliance with Sponsor and Prime Awardee’s requirements –review Statement of Work and Budget to ensure costs are accurate and complete –review the Subcontractor’s rate agreement to ensure F&A is properly applied –at the JIT or award stage, request a copy of Subcontractor’s IRB / IACUC approval letters
What does the Central Office do with Subcontractor Documents? Cont’d. Review the proposed Subcontractor's latest audit report and the history with the Subcontractor for any administrative or financial issues Partners has implemented a database to record Subcontractor risk –record Subcontractor risk at either the institutional level or at individual subcontract level –All foreign entities are considered high risk –Other Subcontractors are generally designated as high risk if they have reported substantial audit findings (such as non-compliance with federal regulations) –Most U.S. Subcontractors are designated as low risk
Risk Assessment: Questions to Ask Are the Subcontractor Institution or Key Personnel suspended or debarred? –search the Excluded Parties List System (www.epls.gov)www.epls.gov Confirm that Subcontractor has a DUNS number –DUNS number is a common, world wide, unique identifier –DUNS indicates that the Subcontractor is registered with Dun & Bradstreet and has established credit history –required by the federal government for all Subcontractors Does the Subcontractor have adequate accounting systems? –If they are a non-profit, these systems should conform with the requirements of OMB circular A-110 and A-21 –For-profit entities will have different requirements
Risk Assessment: Questions to Ask Cont’d. What, if any, previous experience does the Prime Awardee have with the Subcontractor? Does this experience include past performance problems? –e.g., late submission of billings or technical reports –billing for unallowable costs –repeatedly revising billings – evidence of failure to comply with Subcontractor’s own internal policies
Risk Assessment: Questions to Ask Cont’d. Dollar value of the subcontract –Is it a large percentage of the total award? Can the project be completed if the Subcontractor does not complete their work? Complexity Proximity/Distance –Is the PI / staff able to perform site visits? –If not, does the Subcontractor have sufficient technological capabilities to make long-distance collaboration successful? (i.e. – access to computers, telephones, etc.) Return on time invested: will the collaboration enhance the anticipated goals of the grant?
Other Information that may be Considered During Review FDP Membership –the Federal Demonstration Partnership is a cooperative initiative among 10 federal agencies and 119 institutional recipients of federal funds –the FDP is a program sponsored by the Government, University, Industry Research Roundtable of the National Academies Annual Audit –information regarding Subcontractors subject to A-133 can be found on the Federal Audit Clearinghouse (www.sac.harvester.gov)www.sac.harvester.gov –if the Subcontractor has material findings on their A-133 audits, further reports documenting the action plan and resolution of the audit findings may be required –Subcontractors exempt from A-133 audits (i.e. foreign collaborators or for-profit entities) should complete an audit certification form and send a copy of their most recent audit PPIRS & FAPPIS –Past performance database (https://fapiis.ppirs.gov)https://fapiis.ppirs.gov
Cost/Price Analysis Some form of cost/price analysis is required on all subcontracts What due diligence is included in a Cost/Price Analysis under a grant? – Are the Subcontractor’s proposed costs fair and reasonable? Upon what basis was that determination made (e.g. supporting documents, prior history, experience)? – Why was this particular Subcontractor selected to perform the work? – Does this budget include only allowable costs? – Is the budget adequate to complete the work? There will be additional requirements for Federal Contracts, so please review any RFP carefully and reach out to your Pre-Award GA early to ensure you provide sufficient detail
Lower Risk Subcontractors Domestic entity Well established organization Issued under a grant with minimal terms Total subcontract represents less than 49% of the Prime Award Approved financial management systems, i.e. annual A-133 audit with no major findings A negotiated, detailed F&A rate agreement Previous positive experience as a Subcontractor No restricted activities (IRB, IACUC…) Enforced Conflict of Interest policy No deliverables beyond reporting Readily accessible, English speaking Timely periodic billing of regular amounts within the approved budget Statement of Intent provided at time of proposal
Higher Risk Subcontractors Foreign entity Start up company Represents more than 49% of the Prime Award No approved financial management system or not subject to A-133 audit requirements No F&A rate agreement No previous experience as a Subcontractor Unfavorable past performance Humans, animals, rDNA, stem cells (ensure approvals are collected) No enforced COI policy Tangible and/or unique deliverables for completion – model organisms, cell lines, etc. Remote location, non-English speaking Late or lapsed billings Invoicing for costs not included in approved budget Invoicing for unallowable costs
Moving Forward with Higher Risk Subcontractors Consult Research Management for guidance (especially your Contracts Specialist) Consider collaborating with another organization Disclose to Department Chief Recognize if award is made, Research Management may –develop a monitoring plan –incorporate legal terms to mitigate any indentified risk
Award Stage Overview
Award Stage Overview Cont’d.
Timing A subcontract can not be issued until the Prime Award is received and activated. Some institutions do not allow research to begin until the subcontract is signed. Keys to expediting the process: Complete and accurate sub docs are in InfoEd record RM and department check the status in InfoEd and Insight (more details later!) All parties understand the process and know when/how to proceed to the next step Contracts Team maintains several types of subcontract templates Subcontractor site is not responsive: Contracts Team may ask Prime PI to contact Subcontractor PI; DAs should ask their counterparts to put pressure on the Subcontractor's central office
The FDP Template RM uses the template when –The Prime Award is a federal grant (not a Contract) –Subcontractor is an FDP member –Prime Awardee has worked frequently with Subcontractor –Subcontractor is a frequent recipient of federal funding –Subcontractor performing basic/bench research (including animal studies) or non-interventional human subject research The purpose of the template is to reduce the administrative burdens associated with subcontracting. Not altering the FDP template reduces review and negotiation time at the Subcontractor institution. FDP Template- MGH as Prime Awardee FDP Template- MGH as Prime Awardee
Non-FDP Subcontracts Terms Specific to Federal Subs Grants: Compliance with applicable portions of the NIH or HHS Grants Policy Statement (GPS) Contracts: Compliance with applicable portions of the Federal Acquisition Regulations (FAR) CFDA number (applies to grants only) Representations and Certifications
Standard Subcontract Terms Sponsor name Prime Award number Period of Performance Authorized budget and SOW Amendments/Changes Reporting (technical, financial, inventions, equipment) Close-Out requirements Prior Approvals (re-budgeting, carryforward, no cost extensions) Termination Audit and maintenance of records (scientific and financial) Payment (invoicing instructions, payment schedule) Contact information for both parties (administrative, financial, scientific) Compliance with applicable laws Human Subjects (IRB, HIPAA) Animals (IACUC) Intellectual Property Data Publication/Copyrights Inventions Liability Confidentiality Use of Name/Publicity Independent Contractor Applicable law Compliance with applicable terms of Prime Award (i.e. flow downs)
Prime Award Flow Downs Privity of Contract –Generally, the legal relationship is only between the Prime Awardee and the Subcontractor –The Prime Awardee has the sole responsibility for monitoring the Subcontractor –Only the Prime Awardee has contact with the Subcontractor –All prior approval requests and reports/deliverables flow from the Subcontractor to the Prime Awardee to the Sponsor (if necessary) –Sponsor usually retains the right to audit the Subcontractor and to use Subcontractor’s IP for further education and research
Statement of Work Integral part of the Subcontractor’s contractual obligations Must be complete and detailed Clearly outlines the procedures and methods to be used by the Subcontractor to accomplish the goals of the subcontract Provides support for the budget (Please Note: The SOW supports the budget, but it is not the same as a budget justification and should not be a list of expenses) A complete and detailed SOW typically describes the work being provided and includes - Aims/Goals - Performance standards - Due dates - Deliverables - Milestones Examples
Payment Methods Firm-fixed price ●Funds distributed by achievement of milestones/submission of reports ●No additional funds provided if work not completed within budget ●Minimal or no invoicing required ●No financial reporting requirements ●Paid by directly by the Department Cost-reimbursement ●Subcontractor reimbursed as costs are incurred ●If budget is not adequate to cover costs of work, Subcontractor has the opportunity to seek additional funds and/or reduce SOW ●Detailed, certified invoices required ●Annual Progress and Financial reports required ●Invoices routed through RM
Intellectual Property Authorship and Copyright: Authorship in accordance with academic standards. Copyright holder(s) are the authors, in accordance with U.S. Copyright Law. Example Government has right to use and publish copyrightable works Prime Awardee retains right to use Subcontractor's copyrightable works to meet its obligation to Sponsor and for research / educational purposes Inventions: Ownership dependent upon each investigator’s effort toward creation, as set forth by U.S. Law (the Bayh-Dole Act governs federally-funded inventions). Each party owns the IP developed by independently by their investigator and co- owns the IP jointly-developed Many organizations have a tech transfer office to help sort through complex issues Publication Rights: Important to retain for all non-profit Subcontractors. Subcontract must recognize academic freedom and the charitable mission of the organization.
Liability Contracts Specialist conducts a risk analysis of the research being completed by the Subcontractor and any potential financial exposure to the Prime Awardee Mitigates risk with specific terms: Indemnification Insurance Termination Audit Reporting I
Advance Payments Cash flow is of critical importance to smaller non-profit, hospital or university entities If Sponsor policy allows, include subcontract terms allowing advance payment or partial up-front payment Advance payments should be no less frequent than quarterly; frequency of payments depends on the amount in each payment Include a detailed financial reporting schedule Authorize next advance only after review and approval of a financial report for the prior period
Subcontractor Added at Award Stage Occasionally, Subcontractors are left out of the proposal. As soon as the department decides to initiate a new subcontract, they need to submit the required materials (SoW, budget, Statement of Intent) to the Post-Award Grant Administrator (GA) and Contracts Specialist. Many Sponsors must approve the new collaboration before Partners can initiate the Subcontract. The Post-Award GA will determine if the Sponsor needs to be contacted for approval and what documentation needs to be submitted to the Sponsor. Post-Award may ask the department to prepare a formal request- outlining the role and unique qualifications of the Subcontractor along with a Statement of Work and any changes in the overall project budget as a result of adding the Subcontractor- for Sponsor submission.
Partners Policy Statement on Subrecipient Monitoring Partners Healthcare (Partners) is responsible for the programmatic, administrative and financial monitoring of all awards made to subrecipients under federal and non-federal sponsored projects. Partners has the obligation, throughout the lifetime of the award, to monitor the activities of subrecipients to make certain that project objectives are completed and all funds are used for authorized purposes in compliance with applicable laws, regulations, and provisions of the prime contracts and grant agreements. Full Text Driver: OMB Circular A-110 “Recipients are responsible for managing and monitoring each project, program, subcontract, function or activity supported by the award.”
Subrecipient Monitoring: Prime Awardee Responsibilities Cont’d. Subrecipient monitoring is a shared responsibility among the Principal Investigator, Department Administrators, and Research Management. All of these parties act as checks and balances to accomplish a common goal.
Federal Regulations Governing the Issuance of Subcontracts OMB Circular A-110 – Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations – Defines subcontract – Sets prior approval requirements OMB A-21 and A-122 – Contains cost principles for educational and non-profit institutions 45 CFR 74(e) – Contains cost principles for hospitals OMB Circular A-133, Attachment M – Establishes minimum audit responsibilities for subrecipient monitoring 48 CFR 31.2 – Establishes cost principles for for-profit entities
Terms Governing the Monitoring of Subrecipients Cont’d. Federal Contracts – Issued under the Federal Acquisition Regulations Non-Federal (Foundations, Commercial) – Issued and governed by the policies of the granting organization – Terms may include additional Subcontractor requirements not found in federal grants, i.e. - providing a copy of the subcontract to Sponsor – Even though these awards not granted under federal authority, Partners still has a responsibility to monitor the activities of the Subcontractor
Monitoring the Science Critical questions –Are protocols and/or other approvals current? –Are there ongoing training needs? –Are the invoices consistent with the progress on the Scope of Work? –Are the deliverables and invoices coming in on time and correct? –Is the Scope of Work adequate and accurate? –Has any risk been identified during the collaboration that needs to be addressed and mitigated? If scientific progress is not as expected –Request revised subcontract terms –I.e. - adding additional reporting or requiring deliverables on a schedule
Monitoring & Administrating the Subcontract Costs –must be allowable and allocable to the project Financial or administrative issues (i.e. unallowable charges, audit findings, incomplete reports) –may require modification of subcontract terms Prior approval –effort reduction/increase –re-budget –no cost extension –carry forward Reporting requirements –FFATA –ARRA
Subrecipient Monitoring: Principal Investigator & Department Review of technical reports to ensure technical work is being completed as anticipated Routine phone calls or s to Subcontractor for updates to ensure technical work is being completed as anticipated Perform site visits to ensure work is being completed as agreed upon and in compliance with applicable laws and regulations Audit technical records to ensure they match invoices Answer any technical or administrative inquiries the Subcontractor has during the life of the project; triage such questions as appropriate to RM
Subrecipient Monitoring: PI & DA Cont’d. Compare Subcontractor’s expenses to budget prior to authorizing invoice payment Establish a tracking system for technical and financial monitoring Perform site visits for technical and financial monitoring Review invoices for adherence to budget and award period, approve and return to RM for processing If applicable, monitor subrecipient cost sharing Prepare budgets and updated SOW (if necessary) for renewals
Subrecipient Monitoring: Research Management Research Management responsibilities span all parts of Research Management Pre-Award, Post-Award and Contracts provides subject matter expertise as needed throughout proposal submission and award period Pre-Award GA: – reviews Subcontractor materials for completion and compliance with Sponsor regulations and policies during proposal review – secures necessary approvals of prime application from authorized institutional official prior to submission or once submitted and prior to receipt of the award – incorporates subcontractor’s progress reports into Sponsor reports
Subrecipient Monitoring: Research Management, Cont’d Post-Award: –confirms the SOW, budget, special award requirements and if applicable, cost sharing once the award is received with the PI and DA –submits prior approval requests, as necessary, to the Sponsor –assists department with questions related to prior approvals, allowable costs, invoicing, payment and financial reporting –updates Subcontractor records for renewal budget periods and prompt Contracts Team to issue renewal mods –submits final and close-out reports to the Sponsor
Subrecipient Monitoring: Research Management, Cont’d. Contracts Team: – prepares and negotiates subcontract including any terms that require flow-down – prepares and negotiates modifications throughout the award cycle – works with PI & DA to modify the agreement terms to reduce risk for high risk Subcontractors – Clarifies contract terms and conditions during negotiation to ensure Subcontractor understands their obligations
Subrecipient Monitoring: Research Management, Cont’d. Research Finance: – conducts preliminary review of subcontractor invoices and forwards to department for PI and DA review and approval – submits PI approved invoices to Accounts Payable for payment – assists department with any questions related to Subcontractor costs, invoicing, payment and financial reporting – conducts an annual review of subrecipient audit reports reviews action plan if needed, changes risk status in subcontractor database
A Note on Renewals During the progress report stage, the Subcontractor’s budget for the next year should be confirmed – if the Prime Award does not permit carry forward, the Subcontractor should submit a carry forward request either in their progress report and/or annual final invoice Often budget cuts by the Sponsor will necessitate budget cuts for each Subcontractor – Partners requires a revised budget and SOW if the change is more than 25% of the direct costs – make sure the Subcontractor is aware of the cuts
Invoice Process The Department and RM must work together to ensure payments are made promptly with proper review Process –invoices sent by Subcontractor to subcontract invoice mailbox or –RM reviews to ensure dates are within approved period of performance amounts are within budget current totals are correct cumulative totals are correct –RM sends invoice to DA & PI through InfoEd DA & PI confirms work is being done and the amounts match what has been technically produced –invoice is approved or denied by the DA / PI –if approved, Research Management routes to accounts payable
Invoice Requirements Standard invoice requirements –Sent monthly or quarterly –Name of Subcontractor –Date of invoice –Invoice number –Period covered by invoice –Costs broken down by line items –Current and cumulative costs –Subcontractor contact –Statement that funds expended are reasonable, allowable and allocable –Statement costs are in compliance with agreement terms and conditions –Signature of Subcontractor Authorized Official Additional information should be collected if the Subcontractor is high risk –Payroll data –General ledger printout –Receipts for larger items –Copies of paid invoices showing the cost of items purchased
PI & DA Invoice Review: Questions to Ask Does the invoice conform to the type of agreement? – i.e. cost-reimbursement vs. fixed-price Does the amount to be paid exceed the amount obligated? Are the invoice dates within the performance period? Have the correct F&A and fringe benefit rates been applied? If applicable, has the required cost-sharing contribution been made? Does the billing/invoice amount accurately represent the amount of scientific data or progress by the Subcontractor?
PI & DA Invoice Review: Questions to Ask Cont’d. Is there sufficient supporting documentation to determine if the expenses on the invoice are allowable? If there are questions about the costs, should further verification be requested? Have special award requirements been met? Is the subcontractor spending the money too quickly, indicating that the funding may run out before the work is complete? Is the subcontractor having trouble getting started on the project?
Close Out Documents Subcontractor should send the following documents to the Prime Awardee upon the completion of the project: –Final Invoice, clearly marked as “Final”; or Final Financial Report if fixed price –Final Technical Report –Invention Reports, including negative reports Some obligations survive the Subcontract Period of Performance: “Closeout of a grant does not automatically cancel any requirements for property accountability, record retention, or financial accountability. Following closeout, the grantee remains obligated to return funds due as a result of later refunds, corrections, or other transactions, and the Federal Government may recover amounts based on the results of an audit covering any part of the period of grant support. ” (NIH GPS)
Streamlining the Subcontract Process RM has successfully implemented the following processes to streamline subcontract administration and ensure the science is continuously funded: –Transparency: RM staff members input statuses into subcontract deliverables. All internal parties will know where the subcontract stands and what they need to do to move the subcontract along. –Expanded authorities: Under NIH or other federal award where the Prime Awardee is granted expanded authorities (i.e. automatic carry forward and re-budgeting authority ), RM flows the same down to the Subcontractor
Streamlining the Subcontract Process Cont’d. Low-risk invoice For low-risk invoices (those less than $50,000, from a domestic institution, or an institution with no prior audit complications), departments will receive s directly from InfoEd that will include links to the record for easy review of the invoices; they'll click a button to approve or deny the invoices; if there is no response and 20 days have passed without a denial, Research Finance will process the invoices for payment. Renewal tracking Via the Insight Deliverable Master Report, RM and the department have a system in place for tracking when subcontracts are due for renewal. Goals Contracts Team strives to send a new subcontract or amendment out to the Subcontractor within 30 days of queue from Post-Award team; follows up with Subcontractor every two or three weeks until Subcontract is signed.
Status Tracking In Insight 1) Subcontract Deliverables Report: Provides details on the status of all incoming agreements (subcontracts, contracts, foundation awards/grants) and outgoing subcontracts processed by the Research Management Contracts Team. Data is pulled from the deliverable(s) in the InfoEd record. 2) Accessing the Report: /call request to Insight Help Desk or Request Module Access to “Reports.” Request access to “Subcontract Deliverables” Report 3) Running the Report: Review tutorial at ex.htm ex.htm Contract the Contracts Specialist for help 4) Key Contacts: Contracts Team Coordinator (BWH): Contracts Team Coordinator (MGH): Contract Specialist assigned to your department:
Status Tracking in InfoEd
Discussion Prime PI moves to another institution and takes the Prime Award with him/her: What about the subs? Same PI on Prime Award and Subcontract: Is this a problem? A-133 audit: What do you do if the Subcontractor has a finding?
External Resources The Federal Demonstration Partnership: A/fdp/index.htm The FDP subcontract Template: A/fdp/PGA_ Harvard Medical School’s Academic Standards for Academic Authorship: y/authorship.html U.S. Copyright Office: The FAR: https://www.acquisition.gov/far/ Excluded Parties List System: Central Contractor Registration: https://www.bpn.gov/ccr/default.aspx NIH eReporter: fm Federal Audit Clearinghouse: NIH Grants Policy Statement, 2010: ps_2010/nihgps_2010.pdf