1. Lifecycle of a Subaward: Making the Connection between Departmental and Central Responsibilities Dennis J. Paffrath, Assistant Vice President, SPA University of Maryland, Baltimore Vicki Krell, CRA, Research Advancement Supervisor College of Liberal Arts and Sciences Dean’s Office Arizona State University

2. What is a Subcontract ? A legally binding agreement between two parties in which: – Prime recipient provides funding to another organization to conduct a portion of the project work, which fulfills part of the prime recipient’s obligation to the sponsor. – Performed using sub’s own resources – Sets forth the work to be performed, deliverables expected, agreed payment for the work and flows-down the terms of the Prime Award.

3. Terminology Prime Award the grant/contract from the Sponsor (funds the subaward) Subrecipient the party providing work under the subaward Subcontractor term used for subrecipient when the prime is a contract Subawardee term used for subrecipient when the prime is a grant or cooperative agreement Flow-down or Flow-through applying the terms and conditions in the Prime Award to the subaward

4. A “Sub” by any other name, would be … a sub! Subcontract Subaward Subagreement Subrecipient agreement Consortium agreement

5. Proposals Subrecipient or Vendor? Proposal preparation Subrecipient Assessment

6. Subrecipient or Vendor OMB A-133 SUB-RECIPIENT Has responsibility to perform some of the project’s technical objectives Responsible for programmatic decision- making Subject to the Federal compliance regulations (e.g. human subjects, animal use, PHS FCOI, etc.) VENDOR Provides the goods and services within the scope of its normal business operations Provides similar goods and services to many purchasers Operates in a competitive environment Provides goods and services that are ancillary to the performance of the project Not subject to the Federal compliance regulations

7. Proposal Preparation PI/Department Obtain from the sub-recipient Statement of Work – describing the work the subrecipient investigators will perform in the project Proposed budget & justification Institutional approval – letter of intent to enter into a consortium or similar acknowledgement Other items required by Sponsor – biosketches, facilities, assurances, small business subcontracting plan, etc. Sponsor Guidelines that apply to Prime, also apply to sub

8. Proposals Subrecipient Assessment PI / Department Review RFP/PA guidelines to determine applicability to institution/subrecipient Determine subrecipient’s Scope of Work Obtain subrecipient’s proposal Assess technical capabilities and qualifications of Subrecipient investigators and facilities Reasonableness of subrecipient’s proposed costs to perform the work Research Office Analyze RFP/PA guidelines and determine applicability to subrecipient Review sub’s budget for compliance with cost principles – reasonable, allowable, allocable, necessary Verify F&A rate Review certifications and assurances Verify debarment and suspension status Require authorized official’s approval

9. Proposals Research Office Verifying Debarment or Suspension – Search for excluded entities: http://www.epls.gov http://www.epls.gov Risk Assessment – Past Experience with this Subrecipient? – Does Sub have a negotiated F&A rate agreement? – A-133 audit report or audited financial statements -- findings? – Responses to financial review? Appropriate controls & systems to comply with A-110?

10. Issuing the Sub-Award Prior Approval Documentation Needed Type of Award Document to Use Terms and Conditions

11. Prior Approval to issue Sub If Sub recipient’s work was included in the proposal and approved by the sponsor – Approval may be noted in Prime – Section B.4. Advance Understandings (Fed Contracts) If Sub-Award is proposed during award period – Check terms of Prime Award – Always need prior approval for foreign sites subs under Federal contracts If scope of the Prime Award is affected

12. Issuing the Sub-Award Documentation & Responsibilities Research Office Assessment for OMB A-110 and A-133 requirements Prime Award document Prior approval from Sponsor, if applicable Determine appropriate type of sub agreement Determine flow-down terms & conditions Determine appropriate cost-basis for sub agreement Intellectual Property issues PI / Department Updated SOW for sub Updated budget for sub Current IRB/IACUC assurances, if applicable Contact info for sub institution Internal Institutional approval routing (if not done previously) Subaward Request Form – PI approval to issue sub – Provide account # for P.O. – Special instructions

13. Type of Award Document Federal Demonstration Partnership (FDP) Subaward Templates http://www.thefdp.org/Subawards_Forms.html – Appropriate when Prime is Federal grant and there are minimal risk Institution-created boiler-plate agreements, customized per requirements of the Prime Award – with for-profit entities – Sub-sites for clinical trials – with foreign entities – under State or Foundation Awards common in your institution Master Agreement with Task Orders

14. FDP

15. Applicable to subs under Awards from all Federal Agencies

16. Specific to the Federal Agency funding the Prime Award plus Special terms particular to this Award (e.g. restrictions)

17. Contact info from each institution

18. Specific to the reporting requirements of the Prime Award

19. Terms & Conditions Non-FDP Agreements Statement of Work Period of Performance Consideration and Payment, Financial Reports Key Personnel Flow-through Prime Sponsor’s policies & regulations Reports (Technical) – Annual/final (standard research award) – Milestones if your PI’s work is dependent upon receipt of sub’s results Confidential Information – Flow through specifics from Prime

20. Terms & Conditions continued Publications (innies: get University FARs) Rights in Data Intellectual Property (innies: get Bayh-Dole) Human Subjects, Animal Use, HIPAA, Select Agents… Indemnification, Liability, Insurance Audit requirements, record retention Administrative Contacts Dispute Resolution Modification of Agreement Independent Contractors Termination

21. Crafting the Agreement as Partners PI / Department Statement of Work Key Personnel Period of Performance Max amount payable Preferred cost-basis Technical Reporting Research Office Intellectual Property, Data Rights Indemnification, Liability Export Controls HIPAA, Human Subjects, Animal Use Publication, Confidentiality Audit Requirements Flow-down requirements Disputes, Termination

22. Cost-Basis Cost reimbursement Payment based on actual expenses incurred Budget of estimated costs used to determine “maximum amount payable” Unobligated balance not paid to subrecipient; provisions for carryforward? Common for research grants and contracts Fixed-Price Amount per unit or total amount for project Subrecipent assumes risk - if estimated amount does not cover all actual costs, no additional compensation and vice versa solution when cost accounting system capabilities are uncertain Appropriate when SOW is providing deliverables, e.g. fee per sample, fee per subject completed

23. Issuing the Sub-Award Payment Terms Cost reimbursement Line-item budget with effort commitments for salary and estimated costs necessary to complete project work Invoice by line-item expenses incurred Fixed-Price Amount per unit or total amount for project inclusive of direct and indirect costs Payment Schedule – Upon receipt of deliverable (patient data, sample, report) – Quarterly, monthly – Upon providing 25% of expected deliverable – Advance, then earned payments applied to reduce advance – Non-refundable set-up costs upfront – Final payment should not be made until after receipt of final deliverable

24. Fun Foreign Facts State Department Clearance U.S. Currency Preferred Advance Payment Issue Wire Transfers IRB/IACUC Translation Fees CRDF – Former Soviet States & the Tax Issue Export Controls – EAR/ITAR/OFAC

25. Life of the Sub-Award Federal Regulations Subrecipient Monitoring Amendments Closeout

26. Federal Regulations OMB Circular A-110 General Definitions: Award, Equipment, Subaward Establishes applicability to Subawards – Revision of budget and program – Management and distribution of property – Procurement standards and procedures – Reports and record keeping OMB Circular A-133 Sec 2.10 guidance for distinguishing between a federal award ( financial assistance ) and payments for goods and services ( vendor ) Sets forth obligation of Prime Recipient to monitor Subrecipients’ compliance with federal regulations; and Subrecipient’s responsibility to comply with Federal Single Audit requirements

27. OMB A-133 Prime Recipient’s Responsibilities Identify Award for Subrecipient – CFDA # – Award # – Federal Agency – Applicable Federal requirements Monitor Subrecipient’s Activity – Review financial and technical reports – Review invoices for allowable costs & activities – Site visits when necessary – Regular contact with subrecipient

28. OMB A-133 Prime Recipient’s Responsibilities Subrecipients’ A-133 Audits, what Prime should look for: – Review annually for any audit findings – Issue Management Decision regarding relevant findings – Follow-up on Sub’s carry-through on corrective actions Prime’s A-133 Audit, what Federal auditors look for: – Proper Identification of awards and flow-down of regulations – Proper review invoices for allowable costs & activities – Effective, consistent monitoring policies and procedures – Complete, current audit documentation from subrecipients with evidence of Management Decisions and follow-through – PI approval of actions taken

29. OMB A-133 Prime Recipient’s Responsibilities Finding Audit Reports Federal Audit Clearinghouse for A-133 – http://harvester.census.gov/sac/ http://harvester.census.gov/sac/ Non-A133 subrecipients – Audit questionnaire – Review Financial Statement For-profit entities – DCAA cognizant Agency or ONR Resident Representative can assist you

30. Subrecipient Monitoring OMB A-133 A-133 # 315 (d) “…Pass-through entity shall (3) monitor the activities of sub-recipients as necessary to ensure Federal awards are used for authorized purposes, in compliance with laws, regulations, and the provisions of contracts and grant agreements, and that performance goals are achieved”

31. Subrecipient Monitoring OMB A-110 Applicability of A-110 - 3. Policy - Recipients shall apply the provisions of this Circular to sub-recipients performing substantive work under agreements that are passed through or awarded by the primary recipient if such recipients are (higher education, hospitals or non-profits)

32. Subrecipient Monitoring PI / Department Monitor Subrecipient’s Activity – Review financial and technical reports – Review invoices for allowable costs & activities - PI sign to approve (do not pay if sub is not performing or costs do not seem to be reasonable, allowable, allocable, necessary) – Site visits when necessary – Regular contact with subrecipient Research Office Subrecipients’ A-133 Audits, look for: – Review annually for any audit findings – Issue Management Decision regarding relevant findings – Follow-up on Sub’s carry- through on corrective actions Interpret Terms and Conditions Handle contractual disputes

33. Amendments PI / Department Determine need for change in the subaward – Non-competing continuation – Supplement – Decrease – No-cost extension Determine if there are changes to Sub’s SOW Notify Central Research Office PI must approve Research Office Determine if prior approval is required Determine what terms are affected Prepare amendment to sub agreement and obtain both parties’ signatures

34. FFATA New contracts with prime contract value of $25,000 or over; and Grants over $25,000 and awarded after 10/1/10. The grants subaward reporting functionality is now available via www.fsrs.gov. Reporting of Sub-contracts of Federal contracts and sub-grants of Federal grants where these sub- contracts and sub-grants are $25,000 and over.

35. Close-out PI / Department Final invoice from subrecipient Verify receipt of final report, all deliverables Assist Research Office with obtaining missing compliance information Close-out P.O. (disencumber balance) Research Office Verify Final Technical Reports obtained Verify Final Payment made Obtain and submit Final Invention Report Obtain Release of Claims Obtain Assignment of Refunds, Rebates & Credits Obtain Final Property Report (if applicable)

36. Questions?

37. Best Case Scenario

38. Contact Us Dennis J. Paffrath dpaffrat@umaryland.edu Vicki Krell vicki.krell@asu.edu