Outgoing Subs Understanding Subawards and Subcontracts

But first…. is it a sub? Criteria Subaward Vendor Consultant Is it considered a federal award? Yes No- It is a payment for goods & services No-It is a payment for a service Performance measured against objectives of Federal Program? No Responsible for programmatic decision making? Must adhere to applicable Federal program compliance requirements? Subject to audit under A-133? Mechanism Subagreement Purchase Order Consulting Contract Still unsure? Use the Sub vs. Vendor Determination form on our website! http://www.colorado.edu/ocg/sites/default/files/attached-files/ocg-302_subrecipient_risk_analysis_-_vendor_or_sub.pdf

Case Study #1 “What is it really?”

Case Study #1 You receive an email from a PI asking you to determine if they have a sub on their proposal or not. The PI has expressed that they don’t want it to be a sub because consultant agreements are much easier to manage. The PI stated that they will be working with researchers at another institution and will have to pay them for their work. The proposal is due to the Sponsor that day at 5:00 PM. What is the list of questions you should ask at this point in the conversation with the PI?

Questions to ask the PI Is the researcher at the other institution doing research or are they just providing an off the shelf service? Are they contributing to the science? Are they responsible for programmatic decision making? Do you have a statement of work for the other researchers? If so, please send it to me. Do you have any contact information for the researcher’s institutional Sponsored Research Officer?

Documentation Needed Statement of Work and Budget Performance Requirements Period of Performance Deliverables Budget Line Items Budget Justification Total Budget (sum to be encumbered) Subcommitment Form Basic Subreciepient information: contact info, PI name, address, etc. Cost Share Human and/or Animal Subjects Conflict of Interest Audit Status (Debarment and Suspension Information) Place of Performance Signed Certification that the Subreciepeint adheres to our regulations and requirements

Documentation Needed Sole Source Justification Only completed on Subcontracts Only known acceptable source for research or services: No other type of service will suffice No other research approach will work with Organization’s project No other source can or will provide research or services within the scheduled deadlines Other sources were contacted and disqualified for specific reasons   Unique technology, prior experience, expertise, professional stature or key personnel; Unique capabilities; Sponsor requests a specific subcontractor. Audit Focus: How was the selection made? Only used when the work did not go to bid

Type of Outgoing Agreements Subcontract Select terms of the Prime contract flowdown FAR Terms from our Federal Prime Contracts Specific Industry Flow Downs Negotiated and issued by CU (Pass-Through-Entity) More restrictive Require a Small Business Subcontracting Plan if on a Federal Prime and over $750,000 Subaward Issued pursuant to a federal financial assistance award (i.e. grant, cooperative agreement) Select terms of the grant or cooperative agreement flowdown Uniform Guidance Terms from Federal Prime Flowdown Federal Domestic Partnership Members can use the templates Fewer negotiations as these follow general grant terms that are widely accepted FAR vs UG 200.101 .101-1 Applicability of Uniform Guidance to Federal Acquisition Regulation (FAR) based contracts If the Federal agency awards a FAR based contract to the contractor, a non-federal entity, to what extent is the Uniform Guidance applicable to the contract? The cost principles in Subpart E, and the audit requirements in Subpart F, of the Uniform Guidance are applicable to the FAR based contracts awarded by a Federal agency to a non-federal entity that is an educational institution; state, local, or Federally recognized Indian Tribal government; or nonprofit organization. While the Subpart E cost principles are applicable to FAR based contracts, their practical impact is on negotiated prime contracts and subcontracts thereof; as a practical matter, the cost principles are not applicable in certain instances, e.g., when the contract or subcontract is for the acquisition of a commercial item, a firm, fixed price contract or subcontract is awarded on the basis of adequate price competition without the submission of certified cost or pricing data, or the price is set by law or regulation. While the Subpart F audit requirements are applicable to FAR based contracts, those audit requirements are not sufficient to meet FAR contract audit requirements as a practical matter. (See FAQ 200.101-2 – Audit Requirements of FAR based contracts in addition to the Uniform Guidance Audit Requirement.) 7 The other subparts of the Uniform Guidance are applicable to the FAR based contracts awarded by a Federal agency, and any subcontracts awarded in accordance with any flow down requirements from the prime contract or higher tier subcontract – but only to the extent that the Uniform Guidance provision is not inconsistent with the terms and conditions of the contract and FAR requirements. The terms and conditions of the contract and FAR requirements must be given effect as they cannot be read out of the contract, modified or superseded by the Uniform Guidance provision. Any Uniform Guidance provision that addresses the same matter as covered by the terms of the contract and FAR requirements are, at the most, supplemental requirements secondary to, and in addition to, the FAR contract requirements.

“Should you issue a Subaward or Subcontract?” Case Study #2 “Should you issue a Subaward or Subcontract?”

What type of agreement should you issue? Case Study #2 Prime Award received from NASA. Contains FAR terms and Conditions Contains high restrictions on the research. Subrecipient is an industry partner in London. What type of agreement should you issue? Subcontract

Foreign Subcontractors NASA NASA funding may not be used to support research efforts by foreign entities at any level. Direct purchase of supplies and/or services that do not constitute research from foreign sources is permitted. NSF NSF funding may be used to support research efforts by foreign entities if in the approved award. Foreign sub’s indirect costs are not allowed unless the foreign entity has a previously negotiated rate agreement with a U.S. Federal agency that has a practice of negotiating rates with foreign organizations.

Foreign Subcontractors NIH NIH funding may be used to support research efforts by foreign entities if in the approved award. Full F&A costs will not be allowed. NIH provides limited F&A costs (8 percent of total direct costs less equipment) to foreign institutions and international organizations.

Subrecipient Monitoring Why do we do it? Pass-through entities (CU) must monitor the activities of subrecipients as necessary to ensure that the subaward: is used for authorized purposes is in compliance with Federal statutes and regulations Follows the terms and conditions of the subaward, subaward performance goals are achieved. **Failure could result in damage to the University via reputation, current funding and future funding** The Uniform Guidance requires pass-through entities to evaluate each subrecipient's risk of noncompliance in order to determine the appropriate monitoring level, monitor the activities of subrecipient organizations to ensure that the subaward is in compliance with applicable Federal statutes and regulations and terms of the subaward, and verify that subrecipients are audited as required by Subpart F of the Uniform Guidance.   Responsibility of monitoring the programmatic and financial activities of our subrecipients to ensure proper stewardship of sponsor funds. Failure note: More importantly it is our responsibility to ensure the funds we have been trusted with are being used appropriately.

Subrecipient Monitoring Central Office Level: At initiation of an Outgoing Sub the following must be completed: System of Award Management (“SAM”) – Domestic Visual Compliance - Foreign Entities Subrecipient Commitment form or Letter of Intent Sole Source Justification (for Prime Procurement Contracts only) Sub Review form Cost Price Analysis / Budget Analysis Risk Analysis & Checklist IRB or IACUC approvals Depending on the outcome of these various reviews we can do many things to mitigate risk such as: Require incremental funding on smaller amounts and shorter budget periods Withhold funds until evidence of acceptable performance; More detailed reporting; Additional monitoring; Require grantee to obtain technical or management assistance; Establish additional prior approval Examples of potential Sub Risk Potential Risk: Incorrectly identifying subrecipient versus contractor. Mitigating Steps: Use worksheet on website. Work with department and PI at proposal to make proper determination Potential Risk: Incomplete review of a subrecipient’s management practices and past audits. Mitigating Steps: Require copies of A-133 audits yearly, if not required to do A-133 we get outside auditors information and review most recent audit Potential Risk: Failure to evaluate existing and future subcontracts with a subrecipient if there are issues with the subrecipient. Mitigating Steps: Run System of Award Management, Visual Compliance, Complete a Risk Analysis before issuing a subaward Potential Risk: Initiating a subaward with an excluded party. Mitigating Steps: Check for debarment, check record of Subs with past issues or performance with CU

Subrecipient Monitoring Department Level: Department Administrator and PI should review: Sub’s burn rate Sub’s performance in accordance with SOW and Agreement Invoices Do not be afraid to reject an invoice Principal Investigator must approve all invoices Principal Investigator is ultimately responsible for monitoring the Sub’s performance ****Reserve right to reject under 2 CFR 200.305**** Example: Potential Risk: Failure to take enforcement action when a subrecipient does not meet the expectations of award management. - Examples include: Not enough detail on invoices, not timely invoicing, late or incomplete reports, etc. Mitigating Steps: PI approval of each invoice, with signature.

Documents from Subcontractor/Subawardee Sub Closeouts Documents from Subcontractor/Subawardee Subcontractor Closeout Form and attachments: Final invention report Final property report A-133 certifications or other audit requirements Small business plan report (< $750,000) Release of liability for University Assignments of refunds, rebates, credits and other amounts Confirmation that Final Technical Report was sent to PI

Thank you! Questions? Laurie Clauson Megan Schosker Christopher Koenig ocgsubcontracts@Colorado.edu