1. Subaward Monitoring for the Departmental Administrator
Jeremy Forsberg, University of Texas at Arlington
David Ngo, University of Wisconsin-Madison
Melanie Jacobs, University of Wisconsin-Madison
Friday, March 15, 2013
11a-12p
Intro:
Jeremy: Assistant Vice President
David: Managing Officer
Melanie: Senior Grants & Contracts Specialist

2. 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

3. 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)

4. 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

5. 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
Resources
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

6. The Process

7. 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

8. 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 (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 )
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

9. 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
Debarment (CFR Part 29, Section 97.35). List is found at:
Consider the subrecipients: past performance, technical/financial resources, audit results
If we have considerable doubts about an entity’s capability to perform or account for dollars – and the concerns cannot be easily remedied, we should seriously consider whether or not the subaward should be made
We should be thinking about specifying (clearly):
What will happen in the case of non-performance
Prior approval requirements
Invoice requirements
What happens if compliance approvals lapse
What happens if COI arises or management plan changes
What hppens if audit status changes
What happens with debarment or suspension status changes

10. 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

11. 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

12. 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.
Remember:
Subwards is meant to protect sponsor and our interests – flow down requirements of the prime
Subawards are legally binding between us and the subrecipient
Subawardsdemonstrate our commitment to due diligence and proper stewardship of sponsor funding
Subawards should not include terms that conflict with prime nor should they add undue administrative burdens on the subrecipient
Not all terms apply to the subrecipient
It’s okay to cross out non applicable terms when attaching the prime
Just throwing a copy of the prime in the subaward w/o a clear order of precedence can create confusion

13. Roles and Responsibilities-
The Subaward process begins at the Proposal Stage
PI and Dept Administrator
Accurate contact information for subrecipient
Detailed work scope
Detailed budget for salary, fringe, supplies, …
Detailed budget justification
A letter of commitment from the subrecipient

14. Roles and Responsibilities- The Subaward Issuance
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?

15. 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?

16. Risk Analysis Multiple combinations of subrecipient characteristics can change a Subrecipient 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?

17. 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.

18. 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 a
1:1 match. The Prime award is a DOD Contract

19. 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 Subrecipient
Between Department and Central Office
Between Pre-award and Post-award

20. Roles and Responsibilities- Completing the Research
PI and Dept Administrator
Scientific Progress – tasks are satisfactorily being completed
Monitoring expenses and invoices are in line with SOW aims
Project Management
Communication

21. 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?

22. 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 the
allowability 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 reports
received to date. The PI should be aware of the progress made on their subawards.

23. 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!

24. Group exercise: Review a sample invoice

25. 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

26. 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 approval strings or having PI’s and Administrators initial or sign the approvals or copies of invoices for internal files.

27. 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

29. What happens if………… 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

30. 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

31. What happens if the Subrecipient:
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

32. Communication & Coordination:
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

33. UW Forms
UW Portal

34. Questions?
Contact Info
Jeremy Forsberg
Melanie Jacobs
David Ngo