Subrecipient Monitoring

 

Oklahoma State University (OSU) is a decentralized university requiring routing of grants, contracts, cooperative agreements, and other agreements through the college for approval from the Principal Investigator (PI), Department Head, Dean, and then through the central offices for approval and assurance of the compliance requirements. OSU follows the Uniform Guidance 2 CFR 200.330 for subrecipient and contractor determinations.

 

Subrecipient Monitoring Processes

 

In an effort to provide proper oversight when issuing subawards, the following procedures outline proper due diligence and considerations.

• Part I - Vendor vs Contractor vs Subrecipient (Subawardee)

  There have been revisions made by the "new" Uniform Guidance (UG) that are changes simply in language, but the changes in language are substantive. Higher Education has often defined whether we have a subrecipient, subawardee, vendor, or contractor relationships, but the UG has gone to such lengths to define the relationships between Universities and the organizations providing goods, services, and deliverables, it is appropriate that universities also adopt the same definitions.

   

  Vendors

  According to the UG we have no "Vendors".

   

  Contractor

  According to the UG a "Contractor":

  • Provides specified services
  • Did not participate in the design of the grant or project
  • Is not directly responsible to the granting agency
  • Markets its goods/services to a range of customers
  • Has little or no independent decision making for the work performed in the project
  • Agrees to only provide a specific type of good/services that will require replacement, reperformance, or nonpayment if incorrect
  • Has no expectation of co-authorship or credit of employees or executives on published research, patents, copyrights, products
  • When the individual is a consultant, the person has no relationship with the grantee

   

  Subrecipient

  According to the UG a "subrecipient":

  • A provider of substantive, programmatic work, or is performing a significant portion of the project
  • A participant in the design of the project and/or conducts research
  • Having some control in how work is carried out
  • Making effort to complete the project
  • Making independent decisions in implementing the requested activities
  • A named PI who may also be considered a co-PI
  • Having co-authorship in any publication
  • A provider of cost-share or matching funds which are not reimbursed
  • Regarding itself as "engaged in research" involving human subjects

   

  While we expect a "contractor" such as Staples, Fisher Scientific, a travel agency or airline to provide quality products or services, the compliance requirements for doing business with these contractors simply require the University to purchase items appropriate to the grant and maintain the supporting document of the goods received and the price paid appropriate to the invoice.

   

  If the agreement with a non-Federal entity is determined to be a "subrecipient" award, this type of award requires much more detail before the award and consistent monitoring during the course of the project. First, it must be determined whether or not the subrecipient is debarred or a high-risk auditee. This requires a review of the documentation from the most recent external audit which would support the subrecipient as an appropriate organization with whom to do business. A determination should be made as to whether the subrecipient si qualified to do the work requested (expertise in the appropriate field). While the work is in progress, the subrecipient should provide appropriate progress reports and meet certain milestones in pursuit of the project. The University should also provide grant management training to the subrecipient as well as continual follow-up through remote desk audits or site visitation.

   

  References: Uniform Guidance 2 CFE 200; Council on Government Relations (COGR)

• Part II - Subrecipient Monitoring Procedures

  This procedure describes the proper management of subrecipient activity under OSU sponsored program awards.

   

  Definitions

   

  Award: An award is a binding agreement between an external sponsor and OSU to support research, instruction, training, service or other scholarly activities with set terms and conditions.

   

  Subaward: A subaward of financial or other support from a prime awardee to a qualified organization for the performance of a substantive portion of the programmatic effort under the prime award.

  • Cost Reimbursement
  • Appropriate for most subawards
  • Fixed Price
  • May be appropriate when awardees are meeting specific requirements of the Federal award and the amount is based on performance results. Prior written approval from the agency is required.

   

  Subrecipient Monitoring: Activities undertaken to review the financial status and management controls of a subrecipient(s) to mitigate the risk of contracting with a subrecipient(s).

• Part III - Pre-Award Process

  During the proposal process, pre-award (Colleges/PI) will be responsible for:

  • Make project role determination if applicant is a subrecipient or contractor. If contractor role, subrecipients information request will not be required.
  • Obtain all subrecipient(s) contact information (PI and Administrative Contact).
  • Prepare Scope of Work and Budget.
  • Prepare Requisition.
  • Evaluate and Award
  • Confirm that potential subrecipients are not suspended, debarred or otherwise excluded from receiving federal funds.

   

• Part IV - Evaluation

  Once Post Award receives an award that contains subawards, they should review all documentation.

   

  The budget needs to be reviewed to ensure the correct indirect cost rate and fringe benefit rate has been used, and to ensure the budget is reasonable and only allowable costs have been included.

   

  Post Award should analyze the risk to determine if the risk is high or low. Depending on how they are classified will determine what language is included in their agreement. Items that typically put the subrecipient in the "High-Risk" category are the following:

  • Findings on their most recent 2 CFR 200 Subpart F Single Audit, formerly known as A133 Audit, report that relate to sponsored program activity.
  • The subrecipient does not have an annual 2 CFR 200 Subpart F Single Audit.
  • The subrecipient is a foundation or corporation.
  • The entity has a history of non-compliance.
  • A "qualified" or "adverse" audit report, or failure to have a current audit report.
  • A known history of non-performance.
  • A small company new to receiving sponsored program funds.
  • A foreign entity.
  • Percentage passed through.
  • Program complexity.

   

• Part V - Process

  After the awarding agency has approved the selection of a subrecipient, whether by issuing an award that contains provisions for the subrecipient or by approving the selection of a subrecipient after the award has been made, the College Research Office will issue the award. The College Research Office will review information provided in the proposal for appropriate financial information. If the information is not included in the proposal. If additional information is needed, the College Research Office will work with the subrecipient and PI to obtain the required information needed. After all the required information is obtained the College Research Office routes the agreement through the University System (See Policy & Procedures 1-0305). The subrecipient commitment form should be included in the proposal routing, if for some reason it is not, it must be included with the award routing.

   

  The subrecipient award shall include the following information:

  • Prime award identification
  • Subrecipient's name (which must match registered name in DUNS)
  • Subrecipient's DUNS Number
  • Prime award dates
  • Subaward Period of Performance (Start and End Date)
  • Amount of funds obligated to the subrecipient
  • Total amount of funds obligated by this action
  • Total amount of prime award
  • Proposed billing schedule
  • Federal award project description as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA)
  • Name of prime awarding agency, pass-through entity and contact information for awarding official
  • CFDA Number: The pass-through entity must identify the dollar amount made available under each federal award and the CFDA number at time of disbursement
  • Indirect cost rate for the federal award (including if the de minimus rate is charged per 2 CFR 200.414 Indirect (F&A) Costs
  • All requirements imposed by the pass-through entity on the subrecipient so that the prime award is used in accordance with applicable statues, regulations and the terms and conditions of the prime award
  • Any additional requirements that the pass-through entity imposes on the subrecipient in order fo the pass-through entity to meet its own responsibility tot he prime awarding agency, including identification of any required financial and performance reports
  • An approved federally recognized indirect cost rate negotiated between the subrecipient and the federal government or (if not such rate exists) either a rate negotiated between the pass-through entity and the subrecipient (in compliance with this part), or a de minimus indirect cost rate
  • A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this section
  • Appropriate terms and conditions concerning closeout of the subaward
  • Special monitoring procedures/requirements for subrecipient compliance

   

• Part VI - Amendments, if Necessary

  The PI will determine when a subaward is to be amended. Common reasons for amending a subaward include providing additional funding, extending the period of performance or modifying the report schedule. If an increase is being completed, it is necessary to verify that SPS has the correlating budget, Statement of Work and Budget Justification. Prior approval may be needed for changes such as the scope of work, change in PI, or transferring the subaward to a new institution.

   

  The College Research Office prepares subrecipient amendment and routes notifying all appropriate areas.

   

• Part VII - Subaward Termination

  If a PI decides the subaward will not be renewed or will be terminated, the PI will notify the subrecipient of such determination. At the time of expiration or termination, the College Research Office staff will contact the subrecipient to make sure the final invoice and appropriate final reports have been submitted. The final technical report should be collected by the PI. An amendment may be necessary to reduce the time and/or funding in order to end the project per the PI's recommendation. This much be fully executed and returned to OSU prior to reallocating any possible remaining funds from the subrecipient.

   

• Part VIII - Subaward Invoice Review and Processing

  Subrecipients are expected to send their invoices to the PI consistent with the terms of the agreement. Upon receipt of an invoice:

   

  The PI will consider the following when processing sub-invoices:

  • Correct subrecipient and fund number are provided
  • Total amount of award is listed and accurate
  • Time period of invoice coincides with the previous invoice. It generally should not overlap, have gaps in time, or exceed the project end date, except in special approved cases
  • The current and cumulative total is in accordance with the approved budget(s), including any line-item categories and total amounts
  • Cost-sharing and memo match commitments are documented on the invoice
  • Invoice is certified

   

• Part IX - Subrecipient Monitoring Responsibilities

  The PI is responsible for:

  • Certifying the work performed by the subrecipient is being completed and is acceptable. A certification statement has been added to the invoices for the faculty to sign.
  • Maintaining regular contact with the subrecipient PI regarding all technical aspects of the project.
  • Ensuring that all deliverables required per agreement terms and conditions (technical and/or invention) are being completed and provided.
  • Reviewing and approving subrecipient invoices in a timely manner.
  • Communicate to the College Research Office and/or Business Office any deliverable or performance related issues which should be relayed to GCFA immediately.

   

  The College Research Office is responsible for:

  • Providing each subrecipient with the funding agency's name, project title, subaward number, prime sponsor reference number and CFDA number (if applicable).
  • Providing the sponsor terms and conditions that are requirements of the subaward.
  • Determining if a subrecipient is high-risk or low-risk.

   

  Grants & Contracts Financial Administration (GCFA) is responsible for:

  • Ensuring that an entitity that expends $1,000,000 or more in federal awards during a subrecipient's fiscal year have met the audit requirements of the Single Audit.
  • Determining if a subrecipient is high-risk or low-risk
  • Following-Up on audit findings to assure they were brought into compliance, as planned.

   

  GCFA Annual Audit Request

   

• Part X - Risk Monitoring

  The level of risk assigned to the subrecipient determines the intensity of the monitoring recommended for the subaward, in addition to the prime sponsor terms and conditions. Some subrecipients are considered more of a risk to the university than others. Some of the following are attributes that may place a potential subrecipient into a higher risk category:

  • Findings on their most recent 2 CFR Subpart F Single audit report, formerly referred to as A-133 Audit, that relates to sponsored program activity
  • The subrecipient does not have an annual 2 CFR 200 Subpart F Single Audit
  • The subrecipient is a foundation or corporation
  • The entity has a history of non-compliance
  • A qualified audit report, or failure to have a current audit report
  • A known history of non-performance
  • A small company new to receiving sponsored program funds
  • A foreign entity
  • Percentage passed through to another agency
  • Program complexity

   

• Part XI - Subaward Closeout

  An integral part of subrecipient monitoring is close-out of the subrecipient at the end of the project period. This is the point at which final determination is made by the PI and College Research Office that the subrecipient has fulfilled all of its responsibilities under the subaward. In general, a subaward is closed when all deliverables have been met and the final payment has been made.

   

  The PIs, in collaboration with the College Research Offices and GCFA should begin subrecipient closeout review at least 60 days prior to the conclusion of the subrecipients period of performance. This will allow adequate time for the department and PI to make any budgetary actions or requests for extensions to the sponsor, if necessary. Generally, subrecipients should be processed for closeout and formally closed with 60 days following the subrecipient end date. Depending on the prime funding source, closeout may be required sooner.