The purpose of this document is to assist WHOI Principal Investigators and staff in the preparation of required forms and documents for the issuance of subawards under sponsored research, regardless of the source of funding.
With the recent change in calculating indirect costs to a base of Modified Total Direct Costs (MTDC), it is more important than ever for PIs to choose the correct classification for the relationship with subrecipients, vendors and consultants at the pre-proposal stage. Choosing the wrong classification could have negative budget implications if a subaward is planned with a prospective entity that is unqualified to be a subrecipient.
ESTABLISHING THE TYPE OF RELATIONSHIP
WHOI follows the Uniform Guidance 2 CFR §200 in determining whether a transaction is a Subaward or a contract (in this instance treated synonymously with vendor, or outside service). The PI must make a case-by-case determination whether each agreement that is made for the disbursement of funds casts the entity receiving the funds in the role of a Subrecipient or a contractor.
Use of judgment in making determination. In determining whether an agreement between a pass-through entity and another non-Federal entity casts the latter as a subrecipient or a contractor, the substance of the relationship is more important than the form of the agreement. All of the characteristics listed may not be present in all cases. The pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract.
Below are some guidelines to help you determine if your planned research partner qualifies as a subrecipient, a vendor or a consultant.
As defined in the Uniform Guidance §200.92 and 93, and §200.330.
A subrecipient relationship exists when funding from a pass-through entity is provided to perform a portion of the scope of work or objectives of the pass-through entity’s award agreement with the awarding agency. Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program; for the “public good” and does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.
- organization is intended to carry out a portion of the scope of work
- typically includes collaboration on the project; both entities have PIs involved, WHOI is the lead institution
- subrecipient retains control of any IP that it develops
- audited under 2 CFR §200 for compliance with federal prime award
**For additional information please see List of Subrecipient Conditions in Related Files.
As defined in the Uniform Guidance §200.22, and §200.330
A Contractor relationship is generally a dealer, distributor or other seller that provides, for example, supplies, expendable materials, or data processing services for the non-Federal entity's own use in achieving the Federal award goals and creates a procurement relationship between the non-Federal entity the contractor.
- provides goods and/or services within normal business operations
- provides similar goods and services to many different purchasers
- operates in a competitive environment
- audited only to determine if they were allowable expenditures and awarded properly
**For additional information please see List of Contractor Conditions in Related Files.
A Consultant relationship is a contract for expert advice and appropriate when:
- Entity or person is considered an expert advisor.
- Entity is paid at fixed negotiated hourly rate.
- Considered "work for hire"
- IP assigned to WHOI
- Audited only to determine if expenditures were allowable and awarded properly
- WHOI defines scope of work
- Will not use pass-through entities resources.
- Has no responsible senior personnel, PI or Co-PI
**For additional information please see List of Contractor Conditions in Related Files.
SUBAWARD STANDARD TERMS
The term Sponsoring Agency refers to the organization that makes an award directly to WHOI. The award document is the agreement processed by the Sponsor and accepted by WHOI specifying the terms under which the program will be conducted. This is often referred to as the Prime Award.
The document that Grant and Contract Services (GCS) generates to formalize a third party relationship with another organization to perform work based upon the Prime Award made to WHOI is called a Subaward. The third party performing the effort under a subaward is called the Subrecipient.
When the procurement requires performance from a sole entity because services or expertise are not available from other sources, the PI is required to provide Justification for Single/Sole and Urgent Purchase Form (from the Procurement website) identifying the need for the service and why the selected subrecipient is the only source available for the needed services. Sole source selection is not justified simply by the fact that there has been an ongoing collaboration between the scientists. It must be further justified with reasons for the unavailability of the services or expertise from other sources.
A budget itemized by major budget category, such as salaries and wages, employee benefits, supplies, equipment, travel, consultants, subawards and other direct costs, is submitted by the subrecipient as part of its proposal. Indirect costs should be included and should be calculated using the subrecipient's current rate(s). A copy of the subrecipient's negotiated rate agreement is needed to verify the indirect costs requested and to support those costs in case of an audit and should be attached to the proposal. If the subrecipient does not have a negotiated rate agreement, the diminimis 10% is all that will be allowed for overhead.
The subrecipient's proposal must be signed by a designated official who is authorized to commit the subrecipient's resources to the completion of the project. The subrecipient's proposal is incorporated in WHOI's budget as a direct cost.
Preparing the Subaward
GCS will prepare and issue the subaward when the following are received.
- a fully executed purchase requisition. (Blank electronic version of purchase requisition may be found on the WHOI Procurement website.)
- Subaward Checklist prepared by Department Administration
- Subaward Budget Information Checklist prepared and signed by the PI
The subaward is normally sent unsigned to the subrecipient for review. The subrecipient may want to negotiate changes or request clarification of the terms and conditions. GCS will negotiate and coordinate those requested changes with department personnel and the PI, where appropriate.
Once this has been accomplished and GCS receives the signed subaward, GCS will execute it on behalf of WHOI and return the fully executed document to the subrecipient and make the proper internal distribution.
Amendments to Subawards
In most cases, the terms and conditions of a subaward will remain unchanged for the duration of the subaward. An exception to this is when the Prime Award to WHOI and the subaward are incrementally funded. Then amendments to the subaward are made when WHOI receives amendments to the Prime Award. Other changes to the subaward, such as no-cost time extensions, rebudgeting, or equipment purchases are accomplished by an amendment to the subaward. If there is a change in the total estimated cost a revised budget must be incorporated with the amendment. The amendment is the vehicle that clearly states the changes and provides for the signature approvals of both parties.
During the term of a subaward, it may be necessary to change or modify one or more of the terms and conditions of the subaward. Some changes such as scope of work or PI may require sponsor approval before an amendment can be issued. Requests for changes should be submitted by the subrecipient's authorized official and have the approval of the WHOI PI before action can be taken by GCS. The Department must send a Change Order to the subaward purchase order to initiate an amendment.
SUBAWARD CLOSEOUT POLICY
It is the Institution's responsibility to perform some type of cost and price analysis on all subawards that are being closed out, therefore a desk audit will be performed by GCS. If during the desk audit, any problems are encountered with the subaward, the matter should be resolved prior to making final payment to the subrecipient. Specifically, the following steps are performed by the Grants Administrator:
- Prepare the Subaward Closeout Checklist to facilitate the collection and summarization of the following information:
- An invoice marked FINAL from the subrecipient.
- A final technical report has been prepared
- Report of Inventions and Subawards (DD Form 882) has been prepared (Prime is a Contract)
- Inventory of Government-owned equipment has been prepared (Prime is a Contract)
- Subrecipient's Release Form has been prepared (Prime is a Contract)
- Subrecipient's Assignment of Refunds, Rebates, Credits, and other amounts has been prepared (Prime is a Contract)
- Subaward Release of Claimes (Prime is a Grant or Cooperative Agreement)
- Compare the actual overhead rates charged to the subrecipient's negotiated rates and reconcile any differences.
- Compare the total amount of the subaward with the ceiling price to ensure that it has not been exceeded.
- Review the final invoice for overall reasonableness and accuracy.
- Determine that the PI is satisfied with the results and deliverables.
- The desk audit, completed by the Director of GCS, will include the following steps:
- If any exceptions or questions arise as a result of performing the above they will be discussed directly with the subrecipient organization. After all issues have been resolved, then the final invoice is processed for payment. The completed checklist and signed Desk Audit with all the attachments is then filed in the subaward file in GCS.
Last updated: March 6, 2017