5.0 Subcontracts, Subawards, and Subrecipient Administration

Additional Resources: 

It is the policy of Georgia Tech’s Office of Sponsored Programs that, in issuing and administering subawards, the office is in compliance with:

  • Georgia Institute of Technology Policies and Procedures
  • Applicable sponsor regulations
  • Terms and conditions of the prime award

The ultimate goal of the following procedures is to guarantee that the subaward activities satisfy Institute and governmental reviews as well as government audit requirements while protecting the Institute’s best interest.

5.1 Pre-Award Stage

Policy No: RESEARCH 5.1
Type of Policy: Administrative
Effective Date: May 2013    
Last Revised: May 2013

Policy Owner: OSP
Policy Contact: Duane Hutchison, Executive Director, duane.hutchison@osp.gatech.edu

1. Policy Statement

Subrecipients, including subcontractors and consultants, must be identified in the proposal budget to ensure that costs are calculated correctly and so that appropriate documentation can be included in the proposal. Sponsor approval is required prior to entering into a subcontract. If it is a vendor relationship, no sponsor approval is required unless specified in the award terms and conditions.

2. Scope

This policy applies to all Georgia Tech Faculty and Staff.

3. Procedures

3.1 Specific Considerations
What is a Subagreement?

Subrecipients, including subcontractors and consultants, must be identified in the proposal budget to ensure that costs are calculated correctly and so that appropriate documentation can be included in the proposal. Sponsor approval is required prior to entering into a subcontract. If it is a vendor relationship, no sponsor approval is required unless specified in the award terms and conditions.

Subrecipients vs. Vendors

It is not always clear when the pass-through entity should award federal funds to a subrecipient via a subcontract or subgrant, or a procurement contract to a vendor. A subrecipient is a state or local government, college, university or nonprofit organization that expends federal awards received from a pass-through entity to carry out a federal program. Under a subaward, a subrecipient generally has a specific scope of work to conduct in conjunction with the proposed research. The PI with the subaward is accountable for programmatic progress as well as for following federal guidelines.

In contrast, a vendor is a dealer, distributor, merchant or other seller providing goods or services that are necessary for conducting a federal program. These goods or services may be for an organization’s own use or for the use of beneficiaries of the federal program. They provide the service as part of their normal business operations. They provide similar services to many different purchasers

Under a procurement contract, a vendor provides goods or services that are auxiliary to the proposed research.

What constitutes a Consultant?

A Consultant Agreement is issued to either a company or to an individual who is clearly a bona fide consultant (expert advisor) who pursues this line of business for him/herself. The consultant is paid for his/her time at the fixed daily (or hourly) rate of compensation specified in an agreement. Consulting effort is usually limited to the term and the pay line is usually determined by a rate per day, which includes travel, expenses, and any other overhead. Consultants set their own hours, use their own equipment and materials, choose their work methods, and are responsible for paying taxes on their earnings as consultants. They will receive Tax Form 1099 from Georgia Tech. Furthermore a consultant’s effort is considered “work for hire” and therefore all intellectual property and copyrightable information produced is assigned to GTRC.

The primary difference is that a subcontract is almost invariably with another institution or with a company, and a consulting agreement is almost invariably with an individual who is not a Georgia Tech employee and has not been employed by Georgia Tech for at least 1 year.

Subagreements under Federal Contracts (Not Grants)

In order to establish a subrecipient relationship under federal contracts, the Federal Acquisition Regulation (FAR 35.009) states that “it is important that the contractor not subcontract technical or scientific work without the contracting officer’s advance knowledge.” The FAR goes on to state that “during the negotiation of a cost-reimbursement R & D contract, the contracting officer shall obtain complete information concerning the contractor’s plans for subcontracting any portion of the experimental, research, or development effort.” Typically approval is granted when a subrecipient is included in the proposal to the Government and an award is made based on that proposal. If a subrecipient relationship is not approved as part of a proposal submitted to the agency, written sponsor approval would be required before any unbudgeted subrecipient subcontract could be established.

4. Related Information

Resource Link
Board of Regents Consulting Policies http://www.usg.edu/policymanual/section8/policy/C224/#p8.2.15_outside_activities

5. Policy History

Revision Date Author Description
12-31-2013 OSP Rev 1.0

5.2 Requesting a Subaward

Policy No: RESEARCH 5.2
Type of Policy: Administrative
Effective Date: May 2013    
Last Revised: May 2013

Policy Owner: OSP
Policy Contact: Duane Hutchison, Executive Director, duane.hutchison@osp.gatech.edu

1. Reason for Policy

A SubAgreement may be required if part of the research effort under a grant or contract is to be performed by an outside organization or institution.

2. Policy Statement

Subcontracts should be set up as soon as possible after the receipt of an award. To initiate one, you or an authorized representative will need to make a request for subcontract agreement using Georgia Tech’s web-based OSP Contract System - https://webwise.gtri.gatech.edu/osp/sub/sitemap

Upon final submission through the on-line system you will need to forward a signed copy of the request form to OSP. A notification of acceptance, as well as other progress notifications will be sent via the ICOL system. Upon receipt of the returned subcontracts, an agreement will be issued to the subcontractor against which project-related costs may be billed. The Principal Investigator will be responsible for monitoring the technical performance of the subcontractor, verifying that required cost-sharing is properly documented and approving the invoices for payment. Please notify a contracting officer in OSP’s Subagreement Division promptly with any questions or concerns. A request for modification will be needed in order to add additional funds or time to the existing subcontract.

3. Scope

This policy applies to all Georgia Tech Faculty and Staff.

4. Procedures

4.1 Requesting a Subaward
As part of the on-line “Request for a Sub-Agreement” process you will want to have the following information ready:
On-line “Request for a Sub-Agreement”
  1. Visit OSP Contract System - https://webwise.gtri.gatech.edu/osp/sub/sitemap
  2. Use your GT Kerberos Password or GTRI credentials to access the system.
  3. From the Subagreement site map click on “make a request for new subagreement”
  4. Query on the fund # you wish to issue the subcontract/consulting agreement under.
  5. After completing the required fields, “Submit to OSP”
  6. Print request form for signature
  7. FAX or e-mail signed copy of the request form to OSP. FAX (404)385-0864

 

5. Responsibilities

5.1 Principal Investigators

The Principal Investigator will be responsible for providing oversight of the subcontract including:

  • monitoring the technical performance of the subcontractor,
  • verifying that required cost-sharing is properly documented,
  • and approving the invoices for payment.

6. Policy History

Revision Date Author Description
01-02-2014 GTRC-IE Rev 1.0

5.2.1 Statement of Work

Preparing the Statement of Work - The Statement of Work (SOW) is a document that lists and describes all essential and technical requirements for the effort to be performed, including standards to be used to determine whether the requirements have been met. This document may include the following items where appropriate:

  • Objective or Purpose
  • Period of Performance
  • A list of detailed work requirements
  • Workload requirements
  • Personnel requirements
  • Resources (if any) to be furnished to the subcontractor.
  • Reporting requirement/Other deliverables

5.2.2 Sole Source Justification

It is necessary to include documentation that you have obtained quotes from alternative vendors or completed a Sole Source Justification form. The PI is required to provide information of the technical competence of the sole source selection.

5.2.3 Cost Price Analysis

The PI is also required to provide a technical assessment of the subaward budget. The assessment would include verification that the costs are reasonable and necessary to carry out the proposed project. The cost elements within the subaward budget must be necessary to accomplish the proposed activity.

The Government is responsible for insuring that Georgia Tech maintains adequate policies and procedures governing subcontracting activities on federally sponsored grants and contracts. These activities are monitored through the periodic Contractor Purchasing Systems Review (CPSR) conducted on campus by the Office of Naval Research every three years. The cost price analysis form is a key component in the Government’s review of our purchasing system.

One of the Government’s principal procurement objectives is to obtain fair and reasonable contract prices. Sub-award pricing is a critical element in the pricing of prime contracts and a major consideration in receiving Government consent to sub-awards and approval for contractor purchasing systems. Sub-awards can sometimes represent a major portion of the total dollars spent under a prime contract. Contracting officers cannot ensure the fairness and reasonableness of prime contract prices without evaluating the prices of critical sub-awards.

In accordance with the Federal Acquisition Regulation (FAR), the contracting officer is responsible for the determination of price reasonableness for the prime contract. To make this determination, the contracting officer must conduct an analysis of the relevant facts and data including subcontractor cost or pricing data. In all cases, a main consideration is to assure that the price to be paid for these goods and services is fair and reasonable. This is essential to insure that both University and Government funds are utilized in a cost effective manner and to conserve funding where resources are limited. To accomplish this, some form of cost or price analysis must be made and documented in connection with every procurement action.

A price analysis is an examination of the price proposed by the anticipated subcontractor and an assessment or evaluation as to whether or not it is fair and reasonable. A cost analysis however, actually examines the individual cost elements that comprise the total proposed estimated cost. These elements generally include such things as labor rates, material costs, overhead or indirect rates, a cost of money factor, general and administrative expenses (G&A), and a profit or fee.

It is not possible for personnel in the Office of Sponsored Programs (OSP) to determine if the price is fair and reasonable without input from others. OSP can evaluate costs, but assistance will be required from the responsible Project Director/Principal Investigator to evaluate the appropriateness of the total price.

If a sub-award exceeding $700,000 is to be issued under a Government contract prime award, OSP must be in compliance with Public Law 87-653, Truth in Negotiations. [The Public Law has been implemented in the United States Code of Federal Regulations 10 U.S.C. 2306a (Armed Forces) and 41 U.S.C. 254b (Public Contracts) and in the Federal Acquisition Regulation Part 15 and Clause No. 52.215-12.]. Public Law 87-653, Truth in Negotiations (TINA) is a requirement for cost or pricing data and certification for any sub-award expected to exceed $700,000. The sub-awardee is required to submit cost or pricing data prior to placement of the sub-award unless one of the following exceptions applies:

  • When the sub-award administrator determines that prices agreed upon are based on adequate price competition.
  • When the sub-award administrator determines that prices agreed upon are based on prices set by law or regulation.
  • When a commercial item is being acquired.
  • When a waiver for cost or pricing data has been granted by the Government contracting officer under the prime award.
  • When modifying a contract or sub-award for commercial items.

Cost or pricing data shall be obtained if the sub-award administrator concludes that none of the exceptions above applies. When cost or pricing data are required, the sub-award administrator shall require the sub-awardee to submit the following in support of any proposal:

  • Cost or pricing data (See FAR 15.408, Table 15-2 for guidance).
  • A certificate of current cost or pricing data, certifying that to the best of its knowledge and belief, the cost and pricing data were accurate, complete, and current as of the date of agreement on price or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price. (See FAR 15.406-2 for format.)
  • For sub-awards under the TINA threshold the guidelines of FAR 15.403-3, Requiring Information Other than Cost or Pricing Data, should be utilized in certain cases. This would also include thorough documentation of cost or price reasonableness in accordance with FAR 15.406-3, documenting the negotiation.

5.3 Subrecipient Monitoring

Georgia Tech is responsible for ensuring that all subrecipients of its sponsored research awards are in compliance with applicable requirements in accordance with 2 CFR 200 Subpart D Subrecipient Monitoring and Management and Subpart F – Audit Requirements, when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equals or exceed $750,000 (2 CFR 200.501). These guidelines and procedures are provided to assist faculty and staff in ensuring that subrecipients conduct their portions of research projects in compliance with laws, regulations and terms and conditions of awards and subawards and that project costs incurred by subrecipients are reasonable and allowable.

Roles and Responsibilities

  • Principal Investigators (PI)

    PIs have primary responsibility for monitoring subrecipient's technical and financial performance to ensure compliance with federal regulations and both prime and subrecipient award terms and conditions. The Federal Government places the primary responsibility for management of federally funded projects with the PI. This includes:

    • Monitoring of subrecipient’s programmatic and financial activities related to the sub-award.
    • Review of technical/performance reports as required.
    • The PI is responsible for verifying the subrecipient work is conducted in a timely manner and that the results delivered are in line with the proposed statement of work.
    • The PI is responsible for reviewing and approving subrecipient invoices. This includes reviewing expenditures to ensure the charges are allowable, allocable, reasonable, and that the charges are within the period of performance.
    • The PI is responsible for maintaining regular contact with the subrecipient.
  • Unit Financial Officers (Departmental Administrators)

    Unit Financial Officers (UFO’s) should assist PI’s in carrying out their subrecipient monitoring responsibilities. This includes:

    • Reviewing invoices from subrecipients to ensure invoices are within the parameters of the sub-award budget, and questioning expenditures if necessary.
    • Ensure that invoices are approved by the PI or his/her designee and submitted to Accounts Payable in a timely basis.
    • If there are any unusual or excessive charges invoiced by the subrecipient, the department should request clarification from the subrecipient.
    • Maintain copies of all invoices that provide evidence of the regular review of invoices by the PI. “Evidence” can be in the form of authorized signature by the PI or his/her designee, PI’s initials, e-mail communications, or notes of meeting between the PI with the department administrator.
    • Maintaining documentation of monitoring efforts (copies of e-mail, phone log, etc.).
  • Office of Sponsored Programs (OSP)

    OSP is responsible for the oversight of subrecipient monitoring and ensuring that the Institute’s subrecipient monitoring procedures are compliant with federal and other applicable regulations. These responsibilities include:

    • Identifying to the subrecipient the Federal award information as required in section 2 CFR 200.331 (e.g., CFDA title and number, award name, name of Federal agency) and applicable compliance requirements, including any appropriate flow-down provisions from the prime agreement.
    • Ensure the use of subrecipient is well documented and cost price analysis performed in accordance with applicable regulations.
    • Determining whether or not the subrecipient or its PI’s are debarred or suspended from receiving Federal funds.
    • On an annual basis, reviewing all active sub-awards for which monitoring is mandated. Accordingly, OSP requests audit certification letters from all subrecipients expending $750,000 or more in Federal funds during the subrecipient’s fiscal year.
    • The returned certification letters are reviewed by the OSP Audit Coordinator to verify that no audit findings related to Federal funds provided by Georgia Tech are reported. If no findings are indicated, the OSP Audit Coordinator will initial, date, and notate that no follow-up action is required. OSP will inquire further into those that are deemed to require closer scrutiny, and take appropriate action.
    • Add additional conditions to the subaward when appropriate in accordance with 2 CFR 200.207 to manage any risk posed by subrecipient.
    • In accordance with FAR 52.219-9(d)(9), for Subrecipients under Federal Contracts, when a subcontract is awarded to a subcontractor (other than a Small Business) and is in excess of $650,000, OSP will obtain a Subcontracting Plan from the subcontractor.
    • In accordance with FAR 52.215-12, will obtain from the subcontractor a Certificate Cost or Pricing Data on all subcontracts in excess of $700,000 and issued under a Federal contract.

The above list is not exhaustive of all compliance requirements. In addition to the general elements of compliance noted above, there may be additional sponsor- or program-specific requirements that mandate collecting and documenting other assurances (e.g. on lab animals, human subjects, biohazards, export controls, financial conflicts of interest etc.) during the course of a project. OSP will work with PIs and department administrators to establish channels of communication with subrecipients that require further scrutiny.

5.4 Closeout of Subawards

Detailed information is available at: http://www.osp.gatech.edu/contractual-close-out/.