Subrecipient Monitoring

Office of Sponsored Programs

Christina Stanger, CRAstanger@umbc.edu, ext 5-4155

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Departmental Research Administrators Training Track

Course Overview

Module I: Intro, Definitions, & Workflow Module II: UMBC Policies &

Federal Compliance Issues Helpful Websites

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Module I: Definitions

OMB A-110 (2 CFR Part 215) Definition:

Subaward means an award of financial assistance in the form of money, or property in lieu of money, made under an award by a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient. The term includes financial assistance when provided by any legal agreement, even if the agreement is called a contract, but does not include procurement of goods and services nor does it include any form of assistance which is excluded from the definition of "award" in paragraph (e)…(“e” is from A-110’s definition of an award).

Subrecipient means the legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided. The term may include foreign or international organizations (such as agencies of the United Nations) at the discretion of the Federal awarding agency.

Module I: Definitions

UMBC Definition: A subaward issued by UMBC refers to an

agreement between UMBC and any other organization in which a Principal Investigator (PI) at the other organization will assist UMBC in accomplishing an externally-funded project by performing substantive work on the project. Substantive work is effort in which the collaborator engages directly in the performance of the specific aims of the project. UMBC and the subrecipient mutually agree on how the substantive work will be performed and how it will be measured. The subaward will have a PI and will generally have potentially patentable or copyrightable technology and/or publications resulting from the project. A subaward does not include agreements for the procurement or purchase of routine goods or services.

Module I: Definitions

Subaward Refers to an agreement in which grant terms and

conditions are being flown down to the subrecipient

Subcontract Refers to an agreement in which contract terms

and conditions are being flown down to the subcontractor

Modifications (Mods)/ Amendments Refers to official changes to the terms & conditions

of the initial subaward/subcontract

Module I: When to SubawardAppropriate Use of Subawards the scope of work to be performed utilizes the facilities,

employees and/or resources of a subrecipient; the subrecipient is contributing substantively to the scholarly

and/or scientific conduct of the project as described in the scope of work and has responsibility for programmatic decision making;

the subrecipient has responsibility for adherence to applicable federal program compliance and performance and is measured against whether the objectives of the federal program are met;

the subrecipient will bring a unique knowledge and expertise to the project and conduct the work mostly independent of UMBC’s direct supervision or control with only general technical direction and coordination exercised by the UMBC PI; and

the subrecipient, as part of its primary business operations, does not provide the same goods and services to others and will be using the subaward funds to carry out a program of the subrecipient organization rather than provide goods and services to complete a program for the sole benefit of UMBC (e.g. purchase, fabrication or repair of equipment, data processing, routine analytical or testing services).

Module I: When to SubawardInappropriate Use of a Subaward if the agreement is for the provision of goods or

services within normal business operations; if the organization/business provides similar goods or

services to many different purchasers; if the organization/business operates in a competitive

environment for the provisioning of the goods or services to be procured;

if providing goods or services are ancillary to the operation of the funding agency; or

if the organization/business is not subject to the requirements of the funding agency.

When a subaward is not appropriate, the PI/department should check with the Procurement Department for information on how to purchase the goods or services. Note, F&A is charged on only the first $25,000 of a subcontract but on the entire amount of a vendor contractual arrangement.

Module I: Pass-Through Entity Relationship

Prime Sponsor(Federal Agency, State Agency,

Contractor, etc..)

Prime Awardee(UMBC)

Subrecipient 1 Subrecipient 2 Subrecipient 3

Sub-Tier Subrecipient A

Sub-Tier Subrecipient B

Module I: Pass-Through Entity Relationship Privity of contract exists between UMBC & any subrecipient, meaning the

subrecipient should always contact UMBC for request and prior approvals (never the prime sponsor). Privity exists between the prime sponsor and the prime awardee (UMBC), and privity exists between the prime awardee (UMBC) and the subrecipient. There is no privity between the prime sponsor and the subrecipient

The subrecipient has no legal recourse against the prime federal sponsor The prime awardee (UMBC) would be ultimately responsible in the eyes

of the federal government for the performance of the subrecipeint. All proposed cost sharing or unallowable costs generated by the subrecipient is the responsibility of the prime awardee (UMBC). Subrecipients are, however, subject to federal audits due to the relationship established by a subaward from the prime awardee (UMBC). It is up to UMBC to ensure the subrecipient is in compliance with federal regulations. Federal sponsors will recoup any cost sharing or unallowable costs through the prime awardee (UMBC).

Module I: Workflow for a New Subrecipient

OSP receives primary grant

with subaward pre-approval

OSP contacts UMBC PIto verify collaboration,dates, amounts, etc…

Changes from Original Proposal?

PI/Bus. Mgr. provides OSP with revised Budget/SOW/Etc..

OSP collects subrecipient compliance

data & certifications

OSP drafts subagreement with specific

flow-down T&C

Bus. Mgr. submits a purchase request &

forwards the PR # to OSP

OSP sends draftagreement to PI

for review & approval

PI reviews & sends approval to OSP

OSP partially executes & sends to

subrecipient AO

OSP contacts Procurement for the

PO #, which becomes the subaward #

OSP receives fully executed subagreement& send to PI/Bus. Mgr.

Subrecipient begins work & invoices

against PO

yes

no

Module I: Workflow for Modifications OSP receives

primary grant/contractamendment

OSP contacts UMBC PIto verify sustainability

& get approval for subaward mod

OSP drafts mod with revisions & gets

PI approval

Revisions to Original T&C?

OSP partially executesmod & sends to

subrecipient for signature

OSP receives fully executed mod from

subrecipient

OSP forwards executed mod to PI & Bus. Mgr.

Bus. Mgr. ensures PO change request issubmitted to &

processed byProcurement

yes

no

OSP verifies annual certifications

or retrieves them

OSP drafts modification

Subrecipientcontinues work

& invoicingaccording to mod

Module I: Workflow for Invoice Payment

OSP receives thesubaward invoice from

Accounts Payable

OSP conducts a 2-person review via

the subaward checklist Problems?

OSP contacts the subaward financial

contact or UMBC dept

yes

no

OSP gets a resolutionto the invoice problem

OSP forwards the invoice to the PI &

Bus. Mgr., notating any issues/resolutions

PI & Bus. Mgr. reviewinvoice & verify expenses match project progress

Bus. Mgr. ensures a receipt is enteredinto PeopleSoft forinvoice payment

AP reviews, approves & sends payment request to the State

State reviews [30 days] & verifies subrecipient

does not owe Statefor any reason

Subrecipient is paid amount of invoice --

sometimes minus outstanding State debt

Module I: Workflow for Close OutPrime award ends, subaward ends, or

PI terminates subaward

PI notifies OSPof termination or vice versa

OSP contacts Subrecipient and

request property &patent/invention reports

Subrecipientsubmits reports

PI request final technical report

From subrecipient

Subrecipient reportsare used to close out

UMBC prime award

Module II: Policies & Compliance

FederalRegulations

Federal AgencyPolicies

UMBC Policies / Terms & Conditions

Subrecipient Institute’s Policies

Refers to OMB’s/CFR’s; Federal Law

Refers to Specific Agency Requirements

Subrecipients must follow all of these

laws/regulations/policies

Module II: Policies & ComplianceWe Flow Down:

Module II: Policies & Compliance

OMB A-21 (2 CFR Part 220)Cost Principles for Educational Institutions(Allowable, Allocable, Reasonable & Consistently-Treated Expenses)

OMB A-110 (2 CFR Part 215)Uniform Administrative Requirements for Grants & Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit(Management & Monitoring of Federal Funds; Also sets forth consistency & uniformity among Fed Agencies for administration of grants & contracts to institutions of higher education)

We Flow Down:

Module II: Policies & Compliance

OMB A-133Audits of States, Local Governments, and Non-Profit Organizations

Title 34 CFR (§ 84.630)Debarment means an action taken by a Federal agency to prohibit a recipient from participating in Federal Government procurement contracts and covered nonprocurement transactions. A recipient so prohibited is debarred, in accordance with the Federal Acquisition Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and the common rule, Government-wide Debarment and Suspension (Nonprocurement), that implements Executive Order 12549 and Executive Order 12689.

We Flow Down:

Module II: Policies & Compliance

Federal Funding Accountability & Transparency Act of 2006 (FFATA)-18 month delay for subrecipients

American Recovery & Reinvestment Act (ARRA)- Subawards are subjected to ARRA reporting- Reporting is due no later than 5 days after each calendar quarter for subawards

We Flow Down:

Module II: Policies & Compliance

Federal Compliance Issues- Proper monitoring of subrecipient spending- Certifications for cost sharing & compliance

UMBC Subaward Policies & Procedures- Defines use of subrecipient agreements- Defines monitoring responsibility- Provides general procedures

Module II: Policies & Compliance

verifying that work performed by the subrecipient is conducted in a timely manner and is acceptable;

reviewing and approving subrecipient invoices (to be forwarded by OSP); Verify salary, expenses, & effort = work being produced!

maintaining regular contact with the subrecipient regarding the technical aspects of the project;

performing site visits as necessary to review fiscal and programmatic records and/or observe programmatic activities; and

ensuring that all deliverables (e.g. technical, property, and invention reports) required under the subaward are being provided.

Subrecipient MonitoringPI & Department Responsibility

Module II: Policies & Compliance

informing each subrecipient of the CFDA title and number, award name and number, and name of the federal agency providing funding;

advising subrecipients of the requirements imposed on them by federal laws, regulations, the provisions of the prime award, or provisions of UMBC;

ensuring that non-profit subrecipients expending $500,000 or more in federal awards during the subrecipient’s fiscal year have met the audit requirements of OMB Circular A-133;

issuing a management decision (when subrecipients have A-133 audit findings) within six months after receipt of the subrecipient’s audit report and ensuring that the subrecipient takes appropriate and timely corrective action;

considering whether subrecipient audits necessitate adjustment of UMBC’s own records;

Subrecipient MonitoringOSP Responsibility

Module II: Policies & Compliance

requiring each subrecipient to permit UMBC and auditors to have access to the records and financial statements as necessary for audit purposes;

reviewing and approving subrecipient invoices and forwarding them to the PI for review and approval; and

verifying cost sharing commitment is documented and certified by subrecipient

verifying the subrecipient has not been debarred or suspended from receiving federal funds

verifying the subrecipient has an IRB or IACUC approved research protocol

performing desk audits and/or site visits as necessary for review of subrecipient financial records; and

obtaining a Small Business Subcontracting Plan from the subrecipient if a subaward is on a federal contract incorporating the Small Business Subcontracting Plan requirement, the amount of the subaward is $550,000 or more AND the subrecipient is not a small business.

Subrecipient MonitoringOSP Responsibility (Continued)

Module II: Policies & ComplianceWhat happens if we don’t comply?

UMBC NSF Audit 2006 Finding: Inadequate subrecipient monitoring of

costs Finding: Inadequate monitoring of subrecipient

cost-sharing Action: Audited UMBC subrecipients Resolution: UMBC charged with developing a

comprehensive subrecipient fiscal monitoring plan, including reviewing cost sharing data and supporting cost documentation from its subrecipients on a regular basis

Module II: Policies & ComplianceWhat happens if we don’t comply? HHS Audit of Yale subaward to U Mass

Medical School Major signal about the responsibility to

monitor subrecipients Disallowed $194K of a $572K award Disallowed cost transfers, effort, cost

allocation methodology

Useful Websites

OSP http://www.umbc.edu/research/OSP/ Excluded Parties List https://www.epls.gov/ Harvester http://harvester.census.gov/sac/ FFATA http://www.ffata.org/ffata/ FDP http://www.thefdp.org/ MD State Vendor Payments

https://interactive.marylandtaxes.com/extranet/gad/GADLogin/login.asp

Query for viewing invoice pymts in PS: UM_AP_VCHRS_BY_PROJECT_PD

Questions?

References

UMBC Subrecipient Policy & Procedures Univ. of Minnesota “Dirty Deeds”

presentation Univ. of Mississippi Subrecipient Policy Management Concepts course

“Subawarding for Pass-Through Entities”