Subawards
A subaward or subcontract is a legally binding written agreement with terms and conditions governing project performance requirements from the primary recipient of funding (often referred to as the “pass-thru entity” or “PTE”) to a secondary recipient (often referred to as a “subrecipient”). A subaward is required when a portion of Stevens’ award is performed by the subrecipient’s personnel, using its own facilities and resources. Subawards for sponsored grants or contracts generally require prior authorization from the Sponsor. When the subaward is not approved at the initial application stage, written prior approval is usually required from the Sponsor. To initiate an outgoing subaward agreement to an external partner contact [email protected].
Proposing a Subaward
Determining the Need for a Subaward
The PI is responsible for determining the need for a subaward on a sponsored project, and for the initial determination that a subaward relationship is appropriate. When a portion of the work is completed by another party it is important to determine whether the other party is acting as a subrecipient tor a consultant. PIs may be assisted by an OSP Pre-Award or Post-Award Specialist in making these determinations.
Selection of a Subrecipient
The PI must select a subrecipient based upon their assessment of the potential subrecipient’s ability to perform the Statement of Work successfully. This includes an analysis of the subrecipient's past performance, technical resources, financial viability, and an assessment of the reasonableness of the subrecipient’s proposed costs in light of the work to be performed. Although this should be an infrequent occurrence, occasionally a PI may recognize the need for outside involvement on a project but is either unable to identify the best subrecipient by the time of proposal submission or is unable to acquire all of the required paperwork from that subrecipient prior to proposal submission. In these instances, proposals may be submitted with a subrecipient To Be Named (TBN). PIs may be asked by their institutional representative to provide documentation of the basis for their subaward cost estimate for the work being performed. PIs will also be responsible for managing any budgetary shortfalls that may result from their inability to accurately predict a subrecipient's costs. Subrecipients should not be asked to reduce their F&A recovery or to otherwise cost-share because of Stevens' failure to include appropriate costs in our proposal.
Required Elements to Include in a Subaward Proposal
Stevens requires the following documents for each named subrecipient to be included as part of Stevens’ proposal to the sponsor. Proposals will not be endorsed by Stevens’ institutional officials until these elements are on file. Subrecipient’s SOW, including a clear description of the work to be performed, the proposed timelines, and deliverables.
It should be noted that in the event a proposal is submitted with a TBN subrecipient, a specific SOW is required prior to a subaward agreement being issued Subrecipient’s budget and budget justification, including the subrecipient’s direct and indirect costs, calculated using the subrecipient’s approved F&A and employee benefit rates, and verifying any committed cost sharingAn OSP Subrecipient Audit & Data Form (OSP Form 400) that is completed and signed by the subrecipient’s institutional officialAny additional elements that may be required by Stevens’ sponsor for inclusion in the proposal.
Subrecipient proposal elements are expected to conform to the sponsor requirements for Stevens' prime proposal and should be in the format required by the sponsor.
Exceptions to the requirements outlined above should be rare. In these cases, documentation must be maintained as to why an exception was granted and what follow-up action was taken to ensure that the proposal was retroactively brought into compliance in a timely manner (not more than two weeks after the proposal has been submitted).
If appropriate and acceptable documentation is not provided in a timely manner, Stevens may withdraw the proposal from sponsor consideration. Copies of approved exceptions should be promptly furnished to the Director of Sponsored Programs.
Applying Facilities & Administrative (Indirect Cost) Rates to Subawards
There are two types of Facilities & Administrative (F&A) costs on subawards: those earned by the subrecipient, and those earned by Stevens.
A subrecipient is expected to apply its own federally negotiated F&A and employee fringe benefit rates when preparing its subaward budget, unless a lower rate or base has been agreed to by the subrecipient's institutional official (e.g., to meet cost-sharing requirements, or to meet a sponsor's F&A rate limitation.) If a subrecipient does not have an approved F&A rate, it must either have its proposed indirect cost rate approved by Stevens or elect not to recover indirect costs. This function is performed by OSP working directly with the proposed subrecipient and its audit firm and/or CPA. This review is best done before a proposal is submitted to a sponsor, but must be completed before Stevens can issue a subaward. For subawards issued under federal funding in accordance with OMB Uniform Guidance, Section 200.414, subrecipients who do not have a federally negotiated F&A rate may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC). Stevens applies the OMB Uniform Guidance "life-of-the-award" policy with respect to its subawards and will use the approved F&A rates authorized at the time of issuance of the subaward. That means that the terms of the subrecipient’s F&A rate agreement in effect when the subaward is issued will govern F&A charges throughout the performance of the subaward. The period of performance on a subaward will not exceed Stevens’ competitive segment on its award. When a renewal subaward is issued under a Stevens’ award, that uses an MTDC base for calculating F&A, Stevens will recover its F&A on the first $25,000 of the renewal subaward.
When Stevens' prime award uses an F&A rate that is based on an MTDC base, Stevens will recover its own F&A on the first $25,000 of each subaward on a project. This recovery is calculated on the life of the subaward. When Stevens' prime award uses a total direct cost rate, Stevens will recover its own F&A on the full cost of a subaward.
Any exceptions that impact Stevens' recovery of F&A must be approved through the Indirect Cost Waiver process.
Issuing a Subaward
Authorization for Subrecipient to Begin Work
A subaward authorizing the entity to begin work can only be issued after the prime agreement from Stevens’ sponsor has been fully executed. A subaward will not be issued, nor payments to a subrecipient authorized, prior to Stevens’ receipt and acceptance of a funding commitment from the prime sponsor. A Stevens’ PI or designee may not authorize a subrecipient to begin working without a fully executed subaward agreement in place. Proposed subrecipients who commence work without a fully signed subaward agreement from OSP do so at their own risk and have no assurance of payment from Stevens. In the event a subaward is subsequently issued to a subrecipient, a subrecipient may claim costs properly incurred under its own risk and within the stated period of performance (POP), provided that the costs are otherwise allowable. In such cases, the subrecipient must furnish evidence to Stevens that all required compliance approvals were in place at the time the costs were incurred.
After an award has been accepted and an account established by the university, the PI will be contacted by the assigned OSP Postaward Specialist and asked to complete and return OSP Form “Request to Issue a Subaward” and for subawards issued under a prime contract, either OSP Form 405A “Explanation of Costs for US University or Non-Profit” or Form 405B “Explanation of Costs for Commercial or International Organization.” These requests document the amount authorized by the PI for the subaward and delineates the desired period of performance. OSP will not issue a subaward until an approved request is on file. The following items must be present in order for OSP to begin drafting the subaward agreement:
Subrecipient Statement of Work
Subrecipient detailed budget and budget justification
Subrecipient’s OSP Form 400 “Subrecipient Audit and Data Form”
For subawards on non-SERC Federal contracts only: OSP Form 405A “Explanation of Costs for US University or Non-Profit" or OSP Form 405B “Explanation of Costs for Commercial or International Organizations”
As part of the subaward issuance process, OSP will collect additional compliance documentation and issue subawards in compliance with sponsor terms and applicable regulations, including the OMB Uniform Administrative Guidance, Sections 200.330-332.
Subawards are generally issued in twelve-month increments and modifications to extend existing subawards are issued by OSP in response to PI confirmation of acceptable subrecipient performance. Modifications to reduce or otherwise modify obligated funding or prematurely terminate an approved subaward are not allowable unless the PI submits a corresponding email request to OSP to request a formal change in the subaward. In such cases, Stevens is required to honor the terms of the subaward, which typically require an advance notice and reimbursement for uncancellable obligations.
Subaward Periods of Performance and Duration
The period of performance of a subaward (including any requested extensions) may not be outside of Stevens’ period of performance allowed under the prime award. Subawards may, however, be issued for shorter periods of time than Stevens’ full period of performance. A new subaward will be issued whenever Stevens’ sponsored project receives funding under a new competitive segment and upon confirmation from the Stevens PI that they wish to extend the subaward. *NOTE: Task Orders (TOs) issued under IDIQ or BOA prime contracts sometimes are issued late in the contract’s POP and may have expiration dates outside of the prime contract.
Subaward Funding Mechanisms
Stevens typically issues subawards on a cost-reimbursement basis. Rare exceptions may be made when it can be demonstrated that a fixed-price agreement is in the best interest of the university. For subawards issued under federal awards, per OMB Uniform Guidance, Section 200.332, prior written approval from the prime sponsor will be required on fixed-price subawards up to the Simplified Acquisition Threshold.
Initiating a Subaward after the Proposal is Submitted
A PI may decide it is necessary to engage the services of a subrecipient after the proposal has been submitted to the prime sponsor or after an award has been received. In this case, the PI must submit the required elements for a subaward to OSP as described in these Guidelines. Sponsor prior approval may be required. PIs are responsible for initiating such requests for Sponsor approval and routing them through OSP. All requests of this nature must be signed by the appropriate authorized institutional official. Subawards may not be issued until all necessary sponsor approvals are obtained.
Principal Investigator Monitoring Responsibilities
Stevens is responsible for ensuring that sponsor funds, including those provided by Stevens to other entities, are spent in accordance with all applicable laws and regulations. OMB Uniform Guidance requires Stevens, as the pass-through entity, to monitor its subrecipients. This monitoring requirement places Stevens in much the same position as if it were a Federal agency dealing with its own primary recipient.
Stevens has identified the PI (because of their technical expertise) as the individual primarily responsible for monitoring the programmatic and financial performance and progress of a subaward. Except as noted below, the subaward monitoring and compliance obligations of the PI may be shared with departmental administrators, OSP Subaward Specialists, or other Stevens employees; however, in no event may such monitoring and compliance obligations be delegated to a non-Stevens’ employee.
As part of Stevens’ monitoring responsibilities, the duties of the PI during the life of the subaward are as follows:
To understand the terms and conditions of the prime award, including those flowed down to the subrecipient and those that may have been imposed by Stevens, and to regularly monitor the subrecipient's adherence to the subaward's terms and conditions. Such monitoring may take place through phone calls, emails, site visits, meetings, or other regular contact, whether in-person or virtual.
To verify that the costs incurred are in accordance with the approved budget or permissible rebudgeting; that costs were incurred within the approved period of performance and overall cost limitations, and are aligned in terms of cost and type of expense with the scientific progress reported to date; and that the costs are allowable, allocable and reasonable as they relate to the terms and conditions imposed by the sponsor and the subaward issued by Stevens. In the event the level of detail included on an invoice is not sufficient to understand the direct costs, or if it appears that some costs may be excessive or understated, the PI is responsible for questioning the subrecipient's expenditures, requesting further documentation or explanation prior to approving an invoice. Copies of all such documentation and the ultimate outcome of the investigation should be retained in the project file. Such inquiries should be done in a timely manner (within thirty days after receipt of an invoice) so that the subrecipient can be promptly paid for approved costs. OSP staff is available to assist PIs and their departmental staff in resolving issues that may arise.
To personally approve acceptable subrecipient invoices for payment. The Stevens’ PI’s signature on the invoice shall certify that they approve payment of the invoice, attests that the charges appear reasonable and that progress to date on the subaward is satisfactory and in keeping with the statement of work and the bills submitted by the subaward PI.
To monitor the subrecipient's scientific progress in terms of the Statement of Work and any required milestones. If scientific progress is not satisfactory, or if technical reports required of the subrecipient are not prepared timely, the PI is responsible for contacting the subrecipient to address these issues and advising the OSP Subaward Specialist. If continued performance is not satisfactory, PIs should contact OSP to discuss appropriate remedial actions or termination of the subaward.
To verify that the subrecipient is adequately meeting any cost sharing commitments made for the subaward.
To verify that any human subject, animal subject, biosafety or other compliance approvals applicable to the subrecipient's Statement of Work are kept current throughout the performance of the subaward, both from the Stevens’ Research Compliance Office and from the subrecipient's parallel boards or committees. In the event of a lapse in approval, the PI is responsible for immediately notifying Stevens’ applicable compliance committee and the OSP Subaward Specialist. Costs incurred by a subrecipient during a period of lapse may not be charged to a subaward.
To be the primary point of contact for the subrecipient during the technical performance of the subaward. The PI may delegate those responsibilities on a day-to-day basis to another member of the research project, so long as such other member is a full-time, regular Stevens’ employee; however, such delegation may not be made to a contractor or temporary employee working at Stevens.
To ascertain whether the subaward Statement of Work or budget, or both, require modification to add funding, time, or other considerations, and to notify OSP in a timely manner so an amendment to the subaward agreement may be prepared.
To assist OSP, upon request, in obtaining or reviewing reports, advising OSP during risk analyses, complying with additional monitoring responsibilities for high-risk auditees, obtaining audit information, monitoring a subrecipient's adherence to corrective action plans, and participating in the efficient completion of project performance and subaward close-out.
Closeout of a Subaward
Close-Out Procedure
A subaward is closed out when its period of performance comes to an end, regardless of whether Stevens’ research project is ending or continuing. It may be advisable for a subaward period of performance to be somewhat shorter than Stevens to allow sufficient time for collection and review of the subrecipient's final reports, verification of subrecipient data, and incorporation of the subrecipient's research results into Stevens’ final technical report to the sponsor.
Final Technical Reports
PIs are responsible for obtaining final technical reports from their subrecipients, and retaining a copy in their project file. PIs are encouraged to remind subrecipients of this need well in advance of the due date for such reports.
Other Close-Out Reports and Documents
Other final reports, including property reports, patent reports, small/small disadvantaged business reports, and Assignment and Release documents may be required. PIs and departments may be asked to assist OSP in obtaining the necessary closeout reports in a timely manner from the subrecipient.
Final Invoice
For Stevens to comply with its financial report requirements, subrecipients are required to submit a final invoice (clearly marked FINAL) to Stevens no later than specified in the Subaward Agreement. In the event a Final invoice is not received within the require timeframe, Stevens may treat the subrecipient's last approved invoice as its final invoice. Late Final invoices submitted to Stevens may not be paid. PIs and departments are responsible for assisting OSP in obtaining final closeout information, including invoices, from their subrecipients.
At times, to accommodate certain contractual requirements, an “Interim Final Invoice” is submitted to the sponsor, then a “Final Invoice” is submitted. The subaward agreement should specify these circumstances.