The University of Memphis

Subagreements Issued to a Third Party



POLICIES

Issued: June 28, 2011
Responsible Official: Vice President for Business & Finance
Responsible Office: Accounting

Policy Statement


 

Sponsored awards made to the University are generally conducted within the physical boundaries of the University. On occasion, substantive programmatic work is parceled out to one or more institutions (subrecipients), who are made responsible for a portion of a project awarded to the University. These activities constitute a significant portion of the research program and require the leadership and direction of a responsible principal investigator located at the work site of the cooperating institution.

This policy details consistent practices for Subrecipient Monitoring of sponsored subagreements.

The Principal Investigator is primarily responsible for monitoring subrecipients to ensure that programmatic and financial objectives are met, and that no Conflict of Interest exists between the Subrecipient, the University or the Principal Investigator.

Authority

This guidance has been established to meet federal regulations and compliance standards set forth in:

Title 2 in the Code of Federal Regulations (2 CFR), Part 220, Cost Principles for Educational Institutions (formerly Office of Management and Budget (OMB) Circular A-21).  

Title 2 in the Code of Federal Regulations (2 CFR), Part 215, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-profit Organizations (formerly Office of Management and Budget (OMB) Circular A-110). 

OMB Circular A-133, Audits of States, Local Governments and Non-profit Organizations.



Purpose


 

The purpose of this policy is to establish practices that must be consistently applied for Subrecipient Monitoring of sponsored subagreements at the University of Memphis.

These guidelines and procedures are provided to assist responsible faculty and staff in ensuring that subrecipients conduct their portions of research projects in compliance with laws, regulations and the terms and conditions of awards and subawards, and that project costs incurred by subrecipients are reasonable and allowable.



Definitions


Conflict of Interest

The Subawardee and/or the Subawardee’s principal have a significant financial interest in a proposal that may affect, or be perceived to affect, the results of the research proposed.


Consortium

An association or a combination of businesses, financial institutions, organizations, or investors, for the purpose of engaging in a joint venture; a cooperative arrangement.


 

Programmatic Objective

To ensure the assigned technical and/or scientific goals are met as outlined in the scope of work.


Subagreement

A contract between a party of an original contract and a third party that assigns part of the performance of the original contract to the third party. for purposes of this policy, where reference is made to "subagreement," reference may be  to subaward, subcontract or consortuium agreement, dependent upon the nature of the prime award.


Subrecipient

A third-party organization performing a portion of the University’s sponsored agreement. The University’s relationship with the subrecipient is documented in a subagreement.


Subrecipient Monitoring

Activities taken by the University of Memphis to review the financial status and management controls of a subrecipient to mitigate the risk of contracting with a subrecipient organization.


Vendor

An organization providing a recipient or subrecipient with generally required goods or services that are related to the administrative support of the sponsored program.



Procedures


Pre-Proposal

The Principal Investigator (PI) is integral to identifying and managing subrecipients.  When the PI recognizes that there is a potential need for a subrecipient in a proposal, Research Support Services (RSS) should immediately be notified to ensure timely submission of the proposal.

RSS will require a Subrecipient Commitment Form to be completed for all subrecipients included in a project proposal.  See Related Forms below.

Upon receipt of the Subrecipient Commitment Form, RSS will perform a risk analysis to determine the level of risk for subcontracting with the proposed organization/institution.

In consultation with the PI, and based on the risk analysis, a decision will be made regarding whether to include this subagreement in the proposal.

Vendor or Subrecipient Determination

A vendor is measured by the following:

  • Provides goods or services as part of its normal business operations to various purchasers;
  • Provides professional services or highly technical advice;
  • Provides goods or services which are ancillary to the Federal award; and,
  • Is not subject to the compliance requirements of the Federal award.

 A Subrecipient is measured by the following:

  • Responsible for helping the University meet the requirements of the prime award;
  • Performs a substantive portion of the project activities which are the primary purpose of the prime award;
  • Responsible for incurring project costs that are reasonable and allowable;
  • Measures performance against the objectives of the Federal program; and,
  • Responsible for adhering to applicable Federal program compliance requirements.

Key questions to ask to determine whether the organization is a subrecipient are:

  • Is there an identified investigator at the subrecipient organization?  If yes, is he or she a co-investigator on the primary award?  
  • Is the subrecipient organization free to decide how to carry out the activities requested of it?
  • Will there be potentially patentable or copyrightable technology created or reduced to practice from the activities of the subrecipient?  If yes, does the entity have rights to, or the right to file for protection of, its technology?
  • Are publications anticipated from the subrecipient?  Will individuals at the lower-tier organization be co-authors on articles?
  • Under federal assistance funding, is the subrecipient organization providing cost sharing or matching funds?

If the answers are “yes” to any of the above questions, the relationship probably is with a subrecipient.

Key question to ask to determine whether the organization is a vendor:

  • Is the activity to be performed a series of repetitive tests or activities requiring little or no discretionary judgment on behalf of the service provider?

If the answer is “yes,” then the relationship is most likely with a vendor.

 


Notification of Prime Award

 

Upon notification of the prime award, RSS will contact the Principal Investigator to determine the updated scope of work, timing of subcontract and subcontract budget.

 


Subagreement Issuance

RSS will provide a copy of the fully executed subagreement to the PI, Business Officer, and Grants and Contracts Accounting.

 


Subrecipient Monitoring

RSS and Grants and Contracts Accounting (GCA) will assist in managing subagreements to provide reasonable assurance that grant funds are expended in ways that meet provisions of pertinent statutes, regulations, agency administrative requirements, relevant Office of Management and Budget (OMB) circulars, the terms of the award notice, and comply with the UM Policy 1719 – Charges to Sponsored Agreements.  See Link below.  RSS and GCA will annually review and evaluate subrecipient organizations.

The PI has primary responsibility for maintaining and reviewing programmatic, fiscal, administrative and regulatory compliance, which should occur monthly.

The PI may receive informal progress reports via phone conversations, e-mail communications, or face-to-face discussions, or more formal technical reports may be required and due on specific dates.  If formal technical reports are required they should be filed with the grant files in the department, and retained in the same manner as other grant documents.  Any problems or potential problems need to be communicated to GCA or RSS immediately.

Subrecipients are required to submit an invoice to the PI. The PI will ensure that invoices are submitted in accordance with subagreement requirements.  If subagreement requires cost share, information specifying how the cost share was met should be included with the invoice. 

Technical progress reviews by the PI are documented by that PI’s signature on invoices.

The PI must determine that the work is completed and that charges are allowable, allocable to the project and reasonable. The PI’s signature acknowledges that work/milestones performed by the subrecipient are acceptable, and deliverables such as reports, data analyses or required publications have been received.  After the PI approves and signs the invoice, it is submitted to Grants and Contracts Accounting for review for medium and high risk subrecipients.  GCA will determine if the invoice meets the conditions outlined in the contract and submit the invoice to General Accounting for payment.

Reviews

RSS and GCA will annually conduct a series of reviews to gather updated information and documentation on the financial stability, processes and controls of subrecipient organizations.  This may include desk reviews and/or site visits.  The Subrecipient Monitoring memo may be issued to obtain information regarding OMB Circular A-133 audits.

Management decisions regarding problems associated with subrecipients will be made jointly between RSS and GCA.  Decisions will be made within six months after receipt of the subrecipient’s financial information.  Problems associated with a subrecipient should be reported to RSS or GCA immediately for review.  If warranted, the risk category will be changed or subagreement may be terminated.

Subrecipient Closeout

Before the final invoice can be paid, the PI must certify that all technical reports and/or deliverables and any documentation required have been received, and that the subrecipient has fulfilled its obligations. The final invoice must be received and approved prior to the closeout of the prime award. 


Roles and Responsibilities

 Principal Investigator/Program Director

  • Notify RSS immediately upon identification of a potential need for a subrecipient;
  • Complete Subrecipient Commitment Form;
  • Ensure no conflict of interest exists between his/herself and the potential subrecipient;
  • Negotiate scope of work to be performed by the subrecipient;
  • Responsible for directing and managing fiscal and scientific aspects of sponsored agreement; 
  • Primarily responsible for monitoring subrecipients to ensure compliance with federal regulations, and the award terms and conditions for both the prime and subrecipient award.
  • Report any problems with subrecipient to RSS or GCA immediately upon discovery.

Administrator/Business Officer

  • Responsible for assisting Principal Investigators in discharging his/her monitoring responsibilities, for reviewing invoices from subrecipients, questioning expenditures if necessary, and maintaining documentation of monitoring efforts.

Research Support Services

  • Responsible for performing the Risk Analysis to assess the level of risk for the potential subrecipient;
  • Responsible for negotiating the subcontract or consortium agreement;
  • Upon notification of the prime award, notifies the PI to determine the updated scope of work, timing of subcontract and subcontract budget;
  • Responsible for ensuring the University’s subrecipient monitoring procedures are compliant with federal and other applicable regulations, and are consistent with sound business practices;
  • Provide training, monitoring and guidance in interpreting and executing applicable regulations and award terms and conditions for the subrecipient award;
  • Responsible for assisting GCA to manage subagreements;
  • Review subrecipient organizations annually and evaluate single audit (A-133) or program-specific audit results, along with GCA; and,
  • Responsible for management decisions with GCA in regards to problems associated with subrecipient.

Grants and Contracts Accounting

  • Responsible for assisting RSS to manage subagreements;
  • Review subrecipient organizations annually and evaluate single audit (A-133) or program-specific audit results, along with RSS;
  • Responsible for management decisions with RSS in regards to problems associated with subrecipient;
  • Review invoices prior to payment for medium and high risk subrecipients to ensure they meet the conditions outlined in the contract, and submit to General Accounting for payment; and,
  • Serve as Office of Record for record retention of final programmatic and financial reports.

 



Related Forms


Subrecipient Commitment Form

http://bf.memphis.edu/forms/acct/acct14.php



Links


 

University of Memphis Policy 1719 – Charges to Sponsored Agreements

 



Revision Dates


 UM1721 - Issued: June 28, 2011


Subject Areas:

AcademicFinanceGeneralHuman ResourcesInformation TechnologyStudent Affairs
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