Subrecipient Subrecipient MonitoringMonitoring

NCURA Regional ConferenceNCURA Regional ConferenceApril 25, 2007April 25, 2007

Jeri MuJeri MuññizizDirector, Sponsored ProjectsDirector, Sponsored Projects

University of California, IrvineUniversity of California, Irvine

Csilla M. CsaplárCsilla M. CsaplárContract & Grant OfficerContract & Grant Officer

Stanford UniversityStanford University

AgendaAgenda

►Subaward determinationSubaward determination►Overview of Federal regulationsOverview of Federal regulations►What to do and who does itWhat to do and who does it

Responsibilities of the PI, Responsibilities of the PI, department administrator, central department administrator, central administratoradministrator

►Tips and Tools during the life of Tips and Tools during the life of the subawardthe subaward

►What are other institutions doing?What are other institutions doing?

Decision MatrixDecision MatrixSubaward vs. other procurement actionSubaward vs. other procurement action

A subaward is likely appropriate if you can answer “yes” to any of the A subaward is likely appropriate if you can answer “yes” to any of the following questions:following questions:

► Does the subrecipient entity’s statement of work represent an Does the subrecipient entity’s statement of work represent an intellectually significant portion of the programmatic effort of the intellectually significant portion of the programmatic effort of the overall project?overall project?

► Does the entity have responsibility for programmatic decision Does the entity have responsibility for programmatic decision making?making?

► Could the entity’s work result in intellectual property developed or Could the entity’s work result in intellectual property developed or publishable results (including co-authorship)?publishable results (including co-authorship)?

► Will the entity need animal and/or human subjects approvals for its Will the entity need animal and/or human subjects approvals for its portion of the work?portion of the work?

Other procurement actions may be appropriate when the vendor:Other procurement actions may be appropriate when the vendor:► provides the goods and services within its normal business provides the goods and services within its normal business

operations; operations; ► provides similar goods or services to many different purchasers; provides similar goods or services to many different purchasers; ► operates in a competitive environment; operates in a competitive environment; ► provides goods or services that are ancillary to the operation of provides goods or services that are ancillary to the operation of

your entity’s sponsored project; your entity’s sponsored project; ► is not subject to compliance requirements of the Prime sponsor.is not subject to compliance requirements of the Prime sponsor.

Federal RegulationsFederal Regulations

The following regulations guide The following regulations guide Subawards and Subrecipient Monitoring:Subawards and Subrecipient Monitoring:

►OMB Circular A-133OMB Circular A-133►OMB Circular A-110OMB Circular A-110►Federal Acquisition Regulations (FAR)Federal Acquisition Regulations (FAR)

Primarily for contract as funding mechanismPrimarily for contract as funding mechanism

OMB A-133 Sets the StageOMB A-133 Sets the Stage

When the pass-through entity issues When the pass-through entity issues subawards it must:subawards it must:

A.A. Monitor the activities of its subrecipientsMonitor the activities of its subrecipientsB.B. Ensure that federal awards are used in Ensure that federal awards are used in

compliance with laws, regulations, and the compliance with laws, regulations, and the provisions of agreementsprovisions of agreements

C.C. Ensure performance goals are achievedEnsure performance goals are achieved

A-133

The pass-through entity is subject to oversight The pass-through entity is subject to oversight per OMB Circular A-133per OMB Circular A-133

Oversight responsibilities Oversight responsibilities are similar to those of a are similar to those of a federal agency dealing federal agency dealing with its prime recipients.with its prime recipients.

A-133 ExpectationsA-133 Expectations1. Subaward Policies and Procedures exist 1. Subaward Policies and Procedures exist

that:that: Adequately address your responsibilities Adequately address your responsibilities

under A-133under A-133 Assign institutional roles and responsibilities Assign institutional roles and responsibilities Address subrecipient monitoringAddress subrecipient monitoring

►How is routine monitoring performed?How is routine monitoring performed?►Is Risk Assessment policy or guidance needed? If Is Risk Assessment policy or guidance needed? If

yes, how is it implemented? yes, how is it implemented?

A-133 A-133 ExpectationsExpectations, cont., cont.

2. Evidence of Adequate Subrecipient 2. Evidence of Adequate Subrecipient MonitoringMonitoring A-133 Audit MonitoringA-133 Audit Monitoring

►Data downloaded from Single Audit website Data downloaded from Single Audit website ((http://harvester.census.gov/sac/http://harvester.census.gov/sac/) is not ) is not sufficient by itselfsufficient by itself

►Need evidence that it was reviewed by Need evidence that it was reviewed by institutional official relevant to the particular institutional official relevant to the particular subawardsubaward

How are non-A-133 entities reviewed? How are non-A-133 entities reviewed?

A-133 A-133 ExpectationsExpectations, cont., cont.3. Evidence of:3. Evidence of:

Cost-Sharing MonitoringCost-Sharing Monitoring►Directly attributable to benefiting projectDirectly attributable to benefiting project►Detailed backup for expendituresDetailed backup for expenditures►Donations are be accompanied by a formal Donations are be accompanied by a formal

appraisalappraisal

4. Institutional policy that details 4. Institutional policy that details expectations for adequate expectations for adequate documentation in the following areas:documentation in the following areas: Pre-Award ReviewsPre-Award Reviews Life-of-Award MonitoringLife-of-Award Monitoring Award CloseoutAward Closeout

Proposal Preparation StageProposal Preparation Stage

Proposal PreparationProposal PreparationYour PI, realizing the need for Your PI, realizing the need for

additional expertise, requests a additional expertise, requests a proposal from potential proposal from potential subrecipient(s).subrecipient(s).

Subrecipient’s proposal must include:Subrecipient’s proposal must include:1.1. Statement of Work (SOW)Statement of Work (SOW)

2.2. Budget and JustificationBudget and Justification

3.3. Subrecipient Commitment form or letter of Subrecipient Commitment form or letter of commitmentcommitment

4.4. Any other documents required by your Any other documents required by your institution or by Sponsorinstitution or by Sponsor

Proposal Preparation: PI’s roleProposal Preparation: PI’s roleYour PI assesses the potential Subrecipient’s ability toYour PI assesses the potential Subrecipient’s ability toperform the work successfully based on:perform the work successfully based on:

Past performancePast performance Technical/financial resourcesTechnical/financial resources Proposed scope of workProposed scope of work

The PI then:The PI then:1.1. Integrates the Subrecipient’s SOW into your Integrates the Subrecipient’s SOW into your

entity’s work statemententity’s work statement2.2. Includes the Subrecipient’s budget as a direct Includes the Subrecipient’s budget as a direct

cost line item in your entity’s budgetcost line item in your entity’s budget3.3. Forwards completed proposal to Institutional Forwards completed proposal to Institutional

Representative for review, including the Representative for review, including the Subrecipient’s proposalSubrecipient’s proposal

Proposal Preparation: Proposal Preparation: Institutional Representative’s Institutional Representative’s

roleroleThe Institutional Representative will:The Institutional Representative will:► Verify it is a subaward (as opposed to Verify it is a subaward (as opposed to

another form of procurement action)another form of procurement action)► Review the proposal for completeness, Review the proposal for completeness,

accuracy, and compliance with accuracy, and compliance with institution and sponsor policiesinstitution and sponsor policies

► Verify that the potential Subrecipient Verify that the potential Subrecipient has acceptable business practices has acceptable business practices

► Issue management decisions on audit Issue management decisions on audit findings (if applicable)findings (if applicable)

► Submit the proposal to the sponsor for Submit the proposal to the sponsor for considerationconsideration

What Should You Look For?What Should You Look For?►Subaward vs. other procurement actionSubaward vs. other procurement action►Use of negotiated ratesUse of negotiated rates►Human subjects and/or animal subjectsHuman subjects and/or animal subjects►Conflict of interestConflict of interest►Assurances and certificationsAssurances and certifications►Audit statusAudit status►Subrecipient Statement of Work & DeliverablesSubrecipient Statement of Work & Deliverables►Subrecipient Budget and Budget JustificationSubrecipient Budget and Budget Justification

Are fringe benefits and F&A calculated in accordance with Are fringe benefits and F&A calculated in accordance with approved rates?approved rates?

► What if the subrecipient doesn’t have an approved rate?What if the subrecipient doesn’t have an approved rate? Cost-sharing commitment Cost-sharing commitment Cost and Pricing Data/CertificateCost and Pricing Data/Certificate

As advance preparation for the award, ensure all required assurances are filed and all necessary documents are obtained.

Award Initiation StageAward Initiation Stage

Prime Award ConsiderationPrime Award Consideration

1.1. Sponsor considers your institution’s Sponsor considers your institution’s proposal for acceptanceproposal for acceptance

2.2. Your Institutional Representative will Your Institutional Representative will negotiate Terms and Conditions negotiate Terms and Conditions (T&C’s) with the sponsor as needed(T&C’s) with the sponsor as needed

3.3. An award is made to your institutionAn award is made to your institution

The SubrecipientThe Subrecipient is subject to flow-down is subject to flow-down of T&C’s from both the prime of T&C’s from both the prime funding source & pass-through funding source & pass-through entity(s)entity(s) Uni

versity

Institutional RepresentativeInstitutional RepresentativePrepares and Issues SubawardPrepares and Issues Subaward

Your Institutional Rep will:Your Institutional Rep will:► Verify all approvals are in placeVerify all approvals are in place► Receive and review all supplemental Receive and review all supplemental

documentationdocumentation► Prepare draft subaward agreementPrepare draft subaward agreement► Negotiate terms of subaward with Negotiate terms of subaward with

SubrecipientSubrecipient► Send subaward to subrecipient for Send subaward to subrecipient for

executionexecution

patti

Issues Addressed in the Issues Addressed in the Subaward DocumentSubaward Document

Department can Department can influenceinfluence::

► Statement of WorkStatement of Work► Key PersonnelKey Personnel► Period of PerformancePeriod of Performance► Dollar AmountDollar Amount► Payment TermsPayment Terms► Prior ApprovalsPrior Approvals► Cost SharingCost Sharing► Reporting Reporting

RequirementsRequirements

Institutional Rep Institutional Rep DeterminesDetermines::

► Intellectual PropertyIntellectual Property► Equipment TermsEquipment Terms► Indemnification, ITARIndemnification, ITAR► HIPAA, Rights in DataHIPAA, Rights in Data► Publication, TerminationPublication, Termination► Reference to Cost PrinciplesReference to Cost Principles► Certs and Reps/AssuranceCerts and Reps/Assurance► Flow-Down RequirementsFlow-Down Requirements► Audit RequirementsAudit Requirements

Additional Subaward Approvals Additional Subaward Approvals RequiredRequired

To be completed or obtained by your To be completed or obtained by your institution’s PI:institution’s PI:

►Fair and Reasonable Cost Analysis Fair and Reasonable Cost Analysis ►Sole Source Justification (if Sole Source Justification (if

applicable)applicable)►Prior approval for entering into a Prior approval for entering into a

subaward (federal contracts only)subaward (federal contracts only)

Samples of forms can be found online at: Samples of forms can be found online at: ora.stanford.edu/ora/osr/osr_forms.aspora.stanford.edu/ora/osr/osr_forms.asp

Before Authorizing Work to Before Authorizing Work to BeginBegin

► Determine financial adequacy of the Determine financial adequacy of the SubrecipientSubrecipient

► Acceptable A-133 or DCAA audit, or financial questionnaire Acceptable A-133 or DCAA audit, or financial questionnaire ► Obtain satisfactory evidence of F&A rates/FB ratesObtain satisfactory evidence of F&A rates/FB rates► Conduct and document formal or informal cost & pricing analysis Conduct and document formal or informal cost & pricing analysis

and certificate if neededand certificate if needed

► Verify Subrecipient is not debarred or suspendedVerify Subrecipient is not debarred or suspended► Obtain sole source justification if neededObtain sole source justification if needed► Verify all necessary approvals have been Verify all necessary approvals have been

receivedreceived Agency prior approval normally needed for contractsAgency prior approval normally needed for contracts Some agencies require prior review of textSome agencies require prior review of text

► Make high-risk/low-risk determinationMake high-risk/low-risk determination► Ensure all compliance approvals have been Ensure all compliance approvals have been

obtainedobtained

Potential Indicators of High-Potential Indicators of High-RiskRisk

► A qualified audit report, or failure to have a current audit reportA qualified audit report, or failure to have a current audit report► Inadequate response to a financial questionnaireInadequate response to a financial questionnaire► History of non-complianceHistory of non-compliance► History of non-performance or failure to use funds for their History of non-performance or failure to use funds for their

authorized purposesauthorized purposes► New subrecipient (or new to this type of project)New subrecipient (or new to this type of project)► New personnel or systemsNew personnel or systems► Large subaward/large percentage pass-throughLarge subaward/large percentage pass-through► Award size relative to subrecipient’s sponsored research portfolioAward size relative to subrecipient’s sponsored research portfolio► Criticality to overall success of pass-through entity’s projectCriticality to overall success of pass-through entity’s project► Subrecipient in a remote locationSubrecipient in a remote location► Type of subrecipient (is the subrecipient already subject to A-Type of subrecipient (is the subrecipient already subject to A-

133?) 133?)

Let’s review a sample Risk Analysis tool!

Potential Responses Potential Responses to High Risk Subrecipientsto High Risk Subrecipients

► Corrective Action PlanCorrective Action Plan► Discuss need for special monitoring with Discuss need for special monitoring with

PI/departmentPI/department Ask for extra contact between PI and Sub’s PIAsk for extra contact between PI and Sub’s PI Ask for more frequent technical reportingAsk for more frequent technical reporting

► Engage in “agreed-upon procedures engagements”Engage in “agreed-upon procedures engagements”► Add more detailed or frequent invoicing requirementsAdd more detailed or frequent invoicing requirements

Add requirement for expenditure backup materialsAdd requirement for expenditure backup materials► Tie receipt of technical progress reports to paymentsTie receipt of technical progress reports to payments► Require on-site monitoring (technical and financial)Require on-site monitoring (technical and financial)► Add more stringent termination or stop-work Add more stringent termination or stop-work

language for failure to comply with requirementslanguage for failure to comply with requirements

Monitoring an Active Monitoring an Active SubawardSubaward

Compliance Responsibilities ofCompliance Responsibilities of the Pass-Through Entity the Pass-Through Entity

Your PI is Your PI is primarilyprimarily responsible for responsible for monitoring the subrecipient's monitoring the subrecipient's expenses for:expenses for:

AllowabilityAllowability AllocabilityAllocability Reasonableness Reasonableness Ensuring the performance goals of Ensuring the performance goals of

the project are achievedthe project are achieved

Department administrators play a key role in this step!

Compliance Responsibilities of Compliance Responsibilities of

the Subrecipientthe Subrecipient In accordance with compliance regulations, Subrecipient is In accordance with compliance regulations, Subrecipient is responsible for:responsible for:

WORKWORK - Fulfilling the program’s technical goals - Fulfilling the program’s technical goals MONEYMONEY - Spending in accordance with T&C’s and - Spending in accordance with T&C’s and

applicable OMB Circularsapplicable OMB Circulars► A-21A-21 - Cost Principles for Educational Institutions - Cost Principles for Educational Institutions► A-110A-110 – Uniform Admin Requirements for Non-Profit Organizations – Uniform Admin Requirements for Non-Profit Organizations► A-133 A-133 - Audits of States, Local Governments, and Non-Profit - Audits of States, Local Governments, and Non-Profit

OrganizationsOrganizations RULESRULES - Monitoring both programmatic and financial aspects of - Monitoring both programmatic and financial aspects of

the program the program ► HIPAA complianceHIPAA compliance► Reports – Technical AND FinancialReports – Technical AND Financial► Human and Animal SubjectsHuman and Animal Subjects► Patents and Inventions (if applicable)Patents and Inventions (if applicable)

During the Life of the SubawardDuring the Life of the Subaward► PI/Department monitors subrecipient’s adherence to terms PI/Department monitors subrecipient’s adherence to terms

of subawardof subaward► PI/Department modifies subaward (add $$, time) as PI/Department modifies subaward (add $$, time) as

appropriateappropriate► Institutional Rep ensures annual compliance (A-133, IRB, Institutional Rep ensures annual compliance (A-133, IRB,

etc.)etc.)► PI approves invoices for payment PI approves invoices for payment ► Property clauses are flowed down from prime award Property clauses are flowed down from prime award

Property Management Office verifies Subrecipient’s property Property Management Office verifies Subrecipient’s property system is “approved”system is “approved”

PMO sends property reports to prime sponsor (as required)PMO sends property reports to prime sponsor (as required)► PI/Department plans for a graceful closeout at end of PI/Department plans for a graceful closeout at end of

subawardsubaward Note: This is not necessarily the same date as the end of your Note: This is not necessarily the same date as the end of your

projectproject► PI monitors scientific progress toward milestones outlined PI monitors scientific progress toward milestones outlined

in the subaward proposal and agreementin the subaward proposal and agreementExpenditures must reflect scientific progress!

PI Monitors Subrecipient’s PI Monitors Subrecipient’s Adherence to TermsAdherence to Terms

The PI ensures that:The PI ensures that:► Technical progress is being made Technical progress is being made

according to scheduleaccording to schedule► Subrecipient has proper control of propertySubrecipient has proper control of property► Subrecipient is continuing to meet Subrecipient is continuing to meet

compliance requirementscompliance requirements► Subrecipient is meeting reporting Subrecipient is meeting reporting

requirementsrequirements► Required prior approvals are obtained Required prior approvals are obtained

Monitoring Subrecipient Monitoring Subrecipient Invoices: PIInvoices: PI

► Invoices from the subrecipient allow your institution Invoices from the subrecipient allow your institution to reimburse for project related expensesto reimburse for project related expenses

► Level of detail required is specified in the subaward Level of detail required is specified in the subaward for:for: SalariesSalaries TravelTravel EquipmentEquipment Subawards Subawards Material and SuppliesMaterial and Supplies Cost-SharingCost-Sharing CertificationCertification F&A (rate and amount)F&A (rate and amount) TotalsTotals Cumulative expenditures by line itemCumulative expenditures by line item

Monitoring Subrecipient Monitoring Subrecipient Invoices: PIInvoices: PI

► Verify costs are incurred within the period of Verify costs are incurred within the period of performanceperformance

► Ensure expenses are aligned with technical Ensure expenses are aligned with technical progressprogress

► Verify cost sharing is appropriately reflected if Verify cost sharing is appropriately reflected if requiredrequired

► Do not approveDo not approve invoices for payment if invoices for payment if technical or financial reports are delinquent technical or financial reports are delinquent

► Do not approveDo not approve invoices that are invoices that are insufficiently detailed for you to feel confident insufficiently detailed for you to feel confident the costs are the costs are allowable, allocable, and allowable, allocable, and reasonablereasonable

Communicate any deficiencies to the Subrecipient and Institutional Rep in a timely manner!

Subrecipient Monitoring at Subrecipient Monitoring at CloseoutCloseout

Ensure a Timely CloseoutEnsure a Timely Closeout

► 90 days before the end date of the subaward, 90 days before the end date of the subaward, confer with the Subrecipient to determine confer with the Subrecipient to determine whether work will be completed on time. whether work will be completed on time. If not, request a no cost extension from prime. If If not, request a no cost extension from prime. If

a no cost extension is granted, pass it through to a no cost extension is granted, pass it through to the Subrecipient.the Subrecipient.

► 30-90 days before the end, request an 30-90 days before the end, request an invoice marked “Final” and remind the invoice marked “Final” and remind the Subrecipient when it will be dueSubrecipient when it will be due An invoice marked An invoice marked “Final” “Final” is always required.is always required.

Ensure a Timely CloseoutEnsure a Timely Closeout► Upon expiration…Upon expiration…

Obtain all required reports from subrecipientObtain all required reports from subrecipient► Project PerformanceProject Performance

Technical ReportsTechnical Reports Project DeliverablesProject Deliverables

► Financial Financial Final InvoiceFinal Invoice Refunds, Rebates, Credits Form (if necessary)Refunds, Rebates, Credits Form (if necessary) Subcontractor’s Release FormSubcontractor’s Release Form Verify Fulfillment of Cost Sharing RequirementsVerify Fulfillment of Cost Sharing Requirements Disallowances or disputed costsDisallowances or disputed costs

► Fulfilled ObligationsFulfilled Obligations PatentPatent Property ReportsProperty Reports SB/MBE/WBE reportsSB/MBE/WBE reports

Review reports to make sure they are acceptableReview reports to make sure they are acceptable

Subaward Monitoring at Subaward Monitoring at CloseoutCloseout

► Verify fulfillment of any cost-sharing requirements Verify fulfillment of any cost-sharing requirements

► Verify receipt of invoice marked “Final” Verify receipt of invoice marked “Final” ► Obtain signed Refunds, Rebates, Credits Form (if Obtain signed Refunds, Rebates, Credits Form (if

necessary)necessary)

► Verify clear understanding about record retention Verify clear understanding about record retention

► Audit subaward (if necessary)Audit subaward (if necessary)

► Verify Subrecipient is not debarred or suspendedVerify Subrecipient is not debarred or suspended► Verify that Subrecipient has filed an audit report (or Verify that Subrecipient has filed an audit report (or

equivalent) through subaward end dateequivalent) through subaward end date► Adjust Pass-through entity’s records if necessary to Adjust Pass-through entity’s records if necessary to

reflect changes in subaward costsreflect changes in subaward costs

What are your Institutions What are your Institutions doing?doing?

ResourcesResources

►OMB Circulars: OMB Circulars: http://www.whitehouse.gov/omb/circulars/http://www.whitehouse.gov/omb/circulars/index.htmlindex.html

►Federal Demonstration Partnership:Federal Demonstration Partnership:http://thefdp.org/http://thefdp.org/

►Harvester Single Audit Clearinghouse:Harvester Single Audit Clearinghouse:http://harvester.census.gov/sac/http://harvester.census.gov/sac/

►Stanford sample forms: Stanford sample forms: http://http:// ora.stanford.edu/ora/osr/osr_forms.aspora.stanford.edu/ora/osr/osr_forms.asp

Questions?Questions?

Contact us!Contact us!Jeri MuJeri Muññiziz

Director, Sponsored ProjectsDirector, Sponsored ProjectsUniversity of California, IrvineUniversity of California, Irvine

(949) 824-2897(949) 824-2897JLMuniz@rgs.uci.eduJLMuniz@rgs.uci.edu

Csilla M. CsaplárCsilla M. CsaplárContract & Grant OfficerContract & Grant Officer

Stanford UniversityStanford University(650) 498-6877(650) 498-6877

csaplar@stanford.educsaplar@stanford.edu