- Distinguishing Between a Subaward and a Procurement Action
- Submitting a Proposal with a Subaward
- Pre-Award Spending for Subawards
- Subawards Periods of Performance and Duration
- Subaward Funding Mechanisms
- Submitting a Requisition for a New Subaward
- Submitting a Requisition to Modify an Existing Subaward
- Initiating an Unanticipated Subaward after a Proposal Is Submitted
- Monitoring a Subaward
- Close Out Procedure
- Final Invoice
- Subaward Forms
A subaward is a formal written agreement made between Stanford University and a subrecipient (as defined below) to perform a portion of the Statement of Work under a sponsored project awarded to Stanford.
A subaward must include a clearly defined, intellectually significant Statement of Work (SOW) to be performed by the subrecipient. The subrecipient's SOW is performed by its personnel, using its own facilities and resources. Work is usually performed at the subrecipient's site.
The subrecipient takes full responsibility for adhering to the terms and conditions of the subaward including those flowed down from Stanford's sponsor, and assumes creative and intellectual responsibility and leadership as well as financial management for performing and fulfilling the subrecipient's SOW within the subrecipient's approved budget.
The subrecipient's responsibility under a subaward is also termed programmatic decision making under federal funding terminology. A subaward SOW may include fabrication of specialized equipment to be used for the Stanford sponsored research project as a project related asset or as a deliverable to the sponsor.
Subawards differ from procurement contracts used to acquire goods or services from vendors.
On rare occasions, subawards may be funded under University Research awards. In this case, approval from the university research funding source must be obtained before the subaward is processed through the Office of Sponsored Research (OSR). When subawards are funded under gifts, they are issued in accordance with the specific gift terms. Please consult with the Office of Sponsored Research (OSR).
The pass-through entity is defined as a non-federal entity that provides an award to a subrecipient to carry out a program (Statement of Work on a sponsored project). The pass-through entity assumes responsibility for negotiation, issuance, oversight, and management of a subaward. The pass-through entity assumes many of the responsibilities typically assigned to a prime sponsor in issuance and oversight of an award to a grantee or contractor, including verification of the financial viability, adequacy of compliance controls and audit status of its subrecipients as well as oversight and verification of the subrecipient's fulfillment of its portion of the programmatic effort. Stanford serves as the pass-through entity for subawards issued under its sponsored projects. Stanford's sponsor may be a prime sponsor, or may be a higher-level tier subrecipient who, in turn, acts as a pass-through entity.
A subrecipient is a non-Stanford entity that expends awards received from Stanford to carry out a portion of Stanford's programmatic effort under a sponsored project. There must be an arms-length relationship between Stanford and its subrecipients. In keeping with this requirement, the subrecipient may not involve an individual who is also a direct beneficiary of such a program at Stanford, the sponsor, or a higher-tier subrecipient. The subrecipient may be another educational institution, an independent laboratory, a foundation, a for-profit corporation, a non-profit corporation or other organization, and may be a domestic or foreign entity. Generally, Stanford does not issue subawards to individuals. For both federal and non-federal sponsored projects, Stanford adheres to the federal government's definition of a subrecipient as defined in in federal regulations.
The institutional representative (IR) is individual named by Stanford University, who is authorized to act for the university, and to assume the obligations imposed by federal, state and local laws, regulations, requirements and conditions, as well as university policy that applies to the proposal and award. In signing a proposal application and in accepting a corresponding award, this individual certifies that Stanford will comply with the assurances and certifications referenced in the application.
With the exception of subawards issued under industry-sponsored clinical trials, the institutional representative authorized to issue subawards on behalf of Stanford is the designated Contract & Grant Officer in the Office of Sponsored Research (OSR). For subawards issued under industry-sponsored clinical trials, the institutional representative is the designated CT Contract Officer.
Statement of Work
A statement of work (SOW) describes the work to be performed. It clearly outlines what is expected of the subrecipient and what should be included in the finished product. A good statement of work contains the following elements.
A detailed description of the work to be performed
The period of performance - the start and end dates
Deliverable requirements, including as applicable:
A timeline of the major deliverable due dates (both fixed and flexible; e.g. two weeks after some event occurs),
Milestones as necessary so that the work can be monitored to ensure the quality of the work is as expected,
A definition of completion
The criteria that constitute acceptance
Special requirements such as travel, special skills or knowledge, special resources
Distinguishing Between a Subaward and a Procurement Action
Does the entity’s statement of work represent an intellectually significant portion of the programmatic effort of the overall project? Will the entity have responsibility for programmatic decision making? Could the entity’s work result in intellectual property development or publishable results (including co-authorship)? Will the entity need animal and/or human subjects approvals for its portion of the work? Will the entity complete its portion of the work at its own facilities, using its own personnel? Does the entity provide the goods and services within its normal business operations? Does the entity provide similar goods or services to many different purchasers? Does the entity operate in a competitive environment? Will the entity provide goods or services that are ancillary to the operation of Stanford's sponsored project?
A subaward is likely the appropriate contracting mechanism if you can answer “yes” to any of the following questions.
If you can answer “yes” to any of the following questions, the appropriate contracting mechanism is likely a procurement/services contract:
Does the entity’s statement of work represent an intellectually significant portion of the programmatic effort of the overall project?
Will the entity have responsibility for programmatic decision making?
Could the entity’s work result in intellectual property development or publishable results (including co-authorship)?
Will the entity need animal and/or human subjects approvals for its portion of the work?
Will the entity complete its portion of the work at its own facilities, using its own personnel?
Does the entity provide the goods and services within its normal business operations?
Does the entity provide similar goods or services to many different purchasers?
Does the entity operate in a competitive environment?
Will the entity provide goods or services that are ancillary to the operation of Stanford's sponsored project?
Submitting a Proposal with a Subaward
A subaward begins when the PI recognizes the need for expertise outside of Stanford for a project he/she is proposing. The PI typically identifies known, collaboration partners based on the potential of the entity to perform the proposed scope of work successfully.
Stanford requires that the following elements be included in order for each named subrecipient to be included as part of a PI's proposal to the sponsor. Proposals will not be endorsed by 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.
- Subrecipient's Budget and Budget Justification, including the subrecipient's direct and indirect costs, calculated in accordance with sponsor guidelines using the subrecipient's approved F&A and fringe benefit rates, and verifying any committed cost sharing.
- An OSR Subrecipient Commitment Form (OSR Form 33, found below in Related Items), completed and signed by the subrecipient's institutional official.
- A Sole Source Justification and Cost/Price Analysis (OSR Form 45 found below in Related Items), ONLY IF the funding mechanism is known to be a federal contract at the time of proposal.
- Any additional elements that may be required by Stanford's sponsor for inclusion in the proposal
Subrecipient proposal elements are expected to conform to the sponsor requirements for Stanford's prime proposal and should be in the format required by the sponsor.
In rare instances, 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. In these instances, proposals may be submitted with a subrecipient "To Be Named." 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 Stanford's failure to include appropriate costs in our proposal. All subaward paperwork listed in Section 4 below must be completed at the time the subrecipient is identified.
Although not required at the time of proposal, PIs and Departments should know that for subawards issued under federal funding, the subrecipient must have a current Dun & Bradstreet (DUNS) Number that is registered in the federal government System for Award Management (SAM). A current SAM verification for each subrecipient is required before any subaward can be issued on a federally sponsored award.
Reviewing the Subrecipient’s Budget
The subrecipient’s budget should be prepared in accordance with the sponsor’s guidelines, including allowable costs and F&A application. A Subrecipient is expected to apply its own federally-negotiated F&A rates and bases when preparing its subaward budget. For federal programs, if a Subrecipient does not have a federally negotiated F&A rate, they may apply a de minimis rate of 10% on MTDC or elect not to recover indirect costs.
Integrating the Subrecipient’s Proposal into Stanford’s Proposal
The PI will integrate the subrecipient’s statement of work into Stanford’s proposal, and include the full amount of the subrecipient’s budget as a single, direct cost line item in Stanford’s budget.
When calculating Stanford’s budget, apply the appropriate F&A rate based on the sponsor’s inclusion/exclusion criteria. While the federal government includes the first $25,000 of each subaward in its F&A base, other sponsors may have different criteria. Check the sponsor’s guidelines.
Pre-Award Spending for Subawards
A subaward will not be issued, nor payments to a Subrecipient authorized, prior to Stanford's receipt and acceptance of a funding commitment from the prime sponsor. A Stanford 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 OSR do so at their own risk and have no assurance of payment from Stanford. In the event a subaward is subsequently issued to a subrecipient, a subrecipient may claim costs properly incurred under its own risk, provided that the costs are otherwise allowable. In such cases, the Subrecipient must furnish evidence to Stanford that all required compliance approvals were in place at the time the costs were incurred.
Subawards Periods of Performance and Duration
The period of performance of a subaward (including any requested extensions) must be within Stanford's period of performance under the prime award. Subawards may, however, be issued for shorter periods of time than Stanford's full period of performance. For sponsors such as the NIH who issue renewals to ongoing research programs under the same award number, a new subaward will be issued whenever Stanford's sponsored project receives funding under a new competitive segment.
Subaward Funding Mechanisms
Stanford 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.
Submitting a Requisition for a New Subaward
Once a sponsored project award is accepted by Stanford University and an account (PTA) has been set up, the department submits a request to issue a subaward by processing a requisition through Oracle iProcurement.
The requisition documents: the desired subrecipient, the funding amount authorized by the PI for the subaward and the period of performance. OSR is not authorized to issue a subaward until an approved requisition and specific documents are on file. A Stanford PI or designee may not authorize a subrecipient to begin working without a fully executed subaward agreement in place.
Subawards are typically not issued for more than one year at a time to ensure adequate monitoring of the technical progress to date and compliance with federal audit requirements. In no event can a subaward be issued for a period of time that extends before or after the period of performance of Stanford’s prime award.
The requisition should include any special requests that may be required, or that the PI may want included in the agreement, such as the following.
- Particular payment schedules or terms
- Increased invoicing requirements
- Required deliverables
- Prior approval requirements such as: rebudgeting restrictions and carry forward restrictions
- Any concerns or prior issues in dealing with this subrecipient
Documents Required for a Subaward to be Drafted
The following items must be present in order for OSR to begin drafting the subaward agreement. Though documents may have been collected at the time of proposal, some elements such as the subrecipient budget may have changed. The administrator should attach the following items to the requisition.
- Subrecipient Statement of Work
- Subrecipient Budget that aligns with the amount of the requisition
- Subrecipient’s OSR Form 33
- OSR Form 45 (only if the prime is a federal contract)
Elements Required for a Subaward to be Signed & Issued
As part of its subaward issuance process, OSR will ensure the following are in place.
- Audit Certification & Financial Status Questionnaire (OSR Form 47)
- Applicable rate agreements
Applicable compliance approvals (e.g. IRB, IACUC)
- Copy of subrecipient’s protocol approval
- Incorporation of subrecipient in Stanford’s approved protocol as a collaborating/performance site
- Verification of subrecipient debarment & suspension status
- Other applicable documentation to comply with prime agreement requirements
As part of the issuance process, OSR performs a risk analysis of both the project-specific elements and the potential subrecipient. The risk analysis process helps the OSR official draft a customized subaward agreement specific to the subaward. It is also a federal requirement to conduct a risk analysis prior to subaward issuance.
Submitting a Requisition to Modify an Existing Subaward
Submit a change order requisition through Oracle iProcurement to modify the subrecipient’s SOW, provide incremental funding, modify the budget, change the period of performance etc. Any requested changes should be detailed in the requisition so the OSR Officer can include the appropriate modifications in the subaward amendment.
If the subrecipient's SOW or budget has changed, the PI/administrator should attach the revised documents to the requisition. If the purpose of the amendment is to provide incremental funding, the PI/administrator should attach a budget to match the amount of the funding increment.
If a PI wants to reduce obligated funding or process an early termination on an approved subaward they should submit a corresponding requisition through Oracle iProcurement to request a formal change in the applicable subaward. In such cases, Stanford is required to honor the terms of the subaward, which typically require an advance notice period.
Initiating an Unanticipated Subaward after a Proposal Is Submitted
A PI may decide to engage the services of a Subrecipient after the proposal has been submitted to the prime sponsor. In this case, the PI must submit the required elements for a subaward to OSR as described above. In many cases, sponsor prior approval will be required. PIs are responsible for initiating such requests for Sponsor approval, and for obtaining the countersignature of their authorized institutional official as required. Subawards may not be issued until all necessary sponsor approvals are obtained.
Monitoring a Subaward
Stanford is responsible for ensuring that sponsor funds, including those provided by Stanford to other entities, are spent in accordance with all applicable laws and regulations. The University is required to monitor its subrecipients as if it were the sponsor. This monitoring requirement places Stanford in much the same position as if it were a federal agency dealing with its own primary recipient.
Principal Investigator & Departmental Responsibilities for Monitoring Subawards
It is the PI’s responsibility to monitor subrecipients so there is reasonable assurance that the subrecipient uses the award for authorized purposes, complies with laws, regulation, and the provisions of the agreement, invoices Stanford for allowable expenses in accordance with the agreement, and achieves its performance goals.
Invoice Review and Signature
The PI must review the subrecipient’s invoices and indicate approval by personally signing each invoice for payment. The following language has been developed and required to be included on each invoice:
In signing below I approve payment of this invoice and attest that charges appear reasonable, and progress to date on this project is satisfactory and in keeping with the statement of work.
As part of invoice review, the PI and departmental administrators should verify that the invoice was prepared in accordance with the subaward requirements and that invoiced costs are:
- In accordance with the approved budget or permissible rebudgeting
- Incurred within the approved period of performance and overall cost limitations
- Aligned in terms of cost and type of expense with the scientific progress reported to date
- Allowable, allocable, and reasonable
The subrecipient’s invoices should reflect both current period and cumulative expenses to date. The PI and departmental administrators should also verify that the subrecipient is adequately meeting any cost-sharing commitments made for the subaward.
Clarification of Invoiced Charges: In the event the level of detail included on an invoice is not sufficient to fully understand the costs, or if it appears that some costs may be excessive or understated, the PI or departmental administrator should question the subrecipient's expenditures by requesting further documentation or explanation prior to approving an invoice. If the explanations are not sufficient to render a prudent judgment on the allowability of the cost, and the terms of the subaward permit, department grant administrators may request detailed justifications from subrecipient. Department administrators may also periodically request, if the terms of the subcontract permit, particularly from high-risk subrecipients, detailed support for selected invoiced charges to verify their appropriateness and reasonableness. Such inquiries must be done in a timely manner (e.g., within thirty days after receipt of an invoice) so that the subrecipient can be promptly paid for approved costs.
Examples of detailed justifications that may be requested from subrecipients include: payroll records, copies of paid invoices showing the cost of items purchased, descriptions of services rendered by consultants, including hourly rates and time reports; details of incurred travel charges stating the purpose, airfare, meals, ground transportation, unallowable costs, etc. Copies of all such documentation and the ultimate outcome of the investigation should be retained in the project file.
When there is a concern about the allowability of cost, the administrators can contact the Office for Sponsored Research for coordination of subsequent actions. OSR staff are available to assist the PI and their departmental staff in resolving any invoice review issues that may arise.
Technical Progress & Compliance
The PI must be in contact with the subrecipient regularly to discuss technical progress, receive and review required reports or deliverables, and verify that the subrecipient maintains current human and animal subjects approval when applicable. The subaward monitoring and compliance obligations of the PI may be shared with department administrators or other Stanford employees; however, in no event may such monitoring and compliance obligations be delegated to a non-Stanford employee.
Quarterly Review & Certification
At quarterly review and certification, the PI certifies the allowability, allocability, reasonableness, and consistency of the subrecipient's expenditures and the related sufficiency of the subrecipient's technical progress under each subaward involved in the research project, as well as expenses incurred directly at Stanford.
Regulations and Assurances
The federal regulations that describe subrecipient monitoring are general, but contain the following core elements of compliance:
- Advising subrecipients of all applicable federal laws and regulations, and all appropriate flow-down provisions from the prime agreement
- The routine receipt and review of technical performance reports
- The routine review of expenses-to-budget
- The periodic performance of on-site visits, or regular contact, if necessary
- The option to perform "audits" if necessary, review of A-133 audit reports filed by subrecipients, and any audit findings review of corrective actions cited by subrecipients in response to their audit findings
- Consideration of sanctions on subrecipients in cases of continued inability or unwillingness to have required audits or to correct non-compliant actions
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, etc.) during the course of a project.
Close Out Procedure
A subaward is closed out when its period of performance comes to an end, regardless of whether Stanford's research project is ending or continuing. When feasible, it is advisable for a subaward period of performance to be slightly shorter than Stanford's 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 Stanford's final technical report to the sponsor.
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 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 OSR in obtaining necessary closeout reports from the subrecipient in a timely manner.
In order for Stanford to comply with its financial report requirements, subrecipients are required to submit a final invoice, clearly marked “Final”, to Stanford by the date that is required in the subaward agreement, typically no later than 60 days after the end of the Subrecipient's period of performance. In the event no invoice is received within the required timeframe, Stanford may treat the Subrecipient's last invoice as the final invoice. Payment for Subrecipient invoices submitted to Stanford later than the due date may not be paid. PIs and departments are responsible for assisting OSR in obtaining final closeout information, including final invoices, from their subrecipients.
Subaward Document Checklist for Clinical Trials
Subrecipient Commitment Form
Subrecipient Commitment Form for Industry Sponsored Clinical Trials
Invoice Form (Attachment C)
Sole Source/Fair and Cost/Price Analysis
Explanation of cost/price required for subawards under
federal and state contracts to be completed by US
university or non-profit subrecipients
|OSR Form 45 A|
Explanation of Cost/Price required for subawards under federal
and state contracts to be completed by commercial or
Annual Subrecipient A-133 Certification
The ORA-1122 class, Subawards: Recognizing, Processing, Managing is required for those who manage a subaward. There are many unique nuances to working with subawards. This class gives you the tools and information to distinguish between a subaward and another procurement action. You will also learn how to process and monitor a subaward from proposal through closeout.