Subawards

Contact

Questions about this topic can be answered by:

Register, Laura

Subrecipient Monitoring Officer, OSR

Office of Sponsored Research Pre Award

(650) 422-4546

Definitions

Subaward

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 called 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.

Pass-Through Entity

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.

Subrecipient

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 Office of Management and Budget Circular A-133, Section 105.

Subawards Funded by University Research and Gifts 

Subawards are issued under sponsored projects, including grants, contracts and cooperative agreements funded by extramural sources. 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. The appropriate Stanford legal officer should be consulted in each such instance.

Institutional Representative 

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. This individual's signature on the proposal application further certifies that Stanford will be accountable both for appropriate use of funds awarded and performance of the sponsored project activities resulting from the application. The institutional representative for a subaward is the designated officer in the Office of Sponsored Research (OSR).

Pre-award Institutional Representatives

Office of Sponsored Research (OSR)

Research Management Group (RMG)

Industrial Contracts Office (ICO)

Proposals for grants, non industrial contracts except industrial contracts from:

School of:  Engineering, Graduate Education, H&S, Business, Law

Proposals from School of Medicine for grants, non industrial contracts and clinical trials

Proposals from all schools for Industrial contracts except clinical trials

 

Statement of Work 

A statement of work (SOW) describes the work to be performed. A well written SOW allows the subrecipient to provide a detailed response, with a realistic cost estimate. It allows the subrecipient to understand what is expected of them 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
  • 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, security clearances, special skills or knowledge, special resources

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Distinguishing Between a Subaward and a Procurement Action

The agreement is likely a subaward if you can answer “yes” to any of the following questions.

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

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

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

  4. Will the entity complete its portion of the work at its own facilities, using its own personnel?

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Selecting a Subrecipient

The PI must select a subrecipient based upon his/her assessment of the potential subrecipient ability to perform the research work successfully. This includes an analysis of the subrecipient's past performance, technical resources, and financial viability, and an assessment of the reasonableness of the subrecipient’s proposed costs in light of the work to be performed. To meet audit requirements, Stanford is required to retain documentation of this latter assessment for subawards proposed under a contract. PIs are responsible for documenting this assessment via completion and submission of OSR Form 45 (found below in "Related Items") for each proposed subrecipient.

Inclusion of the completed OSR form 45 is required for each subrecipient proposed under a contract at the time a new or renewal proposal is presented for institutional endorsement (for subawards included in proposals). If a new subrecipient is added after a proposal has already been submitted, the PI should submit the form (as well as the other required subaward materials outlined below) at the time the new subaward is requested.


Rarely, 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. 


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Required Elements to Include in a Subaward Proposal

Stanford requires that the following elements be included in order for a 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.

  1. Subrecipient's SOW, including a clear description of the work to be performed, the proposed timelines, and deliverables.
  2. Subrecipient's Budget and Budget Justification, including the subrecipient's direct and indirect costs, calculated using the subrecipient's approved F&A and fringe benefit rates, and verifying any committed cost sharing.
  3. An OSR Subrecipient Commitment Form (OSR Form 33, found below in "Related Items"), completed and signed by the subrecipient's institutional official.
  4. A Fair and Reasonable Cost Analysis - Subawards Under Contract (OSR Form 45 found below in "Related Items"), as applicable, signed by Stanford's PI. The PI's signature on this form certifies that he/she has selected the subrecipient in accordance with this policy, and determined that their costs are reasonable with respect to the proposed SOW. In addition, the PI certifies that s/he has reviewed the subrecipient's proposed budget to ensure that all proposed costs are allowable under the sponsor's anticipated terms and conditions. PIs are responsible for working with their subrecipients to make any necessary modifications in proposed budgets that may be required to bring them into conformance.
  5. Any additional elements that may be required by Stanford's sponsor (e.g., Certificate of Current Cost or Pricing data, Sole Source Justification, biosketches of subrecipient key personnel, etc.)

Subrecipient proposal elements are expected to conform to the sponsor requirements for Stanford's prime proposal. PIs are responsible for ensuring that they request all materials from their subrecipients in the format required by the sponsor.

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Pre-Award Spending on 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.

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Subawards Periods of Performance and Duration

The period of performance of a subaward (including any requested extensions) may not be outside of Stanford's period of performance for a competitive segment under the prime award. Subawards may, however, be issued for shorter periods of time than Stanford's full period of performance. A new subaward will be issued whenever Stanford's sponsored project receives funding under a new competitive segment.

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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.

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Submitting a Requisition for a Subaward Account

Once an award is accepted by Stanford University an account (PTA) is established in Oracle iProcurement.

The PI/administrator must submit a requisition through Oracle iProcurement that identifies the subrecipient. This request documents the amount authorized by the PI for the subaward and delineates the desired period of performance. OSR is not authorized to issue a subaward until an approved requisition is on file. OSR will review and approve the requisition before sending it to the department for final approval. 

The following documents must be on file. Most were gathered by the department and submitted at the proposal stage.

The PI/Administrator submitted these at proposal time

OSR gathers these when approving the requisition

OSR Form 33  

Subrecipient Commitment Form

33 CT

Subrecipient Commitment Form for Industry Sponsored Clinical Trials

The Statement of Work

The  Budget

The Budget Justification

One of the following:

 OSR Form 45

OSR Form 45 A

OSR Form 45 B

 

Sponsor requested information

such as: Small/Small Disadvantaged Business Plan, audit information

The subrecipient's F&A rate

The subrecipient's Fringe Benefit Rate Agreements

 

Approvals

Copies of the subrecipient's human subjects approval (IRB) and approval to use animals (APLAC), if applicable

OSR Form 47

Annual Subrecipient A-133 Certification or a copy of the subrecipient's most recent A-133 audit, or the link to its record on the Federal Audit Clearinghouse

Special Requirements

the PI may wish to impose prior approval requirements, report formats, or due dates, etc

 

A PI may want to modify the SOW, incremental funding, budget, the period of performance etc. OSR will issue the modifications to the subaward in response to requisition. The PI/administrator should submit a requisition through Oracle iProcurement. If the subrecipient's SOW or budget has changed, the PI/administrator should attach the revised documents to the requisition. 

A PI may not reduce obligated funding or prematurely terminate an approved subaward unless they submit a corresponding requisition through Oracle iProcurement to request a formal change in their subaward. In such cases, Stanford is required to honor the terms of the subaward, which typically require an advance notice period.

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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 in Section 4 above, including a Sole Source Justification. In many cases, sponsor prior approval will be required (for rebudgeting, to add a new Subaward, and/or to obtain approval for a change in scope or methodology). PIs are responsible for initiating such requests for Sponsor approval, and for obtaining the countersignature of their authorized institutional official. Subawards may not be issued until all necessary sponsor approvals are obtained.

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Applying Facilities and Administration Rates

There are two types of Facilities & Administrative (F&A) costs on subawards: those earned by the Subrecipient, and those earned by Stanford.

A Subrecipient is expected to apply its own federally-negotiated F&A rates and bases 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 Stanford (See 15.2.5) or elect not to recover indirect costs. Stanford applies the OMB A-21 "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.


When Stanford's prime award uses an F&A rate that is based on an MTDC base, Stanford 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 Stanford's prime award uses a total direct cost rate, Stanford will recover its own F&A on the full cost of a subaward. If one subaward supports multiple tasks on a single sponsored project, the $25,000 threshold will be divided among the project accounts in proportion to their support of the subaward.


Stanford's "life-of-the-award" policy applies to subawards under a research project. 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 Stanford's competitive segment on its award. When a renewal subaward is issued under a Stanford award that uses a modified total direct cost (MTDC) base for calculating F&A, Stanford will recover its F&A on the first $25,000 of the renewal subaward.


Any exceptions that impact Stanford's recovery of F&A must be approved through the Indirect Cost Waiver process.

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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.

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 grant or contract agreement, and achieves its performance goals.

Principal Investigator Review and Signature

The PI must review the subrecipient’s invoices and indicate approval by personally signing each one if he/she determines that the invoices are submitted on time, the costs are adequately detailed, the costs are reasonable, allowable, and allocable based on technical progress.

The PI must verify that the costs incurred are in accordance with the approved budget or permissible rebudgeting; were incurred within the approved period of performance and overall cost limitations, 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

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 is responsible for questioning the subrecipient's expenditures or 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 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.

The PI must be in contact with the subrecipient regularly to discuss technical progress, receive and review required reports, 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.

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.

To verify that the subrecipient is adequately meeting any cost-sharing commitments made for the subaward, and that the subrecipient's indirect costs as charged are in compliance with the "life-of-the-award" policy and indirect cost rate agreement specified in the subaward, OSR staff are available to assist PIs and their departmental staff in resolving issues that may arise.

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.

Procedures for Departments Monitoring Subrecipients

Department grant administrators, with guidance or assistance from OSR staff, should consider the following subrecipient monitoring procedures when appropriate:

  • Review of technical performance reports should be done on a timely basis by the PI. In some cases, subaward terms may require specified deliverables in addition to, or in lieu of, technical reports.

  • Review of invoices and expenses-to-budget should be done for cost-reimbursement subawards. The subrecipient’s invoices showing both current period and cumulative expenses-to-budget are generally required. Department grant administrators should compare subrecipient’s invoices to established subaward budgets.

Evidence of the regular review of invoices by both the PI and the department administrator should be in place and apparent on the uploaded invoice in Oracle. "Evidence" must be in the form of the PI's signature on invoices.

Clarification of Invoiced Charges

Clarification of invoiced charges should be requested by department grant administrators for explanations of any unusual, miscellaneous, apparently excessive, or other charges invoiced by the subrecipient. 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.

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.

When there is a concern about the allowability of cost, the administrators can contact the Office for Sponsored Research for coordination of subsequent actions with the appropriate school sponsored research office. 

On-site visits can be conducted by the PI to evaluate both compliance with the scientific objectives of the project and the appropriateness of the subrecipient’s administrative systems, processes, and charges. The PI should document meeting notes, trip reports, etc. and retain them on file.

Audits

Audits of a subrecipient are an acceptable monitoring procedure under federal regulations, and all of the University's cost-reimbursement subaward agreements contain "right-to-audit" clauses.

Formal audits are performed infrequently, however, and departments should contact Stanford's Internal Audit Department before initiating discretionary audits.

Review A-133 Audit Reports

Administrative staff should review A-133 reports filed by subawards that expend $500,000 or more of federal funds during the fiscal year and are subject to A-133. Staff may view the subrecipient’s A-133 report in the Federal Audit Clearinghouse (FAC) database (http://harvester.census.gov/sac). This website provides evidence to verify that the subrecipient has completed an A-133 audit and to assess the presence of audit findings. This FAC verification would be done in lieu of reviewing A-133 reports submitted by the subrecipient to Stanford. When subawards have A-133 audit findings – OSR may consider issuing a management decision on audit findings, when appropriate, and evaluate subrecipient corrective actions cited in response to audit findings. Corrective actions cited by the subrecipient should be verified to ensure subrecipient compliance and may necessitate on-site monitoring. OSR may also consider whether subrecipient audit findings necessitate adjustment of their own records.

Subawards Not Subject to A-133

 Because A-133 does not apply to foreign or for-profit subawards, Stanford may establish its own requirements, as necessary, to ensure compliance by such subawards. Contracts with foreign or for-profit subawards should describe applicable compliance requirements and responsibilities. Methods to assess compliance with federal subawards made to foreign or for-profit subawards may include pre-award audits, on-site or audits.

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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.

A. 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.

B. 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 OSR in obtaining the necessary closeout reports in a timely manner from the Subrecipient.

 

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Final Invoice

In order for Stanford to comply with its financial report requirements, subrecipients are required to submit a final invoice, clearly marked final to Stanford no later than 60 days after the end of the Subrecipient's period of performance, or such other date as may be specified in the Subaward. In the event no invoice is received 60 days after the end of a subaward, Stanford may treat the Subrecipient's last invoice as the final invoice. Payment for Subrecipient invoices submitted to Stanford later than 60 days after the end of the Subaward may not be paid. PIs and departments are responsible for assisting OSR in obtaining final closeout information, including invoices, from their subrecipients.

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Subaward Forms

 Form Name

Form Number

Subaward Document Checklist for Clinical Trials

OSR Form 31 CT

 Subrecipient Commitment Form

OSR Form 33

Subrecipient Commitment Form for Industry Sponsored Clinical Trials

OSR Form 33 CT

Invoice Form (Attachment C)

OSR Form 34

 Sole Source/Fair and Cost/Price Analysis

OSR Form 45

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

international subrecipients

OSR Form 45 B

Annual Subrecipient A-133 Certification

OSR Form 47

 

 

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Training

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. 

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