- Distinguishing Between a Subaward and a Procurement Action
- Selecting a Subrecipient
- Integrating the Subrecipient's Proposal into Stanford's Proposal
- Pre-Award Spending for Subawards
- Subawards Periods of Performance and Duration
- Subrecipient Proposal Review and Submission by Stanford
- Subaward Funding Mechanisms
- Submitting a Requisition for a New Subaward
- Documents Required Before a Subaward Can Issued
- 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 another institution or organization to perform an intellectually significant portion of the SOW (Statement of Work) under a Stanford sponsored project.
A subaward must include a clearly defined, intellectually significant SOW to be performed by the subrecipient's personnel, using its own facilities and resources. 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.
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.
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.
Is the Scope of Work of assigned to the entity intellectually significant?
Will the entity’s performance be measured against whether the objectives of the sponsored program are met?
Does the Subrecipient have responsibility for programmatic decision-making?
Will the Subrecipient assume responsibility for adherence to applicable sponsor program compliance requirements?
Will the Subrecipient uses sponsor funds to carry out a program (Statement of Work) of Stanford as compared to providing goods or services?
Does the work being performed make up a significant portion of the programmatic effort of the project?
Could the entity’s work result in intellectual property development or publishable results (including co-authorship)?
Procurement Action Indicators
he agreement is likely a procurement action if you can answer “yes” to any of the following questions.
- 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?
- Will the entity not be subject to compliance requirements of Stanford's sponsor?
Selecting a Subrecipient
Once the potential subrecipient is identified and it is determined that a subaward is the appropriate mechanism, the PI assisted by the department administrator obtains the subrecipient proposal elements from their subrecipient.
The proposal should be compiled in the format required by the sponsor and Stanford and forwarded to the institutional official for review. A proposal must include the following elements for each named subrecipient to be endorsed by institutional official.
The subrecipient's statement of work (SOW), including a clear description of the work to be performed, the proposed timelines, and deliverables.
The subrecipient's budget and budget justification, including the subrecipient's direct and indirect costs, calculated using both the subrecipient's F&A and fringe benefit rates, and verifying any committed cost sharing.
The Subrecipient Commitment Form (OSR Form 33) completed and signed by the subrecipient's institutional official.
A Fair and Reasonable Cost Analysis & Sole Source Justification (OSR Form 45) if the funding mechanism is known to be a Federal contract at time of proposal. The PI's signature on this form certifies that he/she has selected the subrecipient in accordance with Stanford 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 necessary modifications to proposed budgets that may be required to bring them into conformance.
Additional elements that may be required by Stanford's sponsor.
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. In these instances, proposals may be submitted with a subrecipient To Be Named.
Integrating the Subrecipient's Proposal into Stanford's Proposal
The PI, assisted by the administrator, integrates the subrecipient’s statement of work into the proposal, and includes the full amount of the subrecipient’s budget (including the subrecipient’s F&A) as a direct cost line item in the Stanford budget. The subrecipient’s proposed costs must be separated from Stanford’s costs.
When calculating Stanford’s budget, it is important to apply the F&A based on the sponsor’s inclusion/exclusion criteria. While the federal government includes the first $25,000 in its F&A base, other sponsors may have different criteria.
- Modified Total Direct Cost (MTDC) Base: Stanford’s indirect costs (F&A) are applied to the first $25,000 of each competitive segment of each subaward.
- Total Direct Cost (TDC) Base: Stanford charges indirect costs on the whole subaward amount.
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, the 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.
Subrecipient Proposal Review and Submission by Stanford
At the time of proposal review & submission, the institutional official is responsible for the following:
- Ensure the Subrecipient Commitment Form (OSR Form 33) is complete
- Review the subrecipient’s scope of work to verify that a subaward is the appropriate vehicle to fund the work
- Review the subrecipient's budget and budget justification
- Review the proposal for compliance with Stanford and sponsor policy
- Submit the full proposal to the sponsor for consideration
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.
Subaward expenditure types 54710 (IDC) and 54720 (Non-IDC) should be used for all subaward requisitions unless both the sponsor AND the Subrecipient are federal entities then expenditure types 54715(IDC) and 54725(No IDC) should be used.
Documents Required Before a Subaward Can Issued
Documents Required for a Subaward to be Issued
The Department administrator attaches the following documents to the requisition.
OSR gathers the following documents.
Subrecipient Commitment Form
The Statement of Work
The Budget Justification
F&A & Fringe Benefit Rate Agreements (if not included as part of the OSR Form 33)
Audit Certification and Financial Status Questionnaire (OSR Form 47)
IRB and IACUC approvals:
Applicable sponsor requested information such as: updated Certificate of Cost or Pricing Data, Small/Small Disadvantaged Business Plan, , etc.
If under federal or state contract:
Sole Source/Fair and Cost/Price Analysis
Submitting a Requisition to Modify an Existing Subaward
Submit a requisition through Oracle iProcurement to request a modification to a subaward. A PI may want to modify the 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. The department 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.
Initiating an Unanticipated Subaward after a Proposal Is Submitted
If a subrecipient was not identified as part of the proposal documentation, the sponsor may require prior approval to add them to the sponsored project. All subaward paperwork should be completed at the time the subrecipient is identified.
If the subaward is under a grant, the prime sponsor may have stated in the award terms and conditions that they require prior approval or notification of a subrecipient addition. Read the terms and conditions carefully and confer with your OSR/RMG official if you need guidance. Be prepared to wait at least 30 days for a response from the sponsor for prior approval of the subrecipient.
Use the SeRA Central Office Request to seek sponsor approval for new subcontract if approval is required.
If a subaward is under a federal contract, the sponsor may require Stanford to obtain written approval or notification to enter into the subaward even if the sponsor approved the subrecipient at the proposal review and acceptance stage. A federal sponsor may require: a detailed written cost analysis of the subrecipient’s proposal, a certificate of cost and pricing data together with a sole source justification (form 45) and a small business subcontracting plan (FAR 52.219-9).
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
Invoices should be generated by the Subrecipient. If the prime sponsor is federal, invoices must be signed by the Subrecipient’s authorized official and include the following certification language:
By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).
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.
You can order stamps with the above language printed on it for affixing on an invoice. Email the JP Cooke sales department directly at firstname.lastname@example.org and request the stamp ordered by Stanford University Dept. of Sponsored Research on February 7, 2013.
As part of the 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, 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 costs, 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 their 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, time reports and 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 OSR 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.
The course, Subawards: Recognizing, Processing, Managing (DOR-1122) is required if you manage a subaward. You will also learn to distinguish between a subaward and a procurement action how to process and monitor a subaward from proposal through closeout.