GIM 7
Subcontracts for Research
UNIVERSITY OF WASHINGTON
Office of Research
Office of Sponsored Programs
Grants Information Memorandum 7
July, 2003
Subject: Subcontracts and Subagreements for Sponsored Programs
Supersedes: GIM 7 (July, 2002)
Sections:
Background, Definition and Budget Format
In recent years, the UW has entered into an increasing number of formal
cooperative relationships with other organizations, generally universities
or non-profit research centers, including foreign organizations. These
take the form of Subcontract awards--a special type of agreement that
differs in several respects (refer to Attachment A) from those for the
more standardized procurement of goods and services from commercial vendors.
These Subcontracts typically result from a UW proposal which specifically
includes the anticipated participation by the cooperating institution
(Subcontractor) identified by name and separately budgeted. The amount
of the Subcontractor's total budget is included as a separate item in
the "other direct cost" or “consortium/contractual” category
of the UW's proposal budget with a reference to the Subcontractor's complete
proposal, including a line item budget with sufficient justification,
elsewhere in the proposal. The Subcontractor’s proposal (work scope
and budget) must be approved by an authorized official of the Subcontractor
institution, which may vary depending on the type of entity, i.e., commercial
versus non-profit. Finally, it is subject to UW indirect costs on the
first $25,000 during the budget period(s) in which those costs occur within
a competing segment of an award. Refer to GIM 13, Attachment A, page 2
of 3 for additional guidance on this policy.
In essence, the Subcontractor's proposal is a subsidiary proposal within
the UW's proposal. The sponsor's issuance of the grant or contract to
the UW usually includes specific authorization for the Subcontract. Occasionally,
the need for a Subcontractor's collaboration develops after an award has
been made to the UW. Under those circumstances, most sponsor policies
require that the UW obtain sponsor approval of the Subcontract before
it is entered into. Such requests originate with the PI (in written form)
and must be co-signed by the Director of Office of Sponsored Programs (OSP),
then forwarded to the sponsor for final review and approval.
Routing, Purchase Requisition (PR), and Tracking
The Subcontractor's proposal is almost always first sent directly to
the UW PI who then incorporates it in his/her proposal for forwarding
in the usual way through the Chair and Dean to OSP for transmittal to
the prospective sponsor. When the award, including the proposed Subcontract
is made to the UW, a budget number is assigned by Grant and Contract Accounting
(GCA) and the PI notified. To avoid unnecessary delays, the PI
or designated staff person in the local UW department must immediately enter
an on-line PR (refer to Attachment B) in the amount of the Subcontract,
which is then directed via Purchasing to OSP where the Subcontract, including
all applicable conditions, is prepared (usually in several weeks after
receipt of the PR). The Subcontract is then returned back to the Purchasing
Department for signature by UW and placement with the Subcontractor (refer
to Attachment C). Once signed by the Director of UW Purchasing and Stores
(refer to Attachment D), sent and returned signed by the Subcontractor,
it is at this point that the funds are encumbered in ordered status so
that invoices from the Subcontractor may be received and approved for
payment. Please note that for sponsored program subcontracts, use of
a PR-3 form or shared budgets is not allowable.
With a special user code and UW NetID card, the entire process for tracking
a Subcontract is available to UW faculty and staff on line through Computing
and Communications, Administrative Applications, Purchasing System (PAS).
By accessing this system in the Main Menu, Requisition Inquiry No. 4,
entering the PR number, then entering Action No. 9 History, one can monitor
the status of the Subcontract as it proceeds from Purchasing to OSP, the
date sent to Subcontractor for signature, and return of the Subcontract
to Purchasing for release to Payables Administration. This is discussed
in greater detail below.
Responsibilities of the UW PI and Various Offices
Responsibilities for the various offices in the process are shared by
the PI and his/her academic department, OSP, the Purchasing Department,
and Payables Administration as follows:
1. Proposal Stage - The PI is responsible for the initial Subcontract
review including determination of reasonableness of the direct cost
portion of the Subcontractor's budget relative to the work scope and
complexity of the collaborative effort. OSP is responsible for the final
UW review including making sure an authorized official has signed the
Subcontract proposal, especially to ensure the correct indirect cost
rate has been used in the request for funding.
Under proposals for Federal contracts, the PI is also responsible
for documenting sole source selection of the proposed Subcontractor(s),
as well as obtaining, where necessary, a Small Business Subcontracting
Plan, pursuant to Federal Acquisition Regulation (FAR) Part 19 and 52.219-19.
2. Subcontract Preparation - OSP is responsible for performing an appropriate
cost analysis in accordance with OMB Circulars A-110 and A-133 and for
preparing the Subcontract document, including the appropriate terms and
conditions (flowdown clauses) from the prime sponsor’s award.
Under proposals for Federal contracts, OSP will also, where necessary,
obtain a Certificate of Current Cost or Pricing Data in accordance with
FAR Part 15 and will negotiate Subcontract terms in accordance with Public
Law 87-563 Truth in Negotiations.
3. Execution, Mailing, Distribution, and Encumbrance - The Purchasing
Department is responsible for execution, mailing, distribution of copies
of the Subcontract, and encumbrance ordering of funds.
4. Invoice or Voucher Review and Approval – Review of the Subcontractor’s
vouchers to assure appropriateness and consistency with the terms of
the Subcontract is the responsibility of the PI and his/her academic
department. Subcontractors are required to invoice no less frequently
than quarterly but no more frequently than monthly, and are instructed
(in nearly all cases) to send those requests to the UW’s Payables
Administration (PA) Office. In accordance with UW and specified PA policies,
vouchers are approved by the PI as acceptable for payment, then forwarded
to Accounts Payable for appropriate reduction of encumbrance and initiation
of payment within 30 days. Refer to the PA policies in the Purchasing/Accounts
Payable System (PAS) in the UW Operations Manual, Section D52.1 and Rapid
Invoicing Processing (RIP) Section D52.2 for additional guidance.
5. Modifications - Often a prime sponsor will not fully fund the entire
UW proposal, rather it is funded on a year to year basis. Should that
be the case, when funds are added to the UW budget number by OSP through
GCA, a memo should be sent promptly by the UW PI to the OSP Subcontract
Administrator. This memo should clearly indicate the nature of all actions
requested, e.g., attached a detailed budget, change the work scope, revised
the performance period, etc. In turn, the Subcontract Administrator will
prepare the Modification and route it for signature through UW Purchasing
to the Subcontractor. The process for invoicing and payments is the same
as noted above.
6. Close-out - Upon completion of the Subcontract, the PI is responsible
for seeing that an acceptable final technical report (normally written,
sometimes more informal) is received from the Subcontractor. He/she,
in conjunction with their academic department,is also responsible for
review of the Subcontractor's final invoice, which is due no later than
60 days following termination, before forwarding it to the PA Office
for final payment. Be aware that the final invoice, in cases involving
Federal pass through funds, must contain the following statement and
be signed by the Subcontractor’s appropriate official:
"The Contractor assures to the University that
all expenditures were incurred in full compliance with OMB Circular
A-133 or its own applicable audit regulations. Disallowed costs if
found during the retention period of this Subcontract will be promptly
refunded to University."
OSP performs a review of the Subcontract at the time of completion to
assure that all necessary amendments or other closing actions have been
achieved, including receipt of audit reports and the Exhibit D Close
Out Certification form, as is necessary for all Federal prime contracts,
and DoD and NASA grants and cooperative agreements, only. Finally, 30
days following the end date of the Subcontract, a reminder memo from
the OSP Subcontract Administrator is sent to the PI and a local administrative
staff person regarding these close out matters and the remaining responsibilities
of the PI and staff.
Please note that after the final invoice has been paid, any remaining
encumbrance under the Subcontract may be liquidated by writing
to or emailing the OSP Subcontract Administrator. In turn, the OSP
Subcontract Administrator will notify the PA Office that the remaining
encumbrance may be fully liquidated and the funds returned to the main
budget account at the UW.
For additional close out guidance, refer to GCA’s web site at
the following location:
Under the subheading “The Post Award Processes”
Click on: “Communicating Financial Information to the Sponsor”
Then click on: “Closing a Grant, Contract or Gift Number”
Subcontractor Property:
In those rare cases where the UW (nor Subcontractor) does not retain
title to equipment acquired through the use of prime sponsor’s funds
(normally Federal contracts), the Subcontract Administrator will notify
the Equipment Inventory Office (EIO) Manager when the Subcontract is first
let of the following: first, that the Subcontract contains equipment (and
shall provide an itemized list) to be acquired or fabricated by the Contractor
or furnished by the U.S. Government (including any resulting scraps not
consumed in performing the Subcontract or delivered to the U.S. Government
(FAR 52.245-2(i)); second, if necessary, there are special (for example
annual) reporting requirements that must be adhered to by the Contractor;
and finally, that within 60 days following termination, a request (using
the Exhibit D Close Out Certification form) shall be made by the Contractor
concerning final disposition of ownership of the equipment.
Following termination of the Subcontract, the OSP Subcontract Administrator
will also forward a copy of the Exhibit D Close Out Certification form
to the EIO Manager after it is received so that all property matters may
eventually be disposed of between all parties.
FDP Subagreements
The UW joined Phase IV of the Federal Demonstration Partnership (FDP),
a program to streamline the operations of grants management between US
universities and certain federal agencies. One feature of this partnership
is the agreement to use a common template and attach terms and conditions
which can greatly reduce the length of time to process these awards between
the parties. The UW uses this template and attachments, which may viewed
at the following OSP web site:
Subagreement Template (MS Word
doc)
Whenever possible and appropriate, the OSP Subcontract Administrator
will use the FDP Subagreement template to process the transfer of funds
to other Phase IV FDP members. Moreover, the UW will expect that an institutional
member of Phase IV FDP will use the FDP Subagreement template when it
transfer funds from the federal prime award to UW.
Subcontracts and Subagreements
to the UW from Another Institution
Members of the UW faculty are sometimes invited by colleagues at other
institutions to participate in programs which have been (or will be) funded
by grant or contract awards to those other institutions. Such participation
usually takes the form of a Subcontract or Subagreement from the awardee
institution to the UW. Should a faculty member wish to participate in
inter-institutional programs under these circumstances, he/she should
prepare and submit, through regular UW channels, a proposal with Form
GC-1 outlining the extent of participation and funding and facilities
commitment necessary
to carry out the participation. Normally but to a lesser extent, the same forms
that the prospective awardee institution is using should also be used by the
UW PI in completing the Subcontract or Subagreement proposal. This will provide
an opportunity for the same type of review given proposals going to primary
funding sources, and will assure the awardee institution of official UW approval
of the proposed collaboration.
Questions or Need More Help
Questions concerning subcontracting for sponsored programs should be
directed to the Subcontract Administrator, OSP, 206-543-4043. For subcontracting
using gift and state budgets, contact the Administrative Assistant to
the Director of Purchasing and Stores, 206-543-5823, since a different
process is followed.
Attachments:
-
Excerpt from OMB Circular A-133, Section 210,
Subrecipient and Vendor Determinations
-
Sample PO for a Sponsored Programs Subcontract, page
2
-
Sample Memo from OSP to Purchasing and Stores
-
Sample Letter from Purchasing to Subcontractor
|