GIM 7
Subcontracts for Research

Subject: Subcontracts and Subagreements for Sponsored Programs

Supersedes: GIM 7 (July, 2002)

Sections:

• Background, Definition and Budget Format

• Routing, Purchase Requisition (PR) and Tracking

• Responsibilities of the UW PI and Various Offices

• FDP Subagreements

• Subcontracts and Subagreements to the UW from Another Institution

• Questions or Need More Help

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:

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.

1. Excerpt from OMB Circular A-133, Section 210, Subrecipient and Vendor Determinations

2. Sample PO for a Sponsored Programs Subcontract, page 2

3. Sample Memo from OSP to Purchasing and Stores

4. Sample Letter from Purchasing to Subcontractor