Subrecipient Monitoring NCURA Regional Conference April 25, 2007

1. Subrecipient MonitoringNCURA Regional ConferenceApril 25, 2007 Jeri Muñiz Director, Sponsored Projects University of California, Irvine Csilla M. Csaplár Contract & Grant Officer Stanford University

2. Agenda • Subaward determination • Overview of Federal regulations • What to do and who does it • Responsibilities of the PI, department administrator, central administrator • Tips and Tools during the life of the subaward • What are other institutions doing?

3. Decision MatrixSubaward vs. other procurement action A subaward is likely appropriate if you can answer “yes” to any of the following questions: • Does the subrecipient entity’s statement of work represent an intellectually significant portion of the programmatic effort of the overall project? • Does the entity have responsibility for programmatic decision making? • Could the entity’s work result in intellectual property developed or publishable results (including co-authorship)? • Will the entity need animal and/or human subjects approvals for its portion of the work? Other procurement actions may be appropriate when the vendor: • provides the goods and services within its normal business operations; • provides similar goods or services to many different purchasers; • operates in a competitive environment; • provides goods or services that are ancillary to the operation of your entity’s sponsored project; • is not subject to compliance requirements of the Prime sponsor.

4. Federal Regulations The following regulations guide Subawards and Subrecipient Monitoring: • OMB Circular A-133 • OMB Circular A-110 • Federal Acquisition Regulations (FAR) • Primarily for contract as funding mechanism

5. OMB A-133 Sets the Stage The pass-through entity is subject to oversight per OMB Circular A-133 When the pass-through entity issues subawards it must: • Monitor the activities of its subrecipients • Ensure that federal awards are used in compliance with laws, regulations, and the provisions of agreements • Ensure performance goals are achieved • Oversight responsibilities are similar to those of a federal agency dealing with its prime recipients. A-133

6. A-133 Expectations 1. Subaward Policies and Procedures exist that: • Adequately address your responsibilities under A-133 • Assign institutional roles and responsibilities • Address subrecipient monitoring • How is routine monitoring performed? • Is Risk Assessment policy or guidance needed? If yes, how is it implemented?

7. A-133 Expectations, cont. 2. Evidence of Adequate Subrecipient Monitoring • A-133 Audit Monitoring • Data downloaded from Single Audit website (http://harvester.census.gov/sac/) is not sufficient by itself • Need evidence that it was reviewed by institutional official relevant to the particular subaward • How are non-A-133 entities reviewed?

8. A-133 Expectations, cont. 3. Evidence of: • Cost-Sharing Monitoring • Directly attributable to benefiting project • Detailed backup for expenditures • Donations are be accompanied by a formal appraisal 4. Institutional policy that details expectations for adequate documentation in the following areas: • Pre-Award Reviews • Life-of-Award Monitoring • Award Closeout

9. Proposal Preparation Stage

10. Proposal Preparation Your PI, realizing the need for additional expertise, requests a proposal from potential subrecipient(s). Subrecipient’s proposal must include: • Statement of Work (SOW) • Budget and Justification • Subrecipient Commitment form or letter of commitment • Any other documents required by your institution or by Sponsor

11. Proposal Preparation: PI’s role Your PI assesses the potential Subrecipient’s ability to perform the work successfully based on: • Past performance • Technical/financial resources • Proposed scope of work The PI then: • Integrates the Subrecipient’s SOW into your entity’s work statement • Includes the Subrecipient’s budget as a direct cost line item in your entity’s budget • Forwards completed proposal to Institutional Representative for review, including the Subrecipient’s proposal

12. Proposal Preparation: Institutional Representative’s role The Institutional Representative will: • Verify it is a subaward (as opposed to another form of procurement action) • Review the proposal for completeness, accuracy, and compliance with institution and sponsor policies • Verify that the potential Subrecipient has acceptable business practices • Issue management decisions on audit findings (if applicable) • Submit the proposal to the sponsor for consideration

13. What Should You Look For? • Subaward vs. other procurement action • Use of negotiated rates • Human subjects and/or animal subjects • Conflict of interest • Assurances and certifications • Audit status • Subrecipient Statement of Work & Deliverables • Subrecipient Budget and Budget Justification • Are fringe benefits and F&A calculated in accordance with approved rates? • What if the subrecipient doesn’t have an approved rate? • Cost-sharing commitment • Cost and Pricing Data/Certificate As advance preparation for the award, ensure all required assurances are filed and all necessary documents are obtained.

14. Award Initiation Stage

15. University Prime Award Consideration • Sponsor considers your institution’s proposal for acceptance • Your Institutional Representative will negotiate Terms and Conditions (T&C’s) with the sponsor as needed • An award is made to your institution The Subrecipient is subject to flow-down of T&C’s from both the prime funding source & pass-through entity(s)

16. patti Institutional RepresentativePrepares and Issues Subaward Your Institutional Rep will: • Verify all approvals are in place • Receive and review all supplemental documentation • Prepare draft subaward agreement • Negotiate terms of subaward with Subrecipient • Send subaward to subrecipient for execution

17. Department can influence: Statement of Work Key Personnel Period of Performance Dollar Amount Payment Terms Prior Approvals Cost Sharing Reporting Requirements Institutional Rep Determines: Intellectual Property Equipment Terms Indemnification, ITAR HIPAA, Rights in Data Publication, Termination Reference to Cost Principles Certs and Reps/Assurance Flow-Down Requirements Audit Requirements Issues Addressed in the Subaward Document

18. Additional Subaward Approvals Required To be completed or obtained by your institution’s PI: • Fair and Reasonable Cost Analysis • Sole Source Justification (if applicable) • Prior approval for entering into a subaward (federal contracts only) Samples of forms can be found online at: ora.stanford.edu/ora/osr/osr_forms.asp

19. Before Authorizing Work to Begin • Determine financial adequacy of the Subrecipient • Acceptable A-133 or DCAA audit, or financial questionnaire • Obtain satisfactory evidence of F&A rates/FB rates • Conduct and document formal or informal cost & pricing analysis and certificate if needed • Verify Subrecipient is not debarred or suspended • Obtain sole source justification if needed • Verify all necessary approvals have been received • Agency prior approval normally needed for contracts • Some agencies require prior review of text • Make high-risk/low-risk determination • Ensure all compliance approvals have been obtained

20. Potential Indicators of High-Risk • A qualified audit report, or failure to have a current audit report • Inadequate response to a financial questionnaire • History of non-compliance • History of non-performance or failure to use funds for their authorized purposes • New subrecipient (or new to this type of project) • New personnel or systems • Large subaward/large percentage pass-through • Award size relative to subrecipient’s sponsored research portfolio • Criticality to overall success of pass-through entity’s project • Subrecipient in a remote location • Type of subrecipient (is the subrecipient already subject to A-133?) Let’s review a sample Risk Analysis tool!

21. Potential Responses to High Risk Subrecipients • Corrective Action Plan • Discuss need for special monitoring with PI/department • Ask for extra contact between PI and Sub’s PI • Ask for more frequent technical reporting • Engage in “agreed-upon procedures engagements” • Add more detailed or frequent invoicing requirements • Add requirement for expenditure backup materials • Tie receipt of technical progress reports to payments • Require on-site monitoring (technical and financial) • Add more stringent termination or stop-work language for failure to comply with requirements

22. Monitoring an Active Subaward

23. Compliance Responsibilities of the Pass-Through Entity Your PI is primarily responsible for monitoring the subrecipient's expenses for: • Allowability • Allocability • Reasonableness • Ensuring the performance goals of the project are achieved Department administrators play a key role in this step!

24. Compliance Responsibilities of the Subrecipient In accordance with compliance regulations, Subrecipient is responsible for: WORK - Fulfilling the program’s technical goals MONEY - Spending in accordance with T&C’s and applicable OMB Circulars • A-21 - Cost Principles for Educational Institutions • A-110 – Uniform Admin Requirements for Non-Profit Organizations • A-133 - Audits of States, Local Governments, and Non-Profit Organizations RULES - Monitoring both programmatic and financial aspects of the program • HIPAA compliance • Reports – Technical AND Financial • Human and Animal Subjects • Patents and Inventions (if applicable)

25. During the Life of the Subaward • PI/Department monitors subrecipient’s adherence to terms of subaward • PI/Department modifies subaward (add $$, time) as appropriate • Institutional Rep ensures annual compliance (A-133, IRB, etc.) • PI approves invoices for payment • Property clauses are flowed down from prime award • Property Management Office verifies Subrecipient’s property system is “approved” • PMO sends property reports to prime sponsor (as required) • PI/Department plans for a graceful closeout at end of subaward • Note: This is not necessarily the same date as the end of your project • PI monitors scientific progress toward milestones outlined in the subaward proposal and agreement Expenditures must reflect scientific progress!

26. PI Monitors Subrecipient’s Adherence to Terms The PI ensures that: • Technical progress is being made according to schedule • Subrecipient has proper control of property • Subrecipient is continuing to meet compliance requirements • Subrecipient is meeting reporting requirements • Required prior approvals are obtained

27. Monitoring Subrecipient Invoices: PI • Invoices from the subrecipient allow your institution to reimburse for project related expenses • Level of detail required is specified in the subaward for: • Salaries • Travel • Equipment • Subawards • Material and Supplies • Cost-Sharing • Certification • F&A (rate and amount) • Totals • Cumulative expenditures by line item

28. Monitoring Subrecipient Invoices: PI • Verify costs are incurred within the period of performance • Ensure expenses are aligned with technical progress • Verify cost sharing is appropriately reflected if required • Do not approve invoices for payment if technical or financial reports are delinquent • Do not approve invoices that are insufficiently detailed for you to feel confident the costs are allowable, allocable, and reasonable Communicate any deficiencies to the Subrecipient and Institutional Rep in a timely manner!

29. Subrecipient Monitoring at Closeout

30. Ensure a Timely Closeout • 90 days before the end date of the subaward, confer with the Subrecipient to determine whether work will be completed on time. • If not, request a no cost extension from prime. If a no cost extension is granted, pass it through to the Subrecipient. • 30-90 days before the end, request an invoice marked “Final” and remind the Subrecipient when it will be due • An invoice marked “Final” is always required.

31. Ensure a Timely Closeout • Upon expiration… • Obtain all required reports from subrecipient • Project Performance • Technical Reports • Project Deliverables • Financial • Final Invoice • Refunds, Rebates, Credits Form (if necessary) • Subcontractor’s Release Form • Verify Fulfillment of Cost Sharing Requirements • Disallowances or disputed costs • Fulfilled Obligations • Patent • Property Reports • SB/MBE/WBE reports • Review reports to make sure they are acceptable

32. Subaward Monitoring at Closeout • Verify fulfillment of any cost-sharing requirements • Verify receipt of invoice marked “Final” • Obtain signed Refunds, Rebates, Credits Form (if necessary) • Verify clear understanding about record retention • Audit subaward (if necessary) • Verify Subrecipient is not debarred or suspended • Verify that Subrecipient has filed an audit report (or equivalent) through subaward end date • Adjust Pass-through entity’s records if necessary to reflect changes in subaward costs

33. What are your Institutions doing?

34. Resources • OMB Circulars: http://www.whitehouse.gov/omb/circulars/index.html • Federal Demonstration Partnership: http://thefdp.org/ • Harvester Single Audit Clearinghouse: http://harvester.census.gov/sac/ • Stanford sample forms: http://ora.stanford.edu/ora/osr/osr_forms.asp

35. Questions?

36. Contact us! Jeri Muñiz Director, Sponsored Projects University of California, Irvine (949) 824-2897 JLMuniz@rgs.uci.edu Csilla M. Csaplár Contract & Grant Officer Stanford University (650) 498-6877 csaplar@stanford.edu