Sponsored Projects Subawards
This Policy reflects the provisions of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (CFR, Title 2) (the Uniform Guidance), and in particular Sections 200.330-200.332 thereof, that was issued by the federal Office of Management and Budget (OMB) on December 26, 2013 and became effective for federal agencies as of such date and for non-federal entities, such as the University, as of December 26, 2014. The Uniform Guidance supersedes, among other regulations, OMB Circulars A-110 and A-133.
Reasons for the Policy
This Policy seeks to:
- ensure that risks associated with a Subrecipient or sponsored project are identified and managed prior to the issuance of a Subaward;
- ensure Subrecipients and Contractors are classified appropriately;
- promote compliance with federal, state and local laws relating to Subrecipient monitoring; and
- assign appropriate unit-level and individual responsibility and accountability for the establishment, management and monitoring of Subawards.
Primary Guidance to Which This Policy Responds
This Policy primarily responds to the Uniform Guidance:
Who is Governed by this Policy
Faculty and staff who are responsible for authorizing, processing and monitoring Sponsored Project Subawards.
Who Should Know this Policy
1. All persons governed by this Policy [see above]
2. Principal Investigators
3. Departmental Administrators and other departmental staff
4. Deans and Department Chairs
5. Office of Research Administration
6. Office of the Controller
Exclusions and Special Situations
A. Important Definitions
As used in this Policy, the following terms have the meanings set forth below:
Fixed Amount Subaward: a type of Subaward under which the Subrecipient provides a specific level of support without regard to the actual costs incurred under the Subaward.
Risk Review Committee: a Committee whose membership includes representatives from SPA, RPIC and the Office of the Controller.
RPIC: the Research Policy and Indirect Cost Division of the Office of the Controller.
SPA: Sponsored Projects Administration.
Sponsored Project: as defined in Chapter I, Section D(1) (Introduction: Sponsored Projects vs. Gifts) of the Columbia University Sponsored Projects Handbook.
Subaward: a written agreement made between the University and a Subrecipient to perform a portion of the work under a Sponsored Project. 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. The Subrecipient takes full responsibility for adhering to the terms and conditions of the Subaward, including those that flow down from the University’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.
Subrecipient: a non-Columbia entity that expends funds received from the University to carry out a portion of the University’s programmatic effort under a Sponsored Project. A Subrecipient may not be an entity that is also a direct beneficiary of such Sponsored Project. The Subrecipient may be another educational institution, a foundation, a for-profit corporation, a non-profit corporation or other organization, and may be a domestic or foreign entity.
B. Certain University Subaward Policies
It is University policy that Subawards are funded for a maximum of one year, renewable for additional periods as appropriate. Modifications to existing Subawards may need to be negotiated with the Subrecipient and are dependent on the continuation of the primary award.
In accordance with federal regulations, it is University policy that the University awardee perform a substantive role in carrying out the activities of a project and not merely serve as a conduit for an award to another party. It is expected that the aggregate amount payable under Subawards in respect of any award made to the University should not exceed 50% of such award without the prior approval of SPA and, in certain circumstances, the Risk Review Committee. See Section D(2) below.
The University generally issues Subawards on a cost-reimbursement basis. With the prior written approval of the sponsor, if required, the University may issue Fixed Amount Subawards if the project scope is specific and if adequate cost, historical or unit pricing data is available to establish a Fixed Amount Subaward with the assurance that the University will realize no increment above actual costs. The fixed costs of a Fixed Amount Subaward under a federal prime award may not exceed $150,000.
C. Distinguishing Between a Subaward and a Contract
1. Importance of and Responsibility for Proper Classification
The proper classification of a transaction as a Subaward or a procurement transaction (called a Contract in the Uniform Guidance) at the time it is proposed is critical to ensure proper accounting for costs and compliance requirements. Misclassification may result in delays in Subaward processing or inaccurate calculation of costs. The Principal Investigator (PI) of the Sponsored Project is responsible for determining the classification at the time that funding is first requested from the sponsor.
2. Distinguishing Characteristics of Subawards and Contracts
The University follows the Uniform Guidance in determining whether a transaction is a Subaward or a Contract and the PI must make a case-by-case determination whether each agreement that is made for the disbursement of funds casts the entity receiving the funds in the role of a Subrecipient or a contractor.
Generally speaking, a Subaward classification is appropriate when:
- The University (within the sponsor’s guidelines) determines who is eligible to receive the Subaward.
- The entity has its performance measured in relation to whether the objectives of the Sponsored Project are met.
- The entity is responsible for programmatic decision-making.
- The entity is responsible for adherence to applicable Sponsored Project requirements.
- The entity uses funds to carry out the Sponsored Project rather than providing goods or services.
Generally speaking, a Contract classification is appropriate when:
- The entity provides goods and services within normal business operations;
- The entity provides similar goods and services to many different purchasers;
- The entity normally operates in a competitive environment;
- The entity provides goods and services that are ancillary to the operation of the Sponsored Project; and
- The entity is not subject to the compliance requirements of the sponsor as a result of the Contract.
The PI must use judgment in making the determination and in doing so, the substance of the relationship is more important than the form of the agreement. All of the characteristics listed above may not be present in all cases. The determination will be documented on a Checklist To Determine Subrecipient or Contractor Involvement (the Subrecipient/Contractor Classification Form) (see Appendix A). The Subrecipient/Contractor Classification Form must be submitted to SPA as provided in Section D (1) below. The final determination with respect to the classification will be made by SPA.
D. Requirements Prior to or At Time of Protocol Submission
1. Submission of Documentation to SPA
At the time that a PI submits a grant or contract proposal to SPA for a Sponsored Project that has one or more Subawards (or if the Subaward or Subrecipient is not known at the time of submission of a proposal, prior to the execution of the Subaward), he/she will provide SPA with the following documentation with respect to each Subrecipient:
- Subrecipient/Contractor Classification Form (see Appendix A)
- Subcontract Proposal Face Page (see Appendix B)
- If applicable, Justification for Subaward Exceeding 50% of Prime Award (see Appendix C)
- If applicable, International Research Questionnaire (see Appendix D).
- Detailed Budget and Budget Justification
2. Initial Actions by SPA and RPIC
(a) SPA will determine if the University has entered into prior Subawards with the proposed Subrecipient. If so, SPA will check the University database (the Subrecipient Financial Database) maintained by RPIC to confirm that the Subrecipient has provided the documentation and has taken the actions required by the University and remains in good standing with the University.
If the University (i) has never entered into a Subaward with the proposed Subrecipient or (ii) has entered into a Subaward with such Subrecipient, but such Subaward ended more than three years ago, SPA will notify RPIC and RPIC will obtain and review a completed Subrecipient Certification and Financial Status Questionnaire (see Appendix E) and the documentation required by such Certification and Questionnaire. RPIC will enter the documentation relating to such review into the Subrecipient Financial Database.
(b) If the aggregate amount payable under all Subawards in respect of the proposed grant or contract is expected to exceed 50% of the expected award thereunder, SPA will determine whether or not the proposal should be modified prior to its submission to the sponsor or withdrawn. SPA will notify the PI of its decision. If the PI disagrees with SPA’s decision, he/she may appeal the matter to the Risk Review Committee, which will determine whether the proposal should be submitted (with or without modifications) or withdrawn. The Risk Review Committee’s decision will be final.
(c) If the Subrecipient has not negotiated an indirect cost rate with the federal government, the parties will agree that the de minimis indirect cost rate (as defined in Section 200.414 of the Uniform Guidance) or a rate set under specific sponsor guidelines shall be applicable to the Subaward.
(d) SPA will provide the PI with a copy of the Principal Investigator Notification Regarding Subaward Monitoring Responsibilities.
3. Risk Assessment
A proposed Subrecipient will be selected based on the assessment of the Subrecipient’s ability to perform the SOW successfully. This includes (a) obtaining certain information from the proposed Subrecipient and (b) evaluating its risk of noncompliance with laws and regulations and the terms and conditions of the Subaward based on the Subrecipient’s past performance, technical resources and financial viability.
If the University (a) has never entered into a Subaward with the proposed Subrecipient or (b) has entered into a Subaward with such Subrecipient, but such Subaward ended more than three years ago, the Subrecipient will be subject to a formal risk assessment by SPA and RPIC.
The risk assessment may take into account one or more of the following factors:
- Whether the Subrecipient and the Subrecipient PI are in good standing with the federal government;
- Whether the Subrecipient is organized or located in a non-U.S. jurisdiction;
- The Subrecipient’s current and past audit experience;
- The degree of external oversight of the Subrecipient by auditors or sponsor agencies;
- Evidence of effective accounting and procurement controls within the Subrecipient’s systems and administrative operations;
- The size of the Subaward and the size of the Subaward relative to the prime award;
- Prior experience with the Subrecipient (e.g., pre-award negotiations, financial/operational reporting accuracy and timeliness, response to requests, etc.);
- The Subrecipient’s organizational and individual conflicts of interest; and
- The risk category for the Subrecipient previously established by SPA and RPIC.
Following the review of all necessary documentation, SPA will complete a Subaward Risk Assessment Questionnaire (see Appendix F).
If SPA categorizes the Subrecipient as “high risk”, it will notify RPIC, and SPA and RPIC will work with the PI to ascertain whether or not a Subaward should be issued, what special terms and conditions should be included in the Subaward, as well as what oversight requirements will be necessary to monitor the Subaward. SPA and RPIC are responsible for ensuring that arrangements are in place to mitigate the risk to the University before issuing a Subaward.
E. Establishment of Subaward
Following the receipt of a notice of award and prior to the execution of the Subaward, the following actions must be taken:
- The Subaward Agreement will include the requirements imposed by the University on the Subrecipient so that the performance under the Subaward is carried out in accordance with all applicable laws and regulations and the terms and conditions of the award, and any additional requirements that Columbia imposes on the Subrecipient to meet its own responsibilities under the prime award, including the requirements that the Subrecipient permit the University and its auditor to have access to the Subrecipient’s records and financial statements and that the Subaward include appropriate terms and conditions for closeout of the Subaward.
- If the award is funded by the Public Health Service, the PI shall submit to SPA a Follow Up Subrecipient FCOI Policy Confirmation Form or an Exception Form (see Appendices G-1 and G-2), in each case if applicable.
- SPA shall confirm that the Subrecipient has provided evidence of IRB or IACUC approval, if applicable.
- SPA shall confirm the terms of the Subaward budget.
- SPA shall prepare and negotiate the Subaward. The Subaward must specify any financial and programmatic reports required of the Subrecipient in accordance with the Uniform Guidance.
A Subaward will not be issued, nor payments to a Subrecipient authorized, prior to the University’s receipt and acceptance of the prime award and the set up of the proper accounts in ARC.
F. Post-Subaward Monitoring
1. General. Following the execution of a Subaward, the PI and his/her Departmental Administrator (DA) will determine the frequency and scope of departmental monitoring procedures, provided that such procedures are not less than those required by the sponsor.
2. Performance. The PI is responsible for monitoring the activities of the Subrecipient to ensure that the Subaward is used for authorized purposes, in compliance with applicable laws and regulations and the terms and conditions of the Subaward, and that the Subaward performance goals are being achieved. Specifically, the following monitoring activities are appropriate actions to be undertaken by the PI and DA:
- Reviewing financial and programmatic reports required by the Subaward on a timely basis.
- Receiving informal progress reports by telephone or email, provided that any telephonic reports are documented;
- Performing site visits if practical to evaluate the Subrecipient’s compliance with the scientific objectives of the Sponsored Project and the appropriateness of the Subrecipient’s administration of the Subaward. The frequency such site visits will depend on the risks associated with the Subaward, the level of complexity of the activity and the scope and duration of the projects. Site visits should be documented by meeting notes, trip reports or correspondence; and/or
- Following up and ensuring that the Subrecipient takes timely and appropriate action with respect to deficiencies pertaining to the award detected through progress reports, audits, on-site reviews and other means.
Copies of materials received by the PI or DA in connection with his/her monitoring responsibilities should be retained in the Department’s files. The Subrecipient’s progress should be included in the PI’s report to the sponsor.
The PI or DA should report any material problems with respect to the Subaward to SPA. SPA will coordinate with the appropriate personnel in the Office of the Controller with respect to a response.
3. Invoices. The PI and the DA will review Subrecipient invoices prior to authorizing their payment.
Subrecipient invoices should contain at least the following information:
- The period of performance covered by the invoice;
- A description of expenses itemized by major budget categories);
- Current period costs, including cost sharing (in sufficient detail to enable comparison to the project budget);
- Cumulative project costs, including cost sharing, as compared to the project budget;
- Subrecipient contact person with respect to the invoice; and
- Certification as to the accuracy and appropriateness of the expenses.
Evidence of regular review of invoices by the PI and the DA must be retained in the Department’s files. “Evidence” can be in the form of PI initials or authorizing signatures on invoices, e-mail communications, meeting notes, etc.
If after review of any invoice, a concern with respect to the Subrecipient’s performance or the inclusion of unusual, excessive or unexplained charges is identified, the PI or the DA should request clarification from the Subrecipient. If the explanation from the Subrecipient is not sufficient to render a prudent judgment on the allowability of the cost or compliance with the terms of the Subaward, the PI or the DA should notify SPA and Sponsored Project Finance (SPF) as soon as possible. SPA and SPF will review the matter. Examples of detailed justifications that may be requested include:
- Payroll records/data;
- Copies of paid invoices showing the cost of items purchased or Vendor Justification Forms if required by federal law;
- Descriptions of services rendered by consultants, including hourly rates and time reports; and
- Details of travel charges (air fare, meals, ground transportation) with purposes of travel stated
Unreasonable, unallowable or unallocable costs should be disallowed by the PI, the DA or SPF. The DA should document the reason for the disallowance (i.e., progress reports not filed, expenses not in line with the SOW, etc.) and contact the Subrecipient to issue a revised invoice.
Copies of invoices should be retained in the Department’s files.
The PI shall have the right to request random audits of invoices under a Subaward from time to time during the term of the Subaward.
Within 45 days following the close of each fiscal quarter, the PI must confirm in writing that he/she has reviewed such fiscal quarter’s expenditures associated with each Sponsored Project of which he/she is the PI and that the expenditures are allowable and appropriate for such Project. Copies of the attestation statement will be retained in the Department’s files.
4. Annual Monitoring. On an annual basis, RPIC will ensure that an Annual Subrecipient Certification and Financial Status Questionnaire (see Appendix H) is completed by each Subrecipient listed in the Subrecipient Financial Database that is a party to an active Subaward.
RPIC will follow up in a timely fashion with any Subrecipient that does not provide it with the required information described above. In the event that the Subrecipient fails to respond, RPIC may determine that subsequent invoice from such Subrecipient should not be paid until such actions are taken. If such determination is made, RPIC shall so notify SPA and SPF.
RPIC will update the Subrecipient Financial Database to record the receipt (or non-receipt) of the information described above and, based on its assessment of the findings and the corrective action plan, make a determination whether the Subrecipient is currently high risk.
In certain cases, RPIC may determine that the Subrecipient’s non-compliance with the University’s requirements is so serious and the risks of continuing the Subaward are so high that the Subaward should be terminated.
Following the conclusion of a Subaward period of performance, Subaward should be processed for closeout and formally closed within 60 days, unless SPA grants the PI an extension of time. The following requirements must be met prior to a Subaward being closed out:
- The PI should insure that all deliverables (e.g., technical/progress reports, patent/invention documentation, equipment reports, final invoice, etc.) have been received from the Subrecipient and should verify the technical completion of the Sponsored Project.
- The PI, with the assistance of his/her DA, should complete a final review of all costs charged by the Subrecipient to insure that only allowable and appropriate costs have been incurred.
- Once the above tasks have been completed, the PI should approve the final invoice from the Subrecipient, indicating that it represents a final payment. Such approval will represent the PI’s acknowledgement that all tasks and obligations of the Subrecipient have been completed. It is important that the final invoice be promptly received and approved, in order to insure appropriate and timely expenditure reporting to the sponsor.
If the actual costs incurred by the Subrecipient are less than the maximum amount authorized by the Subaward (and the purchase order authorizing the commitments of funds to the Subrecipient), the PI and/or the DA will advise SPF to close out the remaining commitment on the purchase order.