1307 PR.01 Establishing Subrecipients Associated with Sponsored Programs

1.     Determining if the Proposed Activity is a Subrecipient or Supplier/Vendor Relationship with Yale

2.     Proposal Preparation and Review

3.     OSP Activities Conducted Prior to Drafting a Subaward

4.     Drafting, Negotiating, Executing, and Setting Up Subawards

This procedure outlines the process for establishing subrecipients under a prime sponsored award to Yale and supports Policy 1307 Subrecipient – Establishing, Managing, and Monitoring.  All faculty and staff involved in the conduct and/or oversight of sponsored research involving a subrecipient are expected to follow the procedures outlined in this document, Procedure 1307 PR.02 Managing Subrecipient Activity Associated with Sponsored Programs, and Procedure 1307 PR.03 Monitoring Subrecipient Activity Associated with Sponsored Programs.

Yale has the responsibility for ensuring that all research carried out by a subrecipient is conducted and administered in compliance with federal regulations as well as sponsor and Yale requirements.  This procedure defines general roles and responsibilities of the affected individuals and describes the activities that should be undertaken when including a subrecipient in a proposal to an external sponsor and issuing a subaward to a subrecipient.

The initial determination of whether a subrecipient or supplier/vendor relationship exists is the responsibility of a Principal Investigator (“PI”) and their Department Business Offices/Faculty Research Management Services (“FRMS”) (hereinafter collectively referred to as “DBO”).  This determination should be done early in the proposal planning stages so that the entity is correctly represented and budgeted in the proposal.

The table below describes the characteristics typical of either a subrecipient relationship or a supplier/vendor relationship with Yale:

It should be noted that suppliers/vendors include, but are not limited to, consultants where a fee-for-service or equivalent relationship exists.

Not all the above characteristics must be met when determining an appropriate supplier/vendor vs. subrecipient relationship, but rather are good indicators of the type of relationship.  If, however, the entity is identified by Yale’s PI as having a responsibility for the conduct, design, or reporting of the research, then the entity would most likely be considered a subrecipient.  The substance of the relationship is more important than the form of the agreement.

For assistance in determining a supplier/vendor vs. subrecipient relationship, PIs and DBOs are encouraged to use the Subrecipient vs. Contractor/Vendor Determination Checklist.  The Office of Sponsored Projects (“OSP”) should also be contacted if further assistance is needed when determining whether a proposed entity is a supplier/vendor or a subrecipient, as OSP makes the final determination.

Under 2 CFR Part 200, agencies can impose additional specific requirements to recategorize suppliers/vendors as subrecipients.  Therefore, it is important to review the sponsor’s criteria, as well as the above.

A.  Subaward Preparation

Yale PIs should alert their DBO as early as possible of their intent to include a subrecipient in a proposal to allow time for the collection of required information and certifications from the subrecipient.

Proposal Documentation Requirements

Yale is a participant in the Federal Demonstration Partnership’s (“FDP”) Expanded Clearinghouse.  The FDP Expanded Clearinghouse is designed to streamline the subrecipient process and monitor responsibilities.

As a participant in the FDP Expanded Clearinghouse, Yale has agreed to rely on the information provided by a fellow FDP Expanded Clearinghouse participant in lieu of sending/receiving individual subrecipient commitment forms when that organization is included in a Yale proposal as a subrecipient. The information and documentation required from FDP Expanded Clearinghouse participants differs from that required from non-FDP Expanded Clearinghouse participants. The sections below describe the information and documentation required from subrecipients depending upon whether those subrecipients are participants in the FDP Expanded Clearinghouse.

Subrecipient Organizations Participating in the FDP Expanded Clearinghouse

For organizations participating in the FDP Expanded Clearinghouse, DBOs must collect the following:

• A completed and signed Form 1304 FR.03A Subrecipient Information and Compliance Form (“SIC Form”).  Organizations participating in the FDP Expanded Clearinghouse only need to complete the FDP portion of this form and complete/sign Section IX or submit this information in a form of their choice, signed and dated by the subrecipient’s authorized organizational official;
• A Statement of Work;
• A Budget; and
• A Budget Justification.

Subrecipient Organizations NOT Participating in the FDP Expanded Clearinghouse

For organizations not participating in the FDP Expanded Clearinghouse, the PI, with the assistance of their DBO, is responsible for obtaining the following, which is included with the submission of the proposal to OSP:

• A completed SIC Form (Form 1304 FR.03A), signed by the subrecipient’s authorized representative;
  • Note that Federally Funded Research & Development Centers and National Laboratories do not complete the SIC form (Form 1304 FR.03A).
• A Statement of Work;
• Facilities and Administrative (“F&A”) rate agreement (if applicable for the subrecipient);
• Budget
• Budget Justification; and
• Any other supporting documentation as appropriate.

It should be noted that the SIC Form contains certifications specific to certain sponsor Financial Conflict of Interest (“FCOI”) requirements. DBOs should be aware of and follow the steps below:

• Proposals may not be submitted to a Public Health Service (“PHS”) agency, a PHS-like sponsor, the National Science Foundation (“NSF”), or the Department of Energy (“DOE”) without certification from the subrecipient that it has a compliant policy and has made all required disclosures.  This certification is indicated in the SIC Form (Form 1304 FR.03A).  For a list of PHS agencies and PHS-like sponsors, visit Frequently Asked Questions for COI and select “What are the PHS agencies and other sponsors that have adopted the PHS regulations?”
• If the subrecipient does not have a compliant PHS FCOI policy, the DBO provides the subrecipient with the Yale model PHS compliant policy and model disclosure form for the subrecipient to adopt and complete.
• Implementing a FCOI policy will take time and the subrecipient should be made aware of the requirement well in advance of the proposal deadline.  The DBO should notify the OSP Proposal Manager immediately if the subrecipient indicates on the SIC Form (Form 1304 FR.03A) that the subrecipient does not have a compliant policy. 
• In those rare instances when a subrecipient does not have a PHS compliant policy and is unable to adopt the model policy at the time of proposal submission, Yale’s FCOI policy will apply to the subrecipient’s personnel identified as being “responsible” for the design, conduct, or reporting of the research and, therefore, must complete an External Interest Disclosure form for Yale.  Yale must receive the disclosure before the proposal is submitted to OSP.  The subrecipient must, however, certify that it will have a compliant policy by the time of award.

B.  Preparing Proposal Budgets that Include a Subrecipient(s)

When DBOs prepare a proposal budget that includes a subrecipient(s) they:

• Ensure that the subrecipient’s total direct and F&A costs are included as a direct cost in Yale’s budget on the Consortium/Subaward line.
• Ensure that subrecipients without a federally negotiated F&A rate determine whether to opt for 0% F&A, or the de minimis rate of 10% of modified total direct costs (“MTDC”), unless otherwise prohibited or restricted by the prime sponsor. The NIH restricts F&A to 8% for foreign subrecipient organizations (excepting the American University of Beirut and the World Health Organization, which are allowed to use their federally negotiated F&A rate.)
• Ensure Yale’s F&A rate is only applied to the first $25,000 of the subrecipient’s total budget if proposing to a federal sponsor.
  • Proposals to non-federal sponsors may have different F&A cost recovery requirements.  Therefore, the charging of Yale’s F&A rate to the entire subaward budget may be appropriate.
• Consider and determine if a fixed amount subaward (up to the Federal Simplified Acquisition Threshold over the entire Federal project period) is appropriate. Standards used to make this determination include:
  • The project scope must be specific and adequate cost, historical, or unit pricing data is available to establish a fixed amount;
  • The subrecipient will realize no increment above the fixed amount; and
  • Prior approval from the federal sponsor is required for fixed amount subawards NOT included in the original proposal.

C.  Proposal Review

OSP reviews and verifies that the SIC Form (Form 1304 FR.03A) and required certifications are complete, as well as reviews the F&A rate, prior to proposal submission.  OSP will contact the DBO to gather any missing information, documentation, or certifications from the subrecipient.  Documentation may include, but is not limited to, the F&A rate agreement, biosketches, current and pending support pages, and consortia and/or proposal endorsement letter. 

If the proposed subrecipient is a foreign entity, then OSP will determine if the proposal and subsequent subaward document may require review and approval by the Director of Export Controls (review Guidelines on Export Controls for additional information).  The PI and/or DBO should contact the Office of Export Controls for guidance in advance of submitting the proposal to OSP.    

A.  Risk Assessment and Mitigation

OSP assesses the subrecipient’s financial status and internal controls prior to issuing a subaward.  Based on this evaluation, Yale determines the appropriate monitoring strategy, which is reflected in the terms and conditions of the subrecipient agreement.  The strategy is consistent with the level of risk determined by the University and required by Section 200.332(b) of 2 CFR Part 200.  OSP will record the low- or high-risk level determination in its internal tracking system.

To assess a potential subrecipient’s level of risk, OSP may perform the following actions:

• Assess the subrecipient’s SIC and Subrecipient Questionnaire (“SQ”) responses to identify potential internal control weaknesses, regulatory concerns, and financial status.  The assessment actions include, but are not limited to:
  • A review of previous audit results, including whether or not the subrecipient is subject to a Single Audit in accordance with 2 CFR Part 200 Subpart F “Audit Requirements”;
  • A determination of adequate controls and systems to comply with federal requirements such as effort reporting systems, cash management controls, etc.;
  • A review of the subrecipient’s prior Yale experience with the same or similar subawards;
  • An evaluation of the subrecipient’s ability to comply with human and animal subjects and/or conflict of interest regulations; and
  • Assess the extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency).
• If the OSP assessment identifies areas of concern, OSP, in consultation with the PI, DBO, and the University Research Compliance Officer, as appropriate, will determine an appropriate risk mitigation plan.  The mitigation strategy may include:
  • More frequent reporting;
  • Site visits;
  • Requiring supporting documentation with each invoice;
  • Providing Yale with copies of the subrecipient’s policies and procedures; and
  • Eliminating administrative flexibilities provided to Yale by its sponsor, such as rebudgeting capabilities.
• If the prime award is a federal award, Yale (OSP) must notify the subrecipient of any additional terms and conditions imposed to mitigate risk, in accordance with 2 CFR Part 200.  OSP must notify the subrecipient as to:
  • The nature of the additional requirements;
  • The reason(s) why the additional requirements are being imposed;
  • The nature of the action needed to remove the additional requirement, if applicable; and
  • The method for requesting reconsideration of the additional requirements imposed.

Any special conditions must be promptly removed once the conditions that prompted them have been corrected.

B.  Subrecipient Regulatory Compliance and Assurance Requirements

Prior to the submission of NIH Just in Time (“JIT”) materials or similar process for other sponsors, or in advance of issuing a subaward to the subrecipient, OSP will review and confirm that all required subawardee documents and certifications have been received.  OSP will contact the DBO to secure any needed documents or information and will check Workday to ensure the Subrecipient is a Supplier.  If the Subrecipient is not listed as a Supplier, OSP will direct the DBO to initiate the Supplier creation process in Workday in accordance with Procedure 3401 PR.01 Supplier Setup and Change.

The PI and their DBO are responsible for gathering from the subrecipient and submitting to OSP all remaining required information, documents, and certifications which may include but are not limited to:

• IRB/IACUC protocol approval information;
• Certification that the subrecipient adopted its own PHS FCOI Policy; and
• F&A Rate Agreement, if changed.

Subrecipients may be required to submit certifications and representations on an annual basis. Certifications and representations may be required more frequently if the subrecipient fails to meet a requirement of a federal award.

A.  Drafting a Subaward

Once OSP has received the Notice of Award (“NoA”) or a fully executed award and the award has been set-up in IRES’ PT module, the OSP Subaward Manager ensures that Yale has the appropriate approvals to issue a subaward.  Subawards will only be issued in accordance with Yale’s policy and sponsor requirements.

The OSP Subaward Manager will prepare the subaward and assign a unique Yale Subaward Number, which includes the GR number and Supplier Contract Number.  The subaward is sent to the DBO and PI for review before the subaward is sent to the subrecipient. 

B.  Determining Subaward Terms and Conditions

Subaward terms and conditions are based on the prime award to Yale and any other requirements to assist Yale in its proper stewardship of the prime award and monitoring the subrecipient.  The DBO and PI should review the subaward document paying particular attention to the following terms and conditions:

• Technical/program reporting requirements;
• Period of performance and termination;
• Financial terms and conditions, including but not limited to, billing requirements and payment terms;
• Ownership of intellectual property and data; and
• Special terms and conditions deemed necessary to mitigate risk in conducting business with the entity based on OSPs assessment.

Special Requirements for Foreign Entities Receiving a Subaward

The DBO is responsible for obtaining from the subrecipient a completed W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (W-8BEN-E for entities) and forwarding the form to the Supplier Compliance Unit (“SCU”).  The SCU will maintain these documents in the Supplier/Vendor Database.  An updated W-8BEN form is required every three years.  The W-8BEN must be current for Yale to process a foreign subaward invoice.  If it has expired, the DBO is responsible for obtaining and attaching an updated copy to the invoice.   

C.  Subaward Activation and Setup Notification to Departments

Once a subaward is fully executed, OSP updates and activates the subaward in Workday.  The subaward is then uploaded into IRES’ PT Agreements folder.  OSP will then notify the PI and DBO via email that the subaward is active.

D.  Subaward Renewals and Modifications

Depending on the sponsor’s funding mechanism, the subrecipient may be issued an amendment to enact changes to the original subaward agreement, such as an increase in funding, project period end date, and/or changes in scope of work.  In such cases:

• The DBO will provide OSP an updated scope of work, detailed budget and budget justification, change in dates, and compliance assurances/documents, as necessary, depending on the specific modification. 
• If sponsor prior approval is required for carry forward of unspent funds, the subrecipient may need to submit a request to Yale.  If the Yale PI approves the request, the Yale PI, with assistance from the DBO, prepares a prior approval request letter to Yale’s sponsor, noting the carryforward amount, and sends the letter to the OSP award/contract manager for endorsement.
• Modifications to subawards are prepared by OSP and sent to the DBO and PI for review before sending to the subrecipient.
• Subawards are assigned a new Subaward Number only when a new Competing Application (in the case of NIH, a competing renewal) is submitted and a new project period begins, or when a new subaward GR line is created.
• Once a renewal or modification is fully executed, IRES’ PT and Workday are updated and the subaward modification documentation is distributed to the PI and DBO.

E.  Subrecipients Not Included in the Proposal

The PI and DBO must first confirm with the OSP award manager whether or not a subrecipient may be added to the project in accordance with sponsor requirements.

OSP will determine the necessary approval process according to Yale’s prime award and will advise the PI and DBO accordingly.  Once an appropriate risk assessment process is conducted and approval is obtained, the review, negotiation, and set up procedures are followed as outlined in this procedure as if the subrecipient were included in the original proposal.

Office of Sponsored Projects

• Using appropriate guidelines and regulations, determines whether a proposed subawardee is a subrecipient, consultant, or supplier/vendor.
• Verifies subrecipient has submitted a SIC Form (Form 1304 FR.03A), as appropriate, proposal, and supporting documentation prior to Yale’s submission of a proposal to the sponsor.
• Reviews any additional information required at JIT or before issuing the subaward.
• Performs a subrecipient risk assessment for all subrecipients on an ongoing basis.  Records the low/high risk determination in tracking system.
• Reviews financial risks to determine whether to do business with a subrecipient.
• Determines special terms and conditions in the subaward based on risk.
• Develops a risk mitigation strategy as necessary based on the results received from the risk analysis including the SQ.
• Negotiates and executes subawards between the University and subrecipient organizations.
• Educates PIs and DBOs on subrecipient processes.
• Monitors and provides guidance regarding the interpretation of applicable regulations and subaward terms and conditions.
• Creates subaward GR lines as needed and Supplier Contracts in Workday and notifies DBO if a new supplier/vendor set-up is needed.
• Uploads subaward documentation into IRES’ PT module.
• Endorses prior approval request letters for carry forward of unspent funds.

Principal Investigator

• Identifies a qualified entity to carry out part of a federal program.
• In conjunction with the DBO, ensures the subrecipient submits Yale’s SIC Form (Form 1304 FR.03A) and supporting documentation to OSP prior to Yale’s submission of a proposal, updates at JIT, or in advance of issuing a subaward and meeting non-NIH sponsor requirements.
• Receives subaward agreement from OSP for review and comment.  Informs the DBO of any comments/concerns to relay to OSP prior to issuance to subrecipient.
• Reviews and approves or denies all carry forward requests. 

DBO

• In conjunction with the PI, ensures the subrecipient submits Yale’s SIC Form (Form 1304 FR.03A), as appropriate, proposal, and supporting documentation to OSP prior to proposal submission.
• Assists PI in the receipt of updated documents, or additional information needed at JIT or information needed for the subaward to be issued.
• Submits the documentation to create the subrecipient/vendor in Workday.
• Receives draft subaward agreement from OSP for review and comment.  Notifies OSP of any required modifications to the agreement.
• Reviews Workday setup of the subaward and subaward modifications in the Find Subawards – Yale report.
• Assists PI with carry forward requests.

University Research Compliance Officer

• Advises OSP regarding risk-mitigation strategies, as appropriate.

Supplier Compliance Unit

• Creates the supplier/vendor and supplier/vendor profile in Workday for payment and ensures the integrity of the Workday supplier/vendor database.