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1307 PR.01 Establishing Subrecipients Associated with Sponsored Programs
May 4, 2018
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.
Reason for the Procedure
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 or not 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:
The principal goal of engaging the entity is to carry out a public purpose authorized by Yale’s prime award
The principal purpose is to acquire goods or services for the direct benefit of an award
The performance of the entity is measured against the objectives of the prime award
The entity provides the goods and services within normal business operations
The entity has programmatic decision-making responsibility
The entity provides similar goods or services to many different purchasers
The entity receives prime award funds from Yale through a subaward to carry out its own program
The entity normally operates in a competitive environment
The entity exercises considerable discretionary judgment
The entity provides goods or services that are ancillary to the operation of the prime award program
The entity may be required to provide matching funds or cost sharing dollars
The entity provides services of a repetitive nature or goods of a commonly available kind
The entity has its performance measured in relation to whether objectives of sponsored award were met
The entity is generally not subject to compliance requirements of the federal program as a result of the agreement, though similar requirements may apply based on the scope of work (e.g., IRB approval, COI).
The entity is responsible for adherence to applicable federal program requirements specified in the federal award if under a federal prime award or the requirements of the non-federal sponsor, as appropriate
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 of 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 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 in order 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 determine the usefulness of an on-line standardized subrecipient data repository to streamline the subrecipient process and monitoring responsibilities.
As a participant in the FDP Expanded Clearinghouse, Yale relies on the information provided by a FDP member organization when that organization is included in a Yale proposal as a subrecipient. The information and documentation required from FDP organizations differs from that required from non-FDP organizations. The sections below describe the information and documentation required from subrecipients, depending upon whether those subrecipients are an FDP organization:
Organizations Participating in the FDP Expanded Clearinghouse
For organizations participating in the FDP Expanded Clearinghouse, DBOs must collect the following:
- A completed/signed one-page Letter of Intent; and
- A Statement of Work, Budget, and Budget Justification page.
FDP member organizations included in a Yale proposal as a subrecipient DO NOT need to complete a Subrecipient Information and Compliance (SIC) Form.
Organizations NOT Participating in the FDP Expanded Clearinghouse
For non-FDP organizations, the PI, with the assistance of their DBO, is responsible for obtaining a completed SIC Form (Form 1304 FR.03A), signed by the subrecipient’s authorized representative along with supporting documentation, such as a Statement of Work, Facilities and Administrative (“F&A”) rate agreement, Budget, and Budget Justification, which is included with the submission of the proposal to OSP. It should be noted that the SIC Form contains certifications specific to certain sponsor Conflict of Interest (“COI”) 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, or the National Science Foundation (“NSF”) without certification from the subrecipient that it has a compliant policy and has made all required disclosures. For a list of PHS agencies and PHS-like sponsors, visit: https://your.yale.edu/research-support/conflict-interest/frequently-asked-questions-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 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 COI 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 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 COI 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 a Yale External Interest Disclosure form. 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 include a 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.
- 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 $150,000 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 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 Director 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 200.331 (b) of 2 CFR 200.
In order 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 in order 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 200 Subpart F-Audit Requirements.
- A determination of adequate controls and systems in order 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.
- 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 and DBO, and the University Research Compliance Officer as appropriate, will determine an appropriate risk mitigation plan. If the prime award is a federal award, Yale (OSP) must notify the subrecipient of the additional terms and conditions in accordance with 2 CFR 200. 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. For example, not flowing down to the subrecipient certain authorities such as rebudgeting capabilities.
OSP must notify the subrecipient as to:
- The nature of the additional requirements;
- The reason 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 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.
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 NoA or a fully executed award and the award has been set-up in IRES’ PT module, the OSP Specialist 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 Specialist will prepare the subaward and assign a unique Yale Subaward Number, which includes the GR number and Supplier/Vendor 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”), not OSP. 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 in order 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 uploads the document into IRES’ PT Agreements folder. The subaward is then updated and activated in Workday. 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 page, 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.
Roles and Responsibilities
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 or LOI 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 and annually thereafter when the subaward is extended.
- 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 and Supplier/Vendor Contracts in Workday and notifies DBO if a new supplier/vendor set-up is needed.
- Scans subaward documentation into IRES’ PT module.
- Endorses prior approval request letters for carry forward of unspent funds.
- 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 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.
- Approves all carry forward requests.
- In conjunction with the PI, ensures the subrecipient submits Yale’s SIC Form or LOI 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 in order for the subaward to be issued.
- Receives 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 subrecipient risk assessments and supporting 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.