Subcontracts

Please see flowchart for easy reference click here 

Reason

Subpart D of the Uniform Guidance (UG) (see § 200.330 through § 200.332) stated the Subrecipient monitoring and management. Specifically stated in §200.331 of the Office of the Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) (“Uniform Guidance”), pass-through entities (PTE) are required to evaluate each subrecipient's risk of noncompliance in order to determine the appropriate monitoring level, monitor the activities of subrecipient organizations and to ensure that the subaward is in compliance with applicable Federal statutes and regulations and terms of the subaward, and verify that subrecipients are audited as required by Subpart F of the Uniform Guidance.

Through the adoption of the federal grant guidance and regulations codified at 2 CFR Part 200 (Uniform Requirements), the Grant Accountability and Transparency Act (GATA), 30 ILCS 708/1 et seq., was established for the use of grant funds for both State agencies and grantees. Pursuant to the Act, the Grant Accountability and Transparency Unit (GATU) has been established in the Governor’s Office of Management and Budget (OMB). GATU is charged with implementation of the Act in coordination with State grant-making agencies and grantees.

 A sample of the complete subrecipient form packet can be viewed here

Statement

In ensuring proper stewardship of sponsor funds, Chicago State University, is responsible for monitoring the programmatic and financial activities of its subrecipients. It is our institutional responsibility to assists Principal Investigators (PIs), administrators, faculty and staff who are working with subrecipients to ensure that in achieving performance goals of the sponsored project/s, that subrecipients comply with applicable federal laws and regulations and with the provisions of each subaward agreement.

Definitions

2 CFR Part 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (aka Uniform Grant Guidance) Consolidated and superseded the eight previous Office of management and Budget (OMB) Circulars (A-21, A-50, A-87, A-89, A-102, A-110, A-122 and A-133), that specifies grant management and audit responsibilities. Single audit regulations also describe the prime recipient/awardee’s responsibility for monitoring subrecipients.

Single Audit – (formerly A-133) Subpart F of the OMB Uniform Guidance, is a rigorous, organization-wide audit or examination of an entity that expends $750,000 or more of federal assistance (commonly known as federal funds, federal grants, or federal awards) received for its operations.

Prime Agency/Sponsor: The agency providing funds directly to the University.

Prime Recipient/Awardee:The institution or non-Federal awardee that receives an award directly from the sponsor.

Prime Award: Funds obligated by a Sponsor/funding agency to the University for a specific project.

Subrecipient:The legal entity to which a subaward is made and is accountable to the prime recipient or Pass-thru-entity (PTE) for the use of the funds provided.  Subrecipients must adhere to the terms and conditions of the prime award passed down to the subrecipient organization in the subaward agreement (subrecipient may also be referred to as subawardee, subgrantee, or subcontractor). A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.

Subaward: A form of legal agreement entered into by the University with another entity (i.e., the subrecipient).  The University agrees to provide funds to the entity to conduct a portion of the work specified in the statement of work (SOW) submitted as part of the proposal.

Catalog of Federal Domestic Assistance (CFDA) Number:( )A unique five- digit number assigned to each federally funded assistance program.  The first two digits identify the agency and the last three digits identify the program.

Federal Funding Accountability and Transparency Act (FFATA):  The Federal Funding Accountability and Transparency Act (FFATA or Transparency Act - P.L.109-282, as amended by section 6202(a) of P.L. 110-252) signed on September 26, 2006, requires the Office of Management and Budget (OMB)  to maintain a single, searchable website that contains information on all Federal spending awards.

The FFATA Subaward Reporting System is the reporting tool Federal prime awardees (i.e., prime contractors and prime grants recipients) use to capture and report subaward and executive compensation data regarding their first-tier subawards to meet the FFATA reporting requirements. Prime contract awardees will report against sub-contracts awarded and prime grant awardees will report against sub-grants awarded. The subaward information entered in FSRS will then be displayed on www.USASpending.gov associated with the prime award furthering Federal spending transparency.

Principal Investigator (PI):Individual responsible for the development, writing, and conduct of a sponsored award, including primary responsibility for the technical and fiscal management of the award.

A Contractor (previously called vendor) is an entity that receives a contract as defined in § 200.22. Contract of the OMB Uniform Grant Guidance. Contract means a legal instrument by which a non-Federal entity purchases property or services needed to carry out the project or program under a Federal Award.  To assist in determining if a collaborator is a  Subrecipient  or a  Vendor, please click the form here.

Listed below are the characteristics of a subrecipient and a contractor as stated in UG Guidance § 200.330.

 

Characteristics of a Subrecipient

  • Determines who is eligible to receive what Federal assistance;
  • Has its performance measured in relation to whether objectives of a Federal program were met;
  • Is responsible for adherence to applicable Federal program requirements specified in the Federal award
  • Has responsibility for programmatic decision making
  • Uses Federal funds to carry out the program of the entity as compared to providing goods and services for a program of the pass-through entity 

Characteristics of a Contractor/Vendor

  • Provides the goods and services within normal business operations
  • Provides similar goods and services to many different purchasers
  • Normally operates in a competitive environment
  • Provides goods and services that are ancillary to the operations of the federal program
  • Is not subject to the compliance requirements of the federal program as a result of the agreement, though similar requirements may apply for other reasons

It is vital to properly distinguish between a subrecipient and a contractor particularly on the proposal stage of the budget as improper identification might affect the amount of award to be received, the computation of indirect cost, and the audit review of the grant. The Contractors, however, have the F & A – (commonly called Indirect Cost) basis, based on the total cost of goods and services.

 

Subrecipient Monitoring Roles and Responsibilities

(Please see flowchart for easy reference, click here) 

Principal Investigator

  1. Obtains proposal-relevant documentation from subrecipient, including Subrecipient Checklist and Consortium Statement, and submits with proposal for review and approval to the Office of Grants and Research Administration (OGRA).
  2. Monitors the technical progress of a subrecipient’s performance as defined in the subaward.
  3. Ensures that subrecipient has met all deliverables.
  4. Ensures that subrecipient has complied with all applicable public policy requirements and objectives.
  5. Reviews invoices for cost allowability, compliance with federal regulations, prime award and subaward terms and conditions.  In addition, ensures that the amount billed is consistent with technical/progress reports and production of deliverables.
  6. Approves invoices for payment.
  7. Submits invoices for payment in a timely manner and retain copies for departmental records.
  8. Notifies OGRA when problems arise regarding invoicing or performance.

 

Office of Grants and Research Administration - OGRA

  1. Initiates Pre-qualification subrecipient reviews; Perform subrecipient risk assessment for each subrecipients.
  2. Negotiates and executes subaward agreements between the University and subrecipient organizations, including appropriate language requiring adherence to federal regulations and other sponsor requirements as applicable.
  3. Provides special terms and conditions in the subaward to manage risk.
  4. Issues and collects annual single audit certification letters and Subrecipient Profile Questionnaire for non-A-133 subrecipients.  Issues management decision on subrecipient audit findings.
  5. Assists PIs in meeting their monitoring responsibilities, as specified above.
  6. Documents annual compliance certifications.
  7. Performs a final review of costs charged and facilitates close-out of all commitments.
  8. Assists to resolve financial questions related to invoices.
  9. Ensures that the University’s subrecipient monitoring procedures are compliant with Federal, non-Federal, and other applicable regulations.
  10. Provides training and guidance in interpreting regulations, subaward terms and conditions and executing these guidelines and requirements.

Federal Funding Accountability and Transparency Act (FFATA):  The Federal Funding Accountability and Transparency Act (FFATA or Transparency Act - P.L.109-282, as amended by section 6202(a) of P.L. 110-252) signed on September 26, 2006, requires the Office of Management and Budget to maintain a single, searchable website that contains information on all Federal spending awards. For more information please click here 

The FFATA Subaward Reporting System is the reporting tool Federal prime awardees (i.e., prime contractors and prime grants recipients) use to capture and report subaward and executive compensation data regarding their first-tier subawards to meet the FFATA reporting requirements. Prime contract awardees will report against sub-contracts awarded and prime grant awardees will report against sub-grants awarded. The subaward information entered in FSRS will then be displayed on www.USASpending.gov  associated with the prime award furthering Federal spending transparency.

Reporting Timeline for Contractors

Prime Contractors awarded a Federal contract or order that is subject to Federal Acquisition Regulation clause 52.204-10 (Reporting Executive Compensation and First-Tier Subcontract Awards) are required to file a FFATA subaward report by the end of the month following the month in which the prime contractor awards any subcontract greater than $30,000. This reporting requirement will be phased-in (see below):

  • Phase 1: Reporting subcontracts under federally-awarded contracts and orders valued greater than or equal to $20,000,000, reporting starts now.
  • Phase 2: Reporting subcontracts under federally-awarded contracts and orders valued greater than or equal to $550,000, reporting starts October 1, 2010.
  • Phase 3: Reporting subcontracts under federally-awarded contracts and orders valued greater than or equal to $25,000, reporting starts March 1, 2011.
  • Phase 4: Reporting subcontracts under federally-awarded contracts and orders valued greater than or equal to $30,000, reporting starts October 1, 2015.

Although the requirement to report subawards is being phased-in at certain dollar levels, if you would like to start reporting prior to the start date for your subcontracts, the system is available to you for reporting.

Reporting Timeline for Prime Grant Recipients

Prime Grant Recipients awarded a new Federal grant greater than or equal to $25,000 as of October 1, 2010 are subject to FFATA sub-award reporting requirements as outlined in the Office of Management and Budgets guidance issued August 27, 2010. The prime awardee is required to file a FFATA sub-award report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $25,000.

Reporting Subawards and Executive Compensation

a. Reporting of first-tier subawards.

  1. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that obligates $25,000 or more in federal funds that does not include Recovery funds (as defined in section 1512(a)(2) of the American Recovery and Reinvestment Act of 2009, Pub. L. 111–5) for a subaward to an entity (see definitions in paragraph e. of this award term).
  2. Where and when to report.
    1. You must report each obligating action described in paragraph a.1. of this award term to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS).
    2. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.)
  1. What to report. You must report the information about each obligating action that the submission instructions specified and posted at here .

b. Reporting Total Compensation of Recipient Executives.

  1. Applicability and what to report. You must report total compensation for each of your five most highly compensated executives for the preceding completed fiscal year, if—
    1. the total federal funding authorized to date under this award is $25,000 or more;
    2. in the preceding fiscal year, you received—
      1. 80 percent or more of your annual gross revenues from federal procurement contracts (and subcontracts) and federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and
      2. $25,000,000 or more in annual gross revenues from federal procurement contracts (and subcontracts) and federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and
    3. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC website.)
  2. Where and when to report. You must report executive total compensation described in paragraph b.1. of this award term:
    1. As part of your registration profile at the Central Contractor Registry. (NOTE: CCR transitioned into the System for Award Management (SAM))
    2. By the end of the month following the month in which this award is made, and annually thereafter.

c. Reporting of Total Compensation of Subrecipient Executives.

  1. Applicability and what to report. Unless you are exempt as provided in paragraph d. of this award term, for each first-tier subrecipient under this award, you shall report the names and total compensation of each of the subrecipient’s five most highly compensated executives for the subrecipient’s preceding completed fiscal year, if—
    1. in the subrecipient’s preceding fiscal year, the subrecipient received—
      1. 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and
      2. $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal financial assistance subject to the Transparency Act (and subawards); and
    2. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC website.)
  1. Where and when to report. You must report subrecipient executive total compensation described in paragraph c.1. of this award term:
    1. To the recipient.
    2. By the end of the month following the month during which you make the subaward. For example, if a subaward is obligated on any date during the month of October of a given year (i.e., between October 1 and 31), you must report any required compensation information of the subrecipient by November 30 of that year.

d. Exemptions

If, in the previous tax year, you had gross income, from all sources, under $300,000, you are exempt from the requirements to report:

  1.  
    1. Subawards,and
    2. The total compensation of the five most highly compensated executives of any subrecipient.

e. Definitions.

For purposes of this award term:

  1. “Entity” means all of the following, as defined in 2 CFR part 25:
    1. A Governmental organization, which is a state, local government, or Indian tribe;
    2. A foreign public entity;
    3. A domestic or foreign nonprofit organization;
    4. A domestic or foreign for-profit organization;
    5. A Federal agency, but only as a subrecipient under an award or subaward to a non-federal entity.
  2. “Executive” means officers, managing partners, or any other employees in management positions.
  3. “Subaward”:
    1. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient.
    2. The term does not include your procurement of property and services needed to carry out the project or program (for further explanation, see Sec. ll .210 of the attachment to OMB Circular A–133, ‘‘Audits of States, Local Governments, and Non-Profit Organizations’’).
    3. A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract. 
  1. “Subrecipient” means an entity that:
    1. Receives a subaward from you (the recipient) under this award; and
    2. Is accountable to you for the use of the federal funds provided by the subaward.
  2. “Total compensation” means the cash and noncash dollar value earned by the executive during the recipient’s or subrecipient’s preceding fiscal year and includes the following (for more information see 17 CFR 229.402(c)(2)):
    1. Salary and bonus.
    2. Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments.
    3. Earnings for services under non-equity incentive plans. This does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees.
    4. Change in pension value. This is the change in present value of defined benefit and actuarial pension plans.
    5. Above-market earnings on deferred compensation which is not tax-qualified.
    6. Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee, perquisites or property) for the executive exceeds $10,000.

It is not sufficient for agencies to simply pass funding on to second or third parties such as Subrecipients. Rather, a system must be established to monitor how those funds are being spent and ensure these monies are being spent for the specified purpose. Subrecipient monitoring includes many aspects, such as reviewing and receiving grant or audit reports, as well as some level of on-site reviews, progress reports, financial review and/or inspections.

The Fiscal Control and Internal Auditing Act (FCIAA), enacted in 1989, require State agencies to establish, maintain, and annually evaluate their internal control systems. Agency internal control systems must reasonably assure compliance with applicable law and effective agency management which include determining if the financial management and the accounting system of the Subrecipient are adequate to account for program funds in accordance with state and federal laws and regulatory guidelines. To this purpose the Office of Grants and Research Administration require the completion of the Audit Certification and Financial Status Questionnaire be completed by the Subrecipient to determine the status of fiscal stability.

The Subrecipient Risk Assessment Report is intended to provide OGRA with a method for assessing Subrecipient risk and to be applicable across federal granting authorities, as well as across University monitoring authorities.  This report was developed to be as comprehensive as possible.  Some sections may not be applicable to specific programs or subrecipients as it applies to the scope of work or amount of funding. If items are not applicable, “N/A” should be used. The report should also include documentation to support particular risk items as they relate to governing compliance statutes, rules and supplements for the program.

Subrecipient Monitoring Procedures on Risk Analysis

Using the information obtained in the Subrecipient Forms (Audit Certification and Financial Status Questionnaire), each subrecipient will be evaluated by completing a subrecipient risk analysis. The risk analysis determines the level of risk associated with each subrecipient, and subsequently to the Chicago State University. A risk level is assigned to each subrecipient based on the score attained in response to the risk analysis questions. Please see updated risk analysis here:

Instruction: 

  1.   Analysis of risk on submitted Subrecipient - Audit Certification and Financial Status Questionnaires provided by CSU.
  2.   Analysis of risk must be applied on all new subaward or modification on an existing award.
  3.   Analysis of risk is needed as an assessment and part of the subrecipient monitoring as stated 2 CFR 200.
  4.   Respective actions are required on the weighted score.
  5.   In case of modification, the financial thresholds are cumulative and may require re-assessment of the risk.
  6.   It is the responsibility of the PI, OGRA Office, the Deans and Department of the responsible colleges to collect information and require additional documentation.
  7.   Additional information not detailed in the risk assessment can be added in the “Notes” section of the form. 

Risk Assessments 

Review of subrecipients internal controls and business practices to mitigate risk in carrying out project objectives and expending federal funds. 

Potential Indicators of High-Risk

  1.   Program Complexity
  2.   Percentage passed-through
  3.   Dollar amount of award
  4.   New subrecipient
  5.   History of non-compliance
  6.   New personnel
  7.   New or substantially changed systems 

Risk Assessments Are Conducted By the Following: 

  1. Federal Audit Clearinghouse
  2. Subrecipient Profile Form
  3. Audit Reports and/or financial statements
  4. Websites
  5. Excluded Parties List System
  6. Interviews
  7. Site Visits
  8. Interactions (Communication via email and over the phone) 

Risk Assessments are conducted 

  1. At the proposal stage
  2. Before the issuance of a subaward
  3. During the life of the subaward
  4. At closeout of the subaward

There are four (4 levels of risk) 

Low, 0-11 - No action necessary.  

Medium, 12-50 - If applicable, require detailed invoicing for subrecipient; as appropriate, seek guidance from PI (Principal Investigator), OGRA (Office of Grants and Research Administration) and Legal Department and/or Risk Management. on complex contract or compliance issues.  

High, 51-83 – If applicable, seek guidance from PI, OGRA, Legal and/or Risk Management on complex contract or compliance issues and the additional monitoring that should be put in place such as more detailed invoices, more frequent/detailed financial and/or programmatic reporting, etc. including how and by whom the monitoring will be done.  

Very High, >=84 - Monitoring and management discussions with PI, OGRA, and Legal and Risk Management are required prior to issuance of a subaward.  

If a subrecipient is found to be high risk, quarterly follow-ups are performed by the PI. Each quarter, an email is sent to the department with a series of questions to determine if the subrecipient is performing in accordance with the terms and conditions of the subaward as follows:  

  1.  Are deliverables and milestones progressing in accordance with the subaward?
  2.  Are invoices being submitted timely?
  3.  Are there any other concerns that you have with this subrecipient?

This process is completed until all identified issues are resolved.

Copies of all correspondence is retained in the subaward file at OGRA  

Remedies for noncompliance §200.338   

If a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.207 Specific conditions. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances:

(a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity.

(b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance.

(c) Wholly or partly suspend or terminate the Federal award.

(d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency).

(e) Withhold further Federal awards for the project or program.

(f) Take other remedies that may be legally available.

The Office of Management and Budget for Grants and Agreements under Part 200 - UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS Subpart D - Post Federal Award Requirements stated the Monitoring and Management of subrecipient.  A subrecipient is the entity that receives a subaward from a pass-through entity (PTE) to carry-out a portion of the federal award.

Sections 200.331 (a) (b) 200.207 200.331 (d) to (e) subpart F and  200.338 referenced the compliance requirements imposed by the Federal Government on Award Notification, Risk Assessment, Specific conditions, Monitoring, and Non-compliance respectively.

Proposal/PreAward Stage

Checklist to Determine Subrecipient or Contractor Classification See Form here

Award/Post-Award Stage

Invoice Checklist See Form here

Close-out Stage

Subrecipient Close-out

The final stage in the grant lifecycle is grant closeout (please see 2 CFR Part 200 Sections 200.343 thru 200.345 for the guidelines).  When CSU issues subawards, subrecipients have the same close-out responsibilities as CSU.  These are awards made to other organization/s for the performance of a portion of the work of a CSU sponsored project.  

Procedures

On the post award stage, CSU close-out marks the end of the project award relationship.  This is a process where CSU finalizes the completion of all administrative actions and stated required work on a project.

Subaward Closeout 

Purpose:  Close out a subaward on a sponsored program. 

Applicability:  CSU Principal Investigators (PIs) involved in sponsored research with subrecipients on a grant.

  1. A termination of account memorandum should be forwarded to the appropriate departments (PI, GAG, Budget Dept., OGRA, and Purchasing Department) 90 days before the grant expires (200.343).
  2. An email notice of grant close-out should be forwarded to the appropriate subrecipients.
  3. Verification that the final invoice has been received from the subrecipient no later than 60 days following the grant termination date.
  4. A verification from PI that the final technical report has been received (in writing, unless an exception has been approved). The PI is responsible for approving the final technical report and retaining it for inclusion in the final technical report to the prime sponsor.
  5. A verification from PI that a patent/invention report has been received, if applicable.
  6. A verification from PI that property report has been received , if applicable.
  7. After full payment of final subrecipient invoice, close all (unexpended balance) Purchase Order.
  8. Retain Subrecipient Close-out Checklist on file
  9. Retain financial and technical records pertaining to the subrecipient for 3 years or the number of years required by the sponsor, whichever is longer.

Close-out Checklist See Form here 

The funding agency together with the fund recipient/s define their respective responsibilities on the project statement of work by establishing its objectives, deliverables and success criteria. The purpose of a project is stated in the project proposal and it is the statement of work that summarizes this purpose and describes the project's desired results. The statement of work acts as a reference basis for the financial or operational decisions on a day-to-day basis and specifies the acceptance criteria that determine if a project result is acceptable.  The document that expresses how a specific project will be completed is called the scope of work (SOW).  The SOW clearly states the project requirements as to timelines, milestones, price, product expectations, reporting schedules, measurable outcomes and expected deliverables.