Just because another entity is involved in carrying out a sponsored project does not mean that a true subrecipient relationship exists. Since it is sometimes difficult to tell the difference between a subrecipient and a vendor, it is easy to confuse the two. 

This can lead to problems managing a sponsored project so it is important to ascertain if the work to be carried out meets the definition of a subaward at the proposal stage.

Questions to ask before including a subaward in a proposal:

1. Does the entity commonly provide these goods and/or services as part of their normal business operations?
2. Does the entity provide similar goods and/or services to other purchasers?
3. Does the entity compete with comparable entities to provide the same goods and/or services?
4. Are the goods and services being provided by the entity secondary to the central purpose of the project?
5. Is the entity’s work carried out according to the Prime’s specifications using standard operating procedures?

If the answer to any of these questions is “yes,” the entity fits the profile of a vendor and a subaward will not be the best solution. If a vendor relationship is required remember that indirect costs will need to be charged on the entire amount of the transaction.

Is a subrecipient form needed when proposing a subaward with another UC campus?

No. When proposing a project that involves another UC campus, the MCA Commitment Form should be used instead. This is because all UC campuses are under the same legal authority as UC Berkeley.

Who is responsible for monitoring a subrecipient?

The process of setting up a subaward and monitoring a subrecipient require the combined efforts of several campus constituencies.

The following matrices provide an overview of who is responsible for what at:

The preaward stage:

PREAWARD STAGE BY TASK/RESPONSIBILITY

PI RESPONSIBILITIES	DEPARTMENT RESPONSIBILITIES	SPO RESPONSIBILITIES
Develops proposal in accordance with sponsor and UCB guidelines	Determine if PI’s collaborator is a SUB or vendor	Reviews proposal with SUB information
Identifies collaborators to assist with scope of work (SOW)	Integrates SUB information into proposal	Identifies revisions needed and notes potential risk issues
Obtains SOW and Budget from SUB	Submits SUB commitment form to SUB	Submits proposal to Sponsor
Revises proposal per SPO guidance	Collects SUB commitment form from SUB	Files subaward commitment form(s) to be used at award stage
	Submits proposal with SUB commitment form to SPO
	Assists with revision of proposal per SPO guidance

After an award is made:

AWARD STAGE BY TASK/RESPONSIBILITY

PI/DEPARTMENT RESPONSIBILITIES	SPO RESPONSIBILITIES
Assesses if any special reporting, billing, intellectual properties or work related terms and conditions are needed. Requests issuance of a subaward from SPO	Validates SUB Sponsor approval of SUB Compliance information Debarment A-133 compliance
Receives copy of subaward and reviews terms and conditions to prepare for monitoring role	Assesses risk and need for: Mini audit questionnaire Additional monitoring/reporting Detailed invoices Additional assurances Backup receipts
	Prepares subaward document Flows down applicable T&C from prime award Determines type of subaward (cost reimbursement, fixed price, etc.) Establishes payment schedule Establishes time line for deliverables Inserts appropriate risk reduction clauses
	Issues the subaward to SUB
	Tracks subaward via COEUS

During subaward monitoring:

SUBAWARD MONITORING STAGE BY TASK/RESPONSIBILITY

PI/DEPARTMENT RESPONSIBILITIES	SPO RESPONSIBILITIES
Reviews/approves invoices	Performs annual compliance review of SUB: A-133 audit Debarment Compliance
Monitors SUB progress/expenditures	Extends/modifies issues subaward agreement per PI request
Accepts/approves reports from SUB
Submits progress/interim financial reports to Sponsor
Requests Issuance of subaward extension/modification; incorporates any special PI instructions/terms
Submits final prime project/financial reports to Sponsor
Completes Closeout

LEGEND
PI - Principal Investigator RA - Research Administrator SUB – Subrecipient SPO – Sponsored Projects Office EFA – Extramural Fund Accounting
Control Point

Principal Investigators (PIs) have the primary responsibility for monitoring subrecipients to ensure compliance with federal regulations and with the terms of both the prime award and the subaward.

PIs are responsible for ensuring that subaward costs are reasonable and allowable. PIs are also responsible for the receipt and review of technical performance reports or other deliverables and the review of expenses vs. budget. There may be additional sponsor-specific or program-specific requirements that mandate collection and documentation of other kinds of assurances (e.g., on laboratory animals, human subjects, biohazards, etc.) during the course of a project. Extramural Funds Accounting provides guidance on subrecipient monitoring after an award is made.

The Sponsored Projects Office (SPO) has responsibility for ensuring that subaward agreements contain appropriate federal and other applicable regulations consistent with sound business practices and for collection of subrecipient federal audits, if necessary. SPO has been delegated the authority to prepare and negotiate all subawards for collaborative research.

Why is a Subrecipient Commitment Form needed before an award is issued?

The federal government requires UC Berkeley to document subawardee compliance with regulations such as those governing research with human or animal subjects, conflict of interest disclosures, and OMB Circular A-133. The Sponsored Projects Office is offering the Subrecipient Commitment Form as a tool for campus departments and subrecipients to understand what is needed to prepare and issue subawards.

Having needed data at proposal submission stage puts the institution in compliance with federal regulations and expedites the issuance of subawards. Having material submitted at proposal stage will allow subawards to be processed and issued more quickly. Having the information at award stage reduces the time to independently research and verify the information included on the form.

See Instructions for Completing the University of California Berkeley Subrecipient Commitment Form for more information.

The Subrecipient Commitment Form is to be completed and signed by an authorized institutional representative of the subawardee and provided at proposal stage with other proposal documents.

The form also is to be used for awards that did not include the form at proposal stage. When UC Berkeley investigators are requesting subawards at award stage, the Subrecipient Commitment Form must be completed and signed at the time of award by an authorized institutional representative of the subawardee.

The University of California, Berkeley requires that the following documents be included in order for a named subrecipient to be included as part of a principal investigator’s proposal to the sponsor. Proposals will not be endorsed by institutional officials until these elements are on file.

• Subrecipient’s Statement of Work (SOW), including a clear description of the work to be performed, the proposed timelines and deliverables, biosketches of subrecipient key personnel, etc.
• Subrecipient’s Budget and Budget Justification, including the subrecipient’s direct and indirect costs, calculated using the subrecipient’s approved facilities and administrative (F&A) and fringe benefit rates, and verifying any committed cost sharing.
• A Subrecipient Commitment Form, completed and signed by the subrecipient’s institutional official.

If the prime is a contract,

• A Fair and Reasonable Cost Analysis and Sole Source Justification: Subawards Under Contracts form, signed by UC Berkeley’s PI. The PI must select a subrecipient based upon his/her assessment of the potential subrecipient’s ability to perform the research work successfully. This includes an analysis of the subrecipient’s past performance, technical resources and financial viability, and an assessment of the reasonableness of the subrecipient’s proposed costs in light of the work to be performed. To meet audit requirements, UC Berkeley is required to retain documentation of this latter assessment for subawards proposed under a contract. PIs are responsible for documenting this assessment via completion and submission of the Fair and Reasonable Cost Analysis for each proposed subrecipient.

Subrecipient proposal elements are expected to conform to the sponsor requirements for UC Berkeley’s prime proposal. PIs are responsible for ensuring that they request all materials from their subrecipients in the correct format. Any exceptions to the requirements outlined above should be discussed with Sponsored Projects Office staff. If appropriate and acceptable documentation is not provided in a timely manner, UC Berkeley may be unable to endorse and submit the proposal.

1. PI assesses subrecipients

• Verify that this is a subaward as opposed to a purchasing action processed by the Procurement Services Office.
• For contracts, include a Fair and Reasonable Cost Analysis and Sole Source Justification: Subawards Under Contracts.
• If PI has financial interest in the subrecipient, PI must complete Form 700-U Statement of Economic Interests and Form 700-UA Addendum to Statement of Economic Interests.

2. PI prepares a proposal including a subaward

• Incorporate subrecipient’s proposal and SOW into UCB’s for consideration as one proposal.
• Include the subrecipient’s budget as a line item in UCB’s budget.
• Include other subrecipient documents (e.g., budget forms, biosketches, other support) as required by sponsor.
• Forward completed UCB proposal to Sponsored Projects Office for review, including signed Subrecipient Commitment Form. For contracts, include a Fair and Reasonable Cost Analysis and Sole Source Justification: Subawards Under Contracts.

3. Sponsored Projects processes the proposal

• Verifies that this is a subaward as opposed to a purchasing action processed by the Procurement Services Office.
• Verifies that all required subrecipient documentation is present.
• Endorses proposal and submits to sponsor for consideration.
• Retains subrecipient documents for use at award stage.

The PI determines when a subaward is to be issued. The PI must verify that this is a subaward, not a purchasing action processed by the Procurement Services Office.

A Request for New Subaward form is completed by the PI and forwarded to SPO: sposubrequest@berkeley.edu. If the PI has financial interest in the subrecipient, the PI must complete Form 700-U Statement of Economic Interests and Form 700-UA Addendum to Statement of Economic Interests, unless already submitted at the proposal stage. Subawardees not subject to an A-133 audit will be required to complete a Mini-Audit Questionnaire. The PI also forwards the Subaward Purchase Order (except for other UC campus subawards) and other documentation.

SPO then:

• Verifies that this is a subaward as opposed to a purchasing action processed by the Procurement Services Office.
• Verifies that all required subrecipient documentation is present.
• Prepares and negotiates subaward.
• Issues subaward.

Extramural Funds Accounting provides additional instructions for processing subawards.

SPO issues subawards and subcontracts under prime awards made to Berkeley. SPO attempts to move every subagreement forward as soon as possible, but this is not solely a SPO responsibility.

Principal Investigators and Departments play an important role in establishing these complex transactions. To ensure your subagreements are handled as expeditiously as possible, PIs and Departments should use the following checklist to make sure SPO has the information it needs to initiate a subagreement.

1. Have you requested a new subagreement or the extension of an existing subagreement?
   
   SPO will not start the process until the PI/Department requests us to do so. Why? Because not all partnerships envisioned at the proposal stage go forward after an award is made. SPO also will not automatically extend a subagreement for the same reason. Use the Request for Subaward and Request to Amend Existing Subaward form and submit to: sposubrequest@berkeley.edu.
   
   
2. Have you made sure that an updated copy of each subrecipients’s scope of work and budget are included with/attached to the request?
   
   If the Berkeley PI wants to change the subrecipient’s scope of work or budget submitted with the proposal, the PI needs to discuss this with the subrecipient and make sure the subrecipient approves. If this has not been worked out before SPO gets involved, a great deal of time will be wasted.
   
   
3. Have you forwarded a completed Subrecipient Commitment Form to SPO that has been signed by the subrecipient’s authorized institutional official within the last 12 months?
   
   The completed Subrecipient Commitment Form with all required attachments should have been submitted to SPO at the proposal stage. However, if more than 12 months have passed since the subrecipient’s authorized official signed the form, please ask the subrecipient to review and update the form; then forward the updated form to subcontracts@berkeley.edu. Outdated and incomplete subrecipient forms will cause unnecessary delays.
   
   
4. Did you obtain and submit a completed MCA Commitment Form with all required attachments to SPO for any UC partner involved in your project?
   
   Again, if the authorized official signature on the MCA Commitment Form is more than 12 months old, please obtain an updated version of the MCA form and submit this version to SPO. Make sure that an up-to-date scope of work and budget approved by the UC partner also are included. Forward updated forms to subcontracts@berkeley.edu.
   
   
5. The following are common stumbling blocks to getting a subagreement in place with non-UC partners. Make sure the subrecipient commitment forms that are submitted to SPO include:
   
   
• A hard copy or link to the URL showing the subrecipient’s F&A rate and fringe benefit rates.
• A hard copy or a link to the URL showing the subrecipient’s most recent A-133 audit.
• If the subrecipient is not subject to an A-133 audit because they spent less than $500,000 last fiscal year, ask them to complete and send a Mini-Audit Questionnaire to SPO.

Documents SPO requires to process a subagreement:

• Request for Subaward and Request to Amend Existing Subaward
• Subrecipient Commitment Form
• MCA Commitment Form
• Mini-Audit Questionnaire
  

What is required if the PI wants to provide a subrecipient with one or more advance payment/s?

Outgoing Subawards - Advance Payments

Most subagreements are issued by SPO on a cost reimbursement basis. This means that the subrecipient is expected to expend its own funds in support of the project and to invoice the University for payment after the expenditures have occurred.

There are two types of situations in which the cost reimbursement process can be altered to allow advance payments to be made to a subrecipient:

Type 1.  When all or most of the funds for the project are advanced to the University before the project commences, the University also has the option of advancing project funds to an approved subrecipient if such an advance is in the best interest of the project, of low risk to the University, and allowed by the sponsor.

Type 2.  When the subrecipient does not have sufficient working capital to accept a cost reimbursement agreement from the University, the University may advance project funds to an approved subrecipient if such an advance is in the best interest of the project, of low risk to the University, and allowed by the sponsor.

If either one of the situations described above exist, the UC Berkeley PI may request that an approved subrecipient receive one or more advance payments. To request that advance payments be made to the subrecipient, the PI should submit a letter to SPO.  This letter should accompany the PI’s request to establish a subagreement with the subrecipient. The letter should be signed by both the PI and the person with fiscal authority over the PI’s Department or administrative unit. The letter must include the following information:

• Justification Statement related to Type 1 or Type 2 above
• The amount of the proposed advance payment/s. (If more than one advance payment is required, please include amounts and payment dates for each.)
• A description of how the PI will ensure that the work being performed by the subrecipient with funds advanced by the University will be monitored. The PI should describe specific steps/actions that will be taken to ensure that the subrecipient is:
• performing the scope of work as expected
• submitting financial reports by the required deadlines
• expending project funds in accordance with the subaward/subcontract budget
• in compliance with all other terms of the subaward

Upon receipt of the PI’s letter, the SPO subaward team will determine if advance payments to subrecipients are allowable under the terms and conditions of the prime award.  Should the subaward team determine that such payments are unallowable the PI’s request automatically will be denied.

If advance payments are allowable, the Subaward Risk Assessment Team will assess the level of risk associated with the advance payment/s requested. If the level of risk to the University is acceptable, the SPO subaward team will work with the PI to establish a subagreement that meets the advance payment needs of both the subrecipient and the University.

If advance payments are provided to a subrecipient and the subrecipient’s costs subsequently are determined to be unallowable or to exceed the final expenditures submitted by the subrecipient, it will be the Department/PI’s responsibility to collect these funds from the subrecipient. If these funds are uncollectable from the subrecipient, the PI’s Department or administrative unit will be responsible for the uncollected funds.

PLEASE NOTE:

1. Advance payments to subrecipients only will be considered if the following conditions are met:
   
   
   1. The University must have received a fully executed award from the sponsor. No subagreement will be issued until the award supporting the subagreement has been processed by SPO.
      
      
   2. The subrecipient must be approved by the sponsor. In most cases if the subrecipient was included by name in the proposal, and an award is made, the subrecipient is considered approved by the sponsor. SPO will notify the PI if additional sponsor approval is required.
      
      
2. When required to do so by the terms of the subagreement, the subrecipient must agree to keep all advance payments in an interest bearing account or provide the University a statement of assurance related to one of the following:
   
   
• The recipient receives less than $120,000 in federal awards per year.
• The best reasonably available interest bearing account would not be expected to earn interest in excess of $250 per year.
• The depository would require an average or minimum balance so high that it would not be feasible within the expected federal and non-federal cash resources.

Subrecipient monitoring

It is the PI/Departmental Research Administrator’s responsibility to monitor the progress of a subrecipient. The first step is to read and understand the subaward document.  Make sure you understand what the subrecipient is required to do according to the terms and conditions of the agreement.  If you have any questions about these requirements do not hesitate to contact SPO. 

Subrecipients are partners in the research enterprise so it is important to identify and establish good communication with subrecipient’s representatives from the beginning.  Involve the Berkeley PI in communicating any deficiencies to the subrecipient’s PI in a timely manner. Here are a number of questions that should be continuously asked during the life of a subaward:

• Is subrecipient’s work progressing according to schedule?
• Are deliverables/reports being provided in a timely manner?
• Are compliance requirements up-to-date?
• Do invoices reflect allowable, allocable, and reasonable costs?
• Are funds being spent according to the budget and project time lines?
• Is committed cost sharing verified?

Subrecipient Monitoring presentation: PDF

Assessing and Managing Risk

Some potential subrecipients are considered more of a risk to the University than others. The following are some of the attributes that will place a potential subrecipient into a higher risk category:

• A qualified audit report, or failure to have a current audit report
• An inadequate response to the audit questionnaire
• A known history of non-compliance
• Hiistory of non-performance or failure to use funds for their authorized purposes
• A new subrecipient (or new to this type of project)
• A subrecipient with new personnel or systems
• A large percentage of project funds is being passed-through to the subrecipient
• The subrecipient’s sponsored research portfolio is small and the subaward amount is large.

In these cases SPO typically will in insert additional terms and conditions into the subaward agreement to manage any potential risk to the University. However, it is the PI and the Department Research Administrator who are responsible for ensuring the subrecipient complies with these special terms and conditions.  The Berkeley PI always should be involved in the review and approval of invoices and reports, and only invoices that are insufficiently detailed to ensure costs are allowable, allocable, and reasonable should be approved.  If any problems arise the PI should consult with SPO to see if the subaward document can be modified to bring the subrecipient into compliance with the terms of the agreement.

The PI determines when a subaward is to be amended. Common reasons for amending a subaward include providing additional funding, extending the period of performance, or modifying the reporting schedule. It is important to note that some changes, such as scope of work changes, change in the subaward recipient's principal investigator or transferring the subaward from one recipient to another, may require the prior approval of the prime sponsor. Requisite changes are made in BFS by the PI. The amount of funding and duration of the agreement are noted on a Request to Amend Existing Subaward form, and the form is forwarded to SPO. SPO then amends the subaward.

Principal Investigators, assisted by department administrators, are responsible for conducting timely and appropriate financial and programmatic reviews of the technical information and invoices submitted by subrecipients.

At the end of the prime award period, Extramural Funds Accounting (EFA) follows its standard procedure for closing out the prime award. This occurs between 90 and 120 days following the end date of the prime award. Any subagreements are closed out by EFA as part of the primary award closeout process: http://controller.berkeley.edu/efa/policy/cgcloseout.htm.

To facilitate this close out process, SPO will send a Subaward Closeout Checklist to the PI/Department after sixty days have passed from the end of the prime award period. The Checklist will inform the PI/Department of the typical deliverables required for close-out of a subagreement.

The form will remind the PI/Department to review the specific terms and conditions of each subagreement under the prime to identify the actual deliverables required and not to approve and/or submit the subrecipient’s final invoice for payment until all required deliverables have been accepted.

The PI/Department will be directed to contact the SPO Subaward Team for assistance if any subrecipient has not provided the required deliverables. Extramural Funds Accounting also can assist with securing information and invoices from subrecipients who have failed to meet their obligations under their respective subagreements. However, timely notification to SPO and Extramural Funds Accounting is essential to help ensure a successful and collegial resolution to such issues.

For SPO’s record purposes, the SPO Subaward Team will close out all subagreements 120 days following the end date of the prime award.

If you have additional questions about establishing a subaward, please contact Jennifer Nadeau at jancal01@berkeley.edu.

For more information, Extramural Funds Accounting provides financial procedures for subawards.