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Subaward Guide and Frequently Asked Questions: Subaward Set Up and Monitoring

1. What is a subaward?

A subaward is an agreement with a third-party organization performing a portion of a UC Berkeley research project or program. The terms of the relationship (sub-grant/subcontract) are influenced by the prime agreement, and all subawards must be monitored to ensure that the subrecipient complies with these terms. Federal regulations for subrecipient monitoring are found in 2 CFR 200, Uniform Guidance (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), and in OMB Circular A-133 “Audits of States, Local Governments, and Non-Profit Organizations.” A subrecipient works collaboratively with the prime award recipient to carry out the scope of work.

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. In accordance with 2 CFR 200.330 and 16-230 of the UC C&G Manual, the University makes a case-by-case determinations as to whether a party is a subrecipient or a contractor.

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.


2. 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.


3. 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:

4. 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 or project information sheet to SUB Submits proposal to Sponsor
Revises proposal per SPO guidance Collects SUB commitment form or project information sheet from SUB Files SUB commitment form(s) or project information sheet(s) to be used at award stage
  Submits proposal with SUB commitment form or project information sheet to SPO  
  Assists with revision of proposal per SPO guidance  

Legend
PI - Principal Investigator
RA - Research Administrator
SUB – Subrecipient
SPO – Sponsored Projects Office
C&GA – Contracts and Grants Accounting
Control Point

After an award is made:

5. Award Stage by Task/Responsibility

PI/Department Responsibilities After Prime Award is Received SPO Responsibilities After Receiving a Request to Issue a Subaward
Send request to SPO to issue a new subaward.

Attach:

1. The Subawardee’s work statement
2. The Subawardee’s budget with applicable F&A rate after confirming any changes from proposal with subrecipient
3. An updated version of the Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information (if more than 12 months from date of authorized signature)

Include special instructions for subrecipient such as special reporting requirements, milestones to be met, and deliverables required.
Validate Subrecipient Eligibility
  • Confirm sponsor approval of subrecipient
  • Investigate subrecipient’s eligibility status (e.g., not debarred, suspended, or delinquent on federal debt)
  • Confirm subrecipient vs. contractor (vendor) status and the subrecipient’s applicable F&A rate
  • Review compliance information on Subrecipient Commitment Form (e.g., no involvement in lobbying, use of human/animal subjects, sponsor-compliant COI policy in place, registration in FDP Clearinghouse) or FDP Pilot Subrecipient Project Information
Collect Risk Information/Manage Subrecipient Risk
  • Review subrecipient’s most recent A-133/single audit (if applicable)
  • If A-133/single audit not applicable:
    • Request/review mini-audit questionnaire
    • Request/review subrecipient’s most recent financial statement
  • Issue a management decision for any identified risks
Prepare Subaward (see Section 16-420 of C&G Manual)
  • Flow down applicable terms and conditions from prime award and all other information required of pass-through entities per §200.331 of the Uniform Guidance.
  • Determine type of subaward (cost reimbursement, fixed price, etc.)
  • Attach PI-approved budget with subrecipient’s applicable F&A rate. Also include a payment schedule (if applicable)
  • Establish SOW and time line for deliverables (if applicable)
  • Insert risk reduction clauses (if applicable)
    Example:
    • Additional monitoring/reporting
    • Detailed invoices/backup receipts
    • Additional assurances
  Issue, negotiate, and sign subaward on behalf of the University.
Review terms and conditions of subaward document to prepare for monitoring role. Provide PI and Department with fully executed subaward document.
Monitor subrecipients performance and financial reporting in accordance with subaward terms and conditions.

Review subrecipient costs for allowability and approve payment of invoices per terms of subagreement.

Notify SPO if subrecipient fails to adhere to the terms/conditions specified in the subaward.
Track subaward via Phoebe.

Report subawards of $25,000 or more issued under federal primes to comply with FFATA.

During subaward monitoring:

6. Subaward Monitoring Stage by Task/Responsibility

PI/Department Responsibilities SPO Responsibilities
Reviews/approves invoices Performs annual compliance review of SUB:
  • A-133/single 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  

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. Contracts and Grants 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.


7. When does the monitoring of subrecipients begin?

The process of monitoring a subrecipient begins at the proposal stage. The PI obtains the proposal from the prospective subawardee for participation in the project, and includes the proposal scope of work and budget in the prime proposal to the sponsor. The PI also obtains the Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information sheet from the subawardee and sends it to SPO with the prime proposal.

8. 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, 2 CFR 200 (Uniform Guidance), and OMB Circular A-133. The Sponsored Projects Office is offering the Subrecipient Commitment Form and FDP Pilot Subrecipient Project Information sheet as tools 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 Subrecipient Commitment Form Preparation Guidance for more information.


9. How is the Subrecipient Commitment Form used?

The Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information are to be completed and signed by an authorized institutional representative of the subawardee and provided at proposal stage with other proposal documents.

The forms also are 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 or FDP Pilot Subrecipient Project Information must be completed and signed at the time of award by an authorized institutional representative of the subawardee.


10. What other subaward documents are required at the proposal stage?

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 or FDP Pilot Subrecipient Project Information, 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.


11. What actions are required for subawards at the proposal stage?

PI assesses subrecipients

PI prepares a proposal including a subaward

Sponsored Projects processes the proposal

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

12. After an award is made, how is a subaward established?

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 Supply Chain Management.

A Request for New Subaward form is completed by the PI and forwarded to SPO: sposubrequest@berkeley.edu. Subawardees not subject to an A-133/single 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. See Subaward Request Form Instructions for more information.

SPO then:

  • Verifies that this is a subaward as opposed to a purchasing action processed by Supply Chain Management.
  • Verifies that all required subrecipient documentation is present.
  • Prepares and negotiates subaward.
  • Issues subaward.

Contracts and Grants Accounting provides additional instructions for processing subawards.


13. After an award is made, how can a PI add a subrecipient that was not named in the proposal?

If a Subrecipient is listed as “TBD” in a funded proposal or the PI decides to add one or more Subrecipients after the award has been received, the SPO Contract and Grant Officer (CGO) will require the following from the PI before any additional steps can be taken:

  1. A completed Subrecipient Commitment Form signed by the Subrecipient’s Authorized Organization Representative (AOR).
  2. A Scope of Work that demonstrates that the work being proposed by the Subrecipient is that of a true Subrecipient rather than a contractor/vendor. For more information on how this determination is made, see Proposal Budget Basics: Subagreements with Collaborators. Note: If SPO determines that the entity is not a true Subrecipient, the PI will be asked to process the transaction through Supply Chain Management.
  3. A budget to support the Subrecipient’s Scope of Work that includes allowable costs and the Subrecipient’s documented F&A and fringe benefit rates.
  4. A letter from the PI to the sponsor justifying the new Subrecipient/s (if required by the sponsor) and any other supporting information/documents required by the sponsor if the sponsor’s approval must be obtained before issuing a subaward.   
After this information is received by the SPO CGO and approval from the sponsor (if required) has been obtained, the steps listed under #12 above will be followed.

14. Facilitating subagreements

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 or FDP Pilot Subrecipient Project Information 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. Documents SPO requires to process a subagreement:


15. What is required if the subrecipient does not have enough working capital and needs an advanced payment from the University?

At the proposal stage, the Authorized Official Representative (AOR) of the Subrecipient should indicate on the Subrecipient Commitment Form that the Subrecipient will require a working capital advance should the project be funded.

After the University receives a fully executed award from the sponsor, and sponsor approval of the Subrecipient is obtained (if required), the Berkeley PI must submit a complete Subaward Request Form with all required attachments and indicate on the form that a working capital advance is requested for the Subrecipient.  The PI also should provide the amount of the working capital advance, which should be sufficient to cover the Subrecipient’s start-up costs for a period of 90 days. See Subaward Request Form Instructions for more information.

Example: If the Subrecipient is to receive $100K in the first project year, a working capital advance should equal 25% of the total funds to be awarded or $25,000. If more start-up funds will be required, the PI should provide a written justification for the additional funds when the New Subaward Request Form is submitted to SPO.

Note: If the Subrecipient did not indicate on the Subrecipient Commitment Form (or FDP Pilot Subrecipient Project Information sheet) at the proposal stage that a working capital advance would be needed, when the PI submits the Subaward Request Form the Berkeley PI also will need to provide a written statement signed by the Subrecipient’s AOR verifying that the proposed working capital advance is necessary. A copy of an email message sent to the UC Berkeley PI is acceptable.

When requesting a working capital advance for a Subrecipient, the Berkeley PI is responsible for monitoring the work being performed by the Subrecipient to ensure that the Subrecipient is performing the scope of work as expected and that the funds being advanced are used in accordance with the approved project budget.

If a working capital advance payment is 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.

16. 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

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 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.


17. How can a subaward be changed/amended?

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.


18. How is a subaward closed out?

The UC Berkeley PI is responsible for submitting any required technical, property, and invention reports and/or any other required deliverables specified in the subagreement to the awarding agency. Failure to provide such reports and deliverables according to stated timelines can have a negative impact on future funding from the sponsor. The UC Berkeley PI also is responsible for ensuring that each subrecipient has submitted all required reports and deliverables to UC Berkeley prior to making a final payment to the subrecipient.

The terms and conditions of the subagreement negotiated by SPO will indicate how many days the subrecipient has to provide this information to the UC Berkeley PI.

  • Subawards issued using the Federal Demonstration Partnership (FDP) subaward template and Multiple Campus Awards (MCAs) issued to other UC campuses will require that all reports and deliverables be provided within 60 days of the end of the subagreement/MCA.
  • All other subagreements will require this information to be provided within 45 days of the end of the subagreement unless UC Berkeley needs to adjust the subaward closeout period in order to comply with the terms of the prime award.

The Subaward Closeout Checklist provides a list of reports and deliverables that are typically required.

Contracts and Grants Accounting is responsible for preparing and submitting final financial reports to awarding agencies. For a full description of the Contracts and Grants Accounting closeout process, see Closeout for Subawards.

If you have questions about any of the terms related to reports or deliverables under this subagreement, please contact subcontracts@berkeley.edu. For questions related to prime award/subagreement financial close out, please contact Contracts and Grants Accounting.