Subagreement Pathways: The Slower Track vs. the Faster Track
Beginning August 2016, UC Berkeley is participating in the Federal Demonstration Partnership (FDP) Expanded Clearinghouse Pilot. This pilot is testing the use of on-line entity profiles to decrease the amount of duplicate information collected from potential subrecipient institutions. Participating pilot institutions will not fill out the full three-page Subrecipient Commitment Form. Instead, participating institutions must complete the one-page FDP Pilot Subrecipient Project Information sheet. See FDP Expanded Clearinghouse - Subrecipients for more information.
A subaward or subcontract agreement is more than a handshake between two individuals. When UC Berkeley receives an award from an external sponsor, the sponsor often indicates the terms and conditions that UC Berkeley must flow down to any subrecipient partners involved in the project. The UC system may also impose additional requirements for certain subrecipients.
If the potential subrecipient disagrees or questions these terms, conditions, and requirements, it will take longer for SPO to negotiate the subagreement. If the subrecipient cannot or will not comply with these requirements, SPO may not be able to establish the subagreement. The following section provides an overview of the issues that would cause a subagreement to follow a slower vs. a faster track at SPO.
|Topic||Red Flag Issues||How to get on the “Slower” Track||How to get on the “Faster” Track||Forms/Tools You Will Need|
|Treating a “Vendor” as a “Subrecipient”||If a vendor is misclassified as a subrecipient at the proposal stage, the vendor may balk when they are asked to comply with the compliance requirements that flow down to subrecipients from the prime award at the award stage, e.g., effort reporting or providing the organization’s most recent audit report. This will slow down negotiations and delay the setup of the subagreement.||The proposed subrecipient is really a vendor providing standard goods and services.||The proposed subrecipient is a true partner and will play a significant role in project decision making.||See Section “C” of the Subrecipient Commitment Form to make sure the partner is a true subrecipient, unless the institution is participating in the FDP Expanded Clearinghouse|
|Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information||SPO must have a completed Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information for each subrecipient before establishing a subagreement. Incomplete and/or unsigned forms and forms over 12 months old, must be completed and/or updated.||A complete/signed Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information is not provided for each subrecipient listed in the proposal.||A complete/signed Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information is provided for each subrecipient at the proposal stage.||Subrecipient Commitment Form or FDP Pilot Subrecipient Project Information|
|Financial Interest Disclosure by
|If the sponsor has adopted PHS Conflict of Interest (COI) requirements, and the subrecipient does not have its own PHS compliant COI policy, each subrecipient investigator must provide a PHS Financial Interest Disclosure Form (5) to SPO before a subagreement can be established.||The subrecipient does not have its own PHS compliant COI policy, and one or more subrecipient investigators does not provide a PHS Financial Interest Disclosure Form (5) at the proposal stage.||The subrecipient does not have its own PHS compliant COI policy, and all subrecipient investigators provide a PHS Financial Interest Disclosure Form (5) at the proposal stage.||PHS Financial Interest Disclosure Form (5)|
|Requesting that a Subaward be Established||A PI may change his or her mind about partnering with the subrecipient and may want to adjust the scope of work and/or funding as the project progresses.
Therefore, SPO does not begin to establish or amend any subaward until a Subaward Request Form is submitted to SPO.
|A Subaward Request Form is not submitted to SPO to establish a new subaward and/or to amend an existing subaward.||A Subaward Request Form is submitted to SPO to establish a new subaward and/or to amend an existing subaward.
A Subaward Request Form is submitted annually when the PI wants to extend/modify the subaward.
|Subaward Request Form
Submit the form to: firstname.lastname@example.org
|A-133/Single Audit Requirements||SPO is required to check the A-133/single audit findings of any proposed or existing subrecipient expending $500K in federal funds annually. If findings related to the proposed subaward are found in the organization’s most recent A-133/single audit, SPO will need to conduct a risk assessment that could delay the set-up of the subagreement.||The proposed subrecipient is subject to A-133/single audit requirements and findings related to the subaward are noted in the organization’s most recent A-133/single audit.||The proposed subrecipient provides a clean A-133/single audit with no findings related to the proposed subaward.||To check the A-133/single audit status of any potential subrecipient go to the Federal Audit Clearinghouse|
|Mini-audit Questionnaire requirements||Under UC policy, SPO is required to complete a mini-audit of any organization not subject to A-133 requirements. If the mini-audit reveals areas of greater than average risk to the Univeristy, SPO will need to conduct a risk assessment that could delay the set-up of the subagreement. (See example mini-audit issues below.)||The subrecipient provides a mini-audit questionnaire that indicates that a subagreement to this organization will create greater than average risk to the University. (See risk areas listed below.)||The subrecipient provides a mini-audit questionnaire that indicates that a subagreement to this organization will not create greater than average risk to the University. (see risk areas listed below.)||See the mini-audit questionnaire|
|Working Capital Advances||When the subrecipient needs advance payments and cannot accept a cost reimbursement subagreement, negotiations will be delayed.
||The proposed subrecipient does not have enough working capital to accept the University’s standard cost reimbursement payment process, and no one informs SPO.||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.||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.|
Example Mini-audit Risk Areas
Subrecipients that expend less than $750K in U.S. federal funds are not subject to A-133/single audit requirements. Therefore, the University must ask these subrecipients to complete a mini-audit questionnaire before establishing a subagreement. If any of the following issues are identified from the subrecipient’s responses on the mini-audit questionnaire, the subrecipient will be considered a higher risk subrecipient, and when this occurs the PI should anticipate additional time will be needed to establish the subagreement with this entity. In some cases, a fixed price subagreement with a high risk subrecipient may be a viable alternative. This option should be discussed with SPO when the Subaward Request Form is submitted. Please Note: A fixed price subagreement is only appropriate for subagreements in which payments can be tied to clear “deliverables” or products provided by the subrecipient and is not prohibited by the sponsor. Note: the following issues are referenced according to the items on the mini-audit questionnaire.
- The organization does not have its financial statements reviewed by an independent public accounting firm (Item #1)
- One individual has complete control over every financial transaction (Item #2)
- There are no controls to prevent expenditures of funds in excess of approved budgeted amounts (Item #3)
- The organization has been audited within the last two years and has negative findings (Item #4—comment box)
- There is only one employee in the organization (Item #5)
- U.S. federal government funds are not deposited in a separate bank account (Item #6)
- Disbursements are not documented with receipts (Item #7)
- Bank accounts are reconciled monthly (Item #8)
- Payroll is not checked against program budgets (Item #9)
- Procurement is not based on competitive pricing (item #11)
- There is no system for authorization/approval of capital expenditures and travel (Item #12)
- No detailed records of capital assets are kept and periodically balanced (Item #13)
- There are no procedures for accounting for the disposal of property and equipment (Item #14)
- There are no detailed property records kept and checked by physical inventory (Item #15)
- The organization does not have an indirect cost allocation plan or a U.S. Government negotiated Facilities and Administration (F&A) rate and the subrecipient is charging for F&A. (Item #18)
- Charges to grants are not treated in a consistent manner (Item #19)
- The organization engaged in lobbying related to the U.S. federal assistance program supporting the project (Item #21)
- The organization is not familiar with federal reporting requirements (Item #25)