Outgoing Subrecipient Agreements
- The PI
- Plans accordingly for outgoing subawards during prime proposal preparation
- Determines the Type of Subrecipient Agreement
- Performs Subrecipient Monitoring of programmatic performance throughout award management
The Single Audit Act of 1984 and amendments (31 USC 7101-7105), Office of Management and Budget (OMB) Circular A-110, OMB Circular A-133, and the Uniform Guidance (2 CFR 200) require recipients of federal funds to ensure that subrecipients comply with federal audit requirements. The monitoring requirements apply only to subrecipients receiving a re-grant, memorandum of understanding, or subcontract and not to vendors receiving a procurement contract (contracted services agreement). To ensure compliance with these federal regulations, the following guidelines will be followed at the University of Montana.
At proposal development, plan accordingly for subawards. Using the Determination Checklist, the ORSP staff will work with the PI to determine whether the use of a subcontract, regrant, memorandum of understanding, or contracted services agreement is appropriate for each potential subrecipient to be included in externally funded projects.
Contracted Services Agreements
Generally, contracted services agreements are entered into with a vendor for the purpose of performing a specific objective within the scope of work. Typically, vendors provide goods or services within their normal business operations, and operate in a competitive environment where they provide similar goods or services to many different purchasers. The program compliance requirements of the University's award do not apply to the goods or services being provided and the terms and conditions of the award are not passed down to the vendor. The federal monitoring requirements do not apply to contracted services agreements.
Contracted services agreements are prepared by the Procurement staff within Business Services.
In contrast, subawards are used when the subrecipient is functioning as a co-investigator on the project, i.e., they are involved in a creative way in designing and/or conducting the sponsored activity and often the subrecipients qualifications were instrumental in helping the University obtain the award. Subawards are routinely issued to other institutions to reimburse for facilities, personnel, equipment, or other institutional resources. Program compliance requirements and other terms and conditions of the prime award are passed down to subrecipients.
Subrecipient agreements for externally funded projects are prepared by the staff of ORSP. For the remainder of this document, the term "subrecipient" will be used to refer to non-vendor relationships only.
Prime sponsor approval is required prior to the preparation of a subrecipient agreement. If the desired subrecipients have been identified at the time of the application for external funding, the role and unique qualifications of the proposed subrecipients should be described in the application narrative and the subrecipients' budgets should be included in the proposal budget section.
If the subrecipient was not identified at the time of the initial application for funding, written approval must be obtained from the sponsor before entering into an agreement.
- A formal request must be prepared, and the PI must outline the role and unique qualifications of the subrecipient and provide the subrecipient's detailed budget.
- The letter of request must be signed or co-signed by the ORSP Director or another authorized institutional representative for the University of Montana.
- Once the sponsor has provided written approval, the subrecipient agreement can be prepared.
Included as attachments to the outgoing subawards ready for partial execution are the prime award, scope of work, budget, and budget narrative, as well as UM's Subaward Compliance and Assurance Statement and Audit Certification, if ncessary. Audit certifications and audit reports are required from subrecipients at the time of the preparation of the initial subaward, and annually thereafter during the performance period of the subaward. However, if the subcontract end date extends no more than three months past the end of the subrecipient fiscal year, an audit will not be required for the additional year.
Outgoing subrecipient agreements are not executed until all required supplemental documents have been received and approved by the University. All subrecipient agreements will identify the prime sponsoring agency and provide the award number and title. In addition, they will include a scope of work, approved budget, period of performance, contact information for both parties, appropriate compliance requirements, and any special terms and conditions of the sponsor. At a minimum, the compliance requirements will include the following:
- Expenditures shall follow generally accepted accounting principles.
- Access to records shall be allowed by university, state, and sponsor agency representatives.
- Records and supporting documents shall be retained for a period of three (3) years from the completion date (or longer as required by the terms of the award or any pending litigation).
- For foreign entities, an audited financial statement will be required for each year during the performance period and/or receipts will be required to support all invoiced expenditures.
For awards involving federal funds, subrecipient agreements will include the following in addition to the above:
- Identify whether the source of funds is federal. In addition, the agreement will provide the name of the federal agency, the award number, the award title, and the Catalog of Federal Assistance (CFDA) number, if known. If the CFDA number is not known at the time the subrecipient agreement is negotiated, the subrecipient will be informed of the CFDA number as soon as the university obtains that information.
- Compliance with applicable cost principles, i.e., 2 CFR 200, OMB Circular A-21, A-87 for state and local governments, and A-122 for nonprofit organizations.
- Compliance with applicable federal administrative standards, i.e., 2 CFR 200, OMB Circular A-110 for educational institutions, hospitals, and other nonprofit organizations, OMB Circular A-102 for state and local governments and tribal governments.
- Compliance with applicable federal audit requirements, i.e., 2 CFR 200, OMB Circular A-133 for state and local governments and nonprofit organizations.
- Access to records shall be allowed by federal government representatives.
- Certification of compliance with applicable federal regulations as required in the federal award to the university.
- Subrecipients will risk repayment of funds to the University of Montana for any expenditure(s) deemed unallowable by the University of Montana. Furthermore, subrecipients who are unresponsive or fail to meet any reporting requirements may be asked to repay the entire amount of the subaward whether the expenditures are deemed unallowable or allowable.
All negotiations concerning the terms of the agreement will be conducted by ORSP staff.
A responsibility of the UM PI is to ensure goals and objectives regarding subrecipient programmatic performance are met. Oversight of programmatic performance occurs through ongoing interaction and communication among the UM PI, ORSP, and subrecipient.
All subrecipient invoices are sent to the UM PI for approval prior to ORSP issuing payment and is documented via the PI's signature. Email approval is also acceptable if sent via the PI's UM email account and it includes the invoice certification statement and PI's explicit approvial thereof:
I certify that I have reviewed the details of this invoice and that the outlays listed are applicable to the above mentioned project, match the technical progress, and are allowable under the terms and conditions of the agreement. I further certify that any deliverables stated above have been received. I authorize and approve this invoice for final review and payment.
Such documented approval to pay represents implicit satisfaction with subrecipient programmatic performance in relation to whether objectives of the project are met. Should difficulties concerning subrecipient performance arise, the PI may contact ORSP for assistance.
Audit certifications and reports received from subrecipient organizations are forwarded to UM's Internal Audit Office which reviews the audit reports to determine if there are any findings that will have an effect on the subrecipient's ability to manage the agreement or that directly relate to the subcontracted activity. If there are no adverse findings, the staff of the Internal Audit Office returns the subrecipient audit report to ORSP for filing.
If additional action is required because of auditor-noted noncompliance with federal laws and regulations, the staff of Internal Audit issues a memo to ORSP citing Internal Audit's concerns. The memo and audit report are sent to ORSP for filing and creation of an action plan.
If the subrecipient's response to ORSP's request for audit information is deemed inadequate or no response is received, the Subaward Coordinator and the ORSP Director will work with the subrecipient organization's representative to resolve the issues and the university may withhold payment of subrecipient invoices until the issues are resolved. In cases where the subrecipient is non-responsive or an inadequate response is received and negotiations between the university and the subrecipient do not bring a satisfactory resolution to the matter, the university may terminate the agreement with the subrecipient and/or ask for repayment of all funds paid under the subagreement.
If the subrecipient of an active project (a project that has not ended yet) does not respond to the original request for the audit certification and report, a second request will be sent. If no response is received from the seond request, the subrecipient may be notified that the University is currently withholding payment, the university may elect not to enter into any new subagreements with the subrecipient, and a response must be received by a specified date or the university will terminate the agreement and/or ask for repayment of funds. If the subrecipient does not respond by the deadline, the subrecipient agreement may be terminated by ORSP. The Director and Subaward Coordinator will work with University Legal Counsel to draft a letter requesting repayment of funds. This letter will be sent via certified mail with signature confirmation to at least two executive officers of the subrecipient organization.
If the subrecipient of an inactive project (a project that has already ended) does not respond to the first request for the audit certification and report, a second request will be sent and may include notification that the University may elect not to enter into any new subagreements with the subrecipient.
If the subrecipient responds that its audit report is not currently completed, the Subrecipient Monitor will work with the Subrecipient to ensure that the audit is received when available.
Throughout each year, the Subaward Coordinator will request the Subrecipient's Audit Reports or appropriate documentation, as well as a copy of the Audit Certification.