Administrative Policies and Procedures Manual - Policy 2470: Sub-Award Administration
Date Originally Issued: 04-01-1993
Revised: 04-05-1993, 12-01-2001, 07-01-2004, 01-01-2008, 07-01-2015
Authorized by RPM 5.9 ("Sponsored Research")
Process Owners: University Controller (Main Campus) and HSC Senior Executive Officer for Finance and Administration
The purpose of this policy is to ensure compliance with federal regulations and the terms of individual sponsored agreements and provide for adequate monitoring of the activities of sub-recipients. Although federal regulations include purchase orders in their definition of subcontracts, for the purpose of this policy, purchase orders issued for standard and routine goods and services are not considered sub-awards.
Sub-award administration consists of pre-award activities (negotiation and preparation of sub-awards) and post-award activities (subsequent administration, accounting, and monitoring of sub-awards). The responsibility of sub-award administration is shared by the following University entities:
- Principal investigator
- Office of Sponsored Projects (Main Campus)
- Contract and Grant Accounting Department (Main Campus)
- Office of Sponsored Projects (Health Sciences Center [HSC])
- Contract and Grant Accounting Department (HSC)
- Purchasing Department
2. Establishing Sub-Awards
2.1. Sub-Recipient and Vendor Determinations
The University is required to distinguish between a sub-recipient and a vendor. Payments received for goods or services provided as a vendor are not considered sub-awards to sub-recipients. The Main or HSC Office of Sponsored Projects is responsible for making the initial determination concerning sub-recipient versus vendor classification. The guidelines provided in the table below are taken into consideration when determining whether payments constitute a federal award or payment for goods and services.
|Exercises considerable discretionary judgment and determines who is eligible to receive what federal assistance.
||Provides the goods or services within its normal business operations.
|Performance is measured against the objectives of the federal award.
||Provides similar goods or services to many different purchasers.
|Has responsibility for programmatic decision making.
||Normally operates in a competitive environment.
|Has responsibility to comply with applicable federal program requirements specified in the award.
||Provides goods or services that are ancillary to the operation of the federal program.
|Uses the federal funds to carry out its own program, as compared to providing goods or services for a UNM program.
||Not subject to the compliance requirements of the federal program.
|Provides matching funds or cost sharing.
||Provides services of a repetitive nature or goods of a commonly available kind.
|Distributes federal dollars further down the pipeline.
||Assumes the risk if performance is more costly or time consuming than expected.
2.2. Principal Investigator
When a contract or grant proposal is being prepared, the principal investigator must request a complete statement of proposed work from any potential sub-recipients. Each statement of work must include a budget, a definition of time commitments, and technical information. The principal investigator is encouraged to solicit statements of work from several organizations. After receipt and evaluation of statements of work, the principal investigator must incorporate the statement of work and the budget into the proposal to the funding agency. After an award has been received, an additional specific prior written approval from the funding agency may be required to issue a sub-award. Verbal commitments should not be given to a potential sub-recipient until a properly executed Sub-Award Agreement has been issued.
2.3. Office of Sponsored Projects
Following receipt of the prime award, the applicable (Main Campus or HSC) Office of Sponsored Projects will insure the sub-awardee is not disbarred from receiving federal funds and prepare a Sub-Award Agreement. In addition to University required terms and conditions, the Sub-Award Agreement may also contain many of the same terms and conditions as in the prime contract or grant (i.e., flow down provisions). Appropriate signatures will be obtained on the Sub-Award Agreement from the sub-recipient and authorized University official. A copy of the Sub-Award Agreement is then forwarded to the Principal Investigator and the appropriate Contract and Grant Accounting Department (Main Campus or HSC).
2.4. Main Campus and HSC Contract and Grant Accounting Departments
The appropriate Contract and Grant Accounting Department will review the Sub-Award Agreement and create a general encumbrance in the University financial system and will process the general encumbrance and the Sub-Award Agreement according to all applicable federal regulations, including but not limited to:
3. Changes to Sub-Awards
All requests for changes to sub-awards must be submitted in writing to the appropriate Office of Sponsored Projects (Main Campus or HSC). When a significant change is made to an existing sub-award, the Sub-Award Agreement must be reviewed to determine if a Sub-Award Agreement Amendment is required.
3.1. Sub-Award Agreement Amendments
A significant change in any of the terms of a Sub-Award Agreement requires a written amendment. A Sub-Award Agreement Amendment may or may not require a change to the general encumbrance.
Sub-Award Agreement amendments are required for the following changes:
- change in the scope of work;
- change in the expenditure level;
- cancellation of all or a portion of the sub-award;
- change in key personnel;
- change in performance dates.
If the sub-recipient's name is changed, the original general encumbrance is canceled and a new one is issued.
4. Monitoring Sub-Recipients
A sub-recipient is defined as a legally constituted organization or institution that helps the prime recipient (grantee) carry out the scope of work identified in the proposal. The University monitors sub-recipients for performance, costs, and compliance with applicable regulations including reporting requirements. In addition, as a prime recipient of federal grant funds, the University is viewed as the sponsor of the activity and must monitor the activities of sub-recipients. The Uniform Guidance in Section 200.331 ("Requirements for Pass-Through Entities") requires that the prime recipient monitor the activities of the sub-recipients; evaluate their risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward; monitor their performance; and review their audits.
4.1. Principal Investigator
The principal investigator is responsible for monitoring the sub-recipient for work performance and adherence to schedule and budget.
4.2 Contract and Grant Accounting Departments (Main Campus and HSC)
The appropriate Contract and Grant Accounting Department is responsible for comparing actual costs to the sub-award budget and maintaining copies of all cost documents pertaining to each sub-award, including Sub-Award Agreements, Sub-Award Agreement Amendments, and invoices.
4.2.1. Nonprofit Sub-Recipients
If the sub-recipient expends $750,000 or more in federal awards during the sub-recipient's fiscal year, the sub-recipient must make a copy of its most recent audited organization-wide financial statements available to the University upon request. Such audits must be conducted according to the guidelines of the Uniform Guidance. The Contract and Grant Accounting Departments (Main Campus and HSC) will obtain required financial statements from sub-recipients and review them for adequate internal controls, material weaknesses, and reportable conditions to determine if an adjustment to the University's financial statements is required. In addition, UNM will bill the sub-recipient for questioned costs relating to the project that was identified in the sub-recipient's audit.
4.2.2. For-Profit Sub-Recipients
The Uniform Guidance does not apply to for-profit sub-recipients. The University is responsible for establishing requirements, as necessary, to ensure compliance by for-profit sub-recipients. The sub-award with the for-profit sub-recipient should describe applicable compliance requirements and the for-profit sub-recipient's compliance responsibility. Methods to ensure compliance for federal awards made to for-profit sub-recipients may include Office of Sponsored Projects audits, monitoring during the sub-award, and post-award audits.
4.3. Purchasing Department
If the sub-award is on a federal contract and the sub-award is for $650,000 or more in aggregate and the sub-recipient is not a small business, the Main Campus or HSC Office of Sponsored Projects will require a Small Business Subcontracting Plan from the sub-recipient. The Purchasing Department is responsible for monitoring the sub-recipients Small Business Subcontracting Plan.
5. Payments to Sub-Recipients
Sub-recipient invoices must be submitted directly to the appropriate Contract and Grant Accounting Department designated in the Sub-Award Agreement and should indicate the general encumbrance number. Payment must be made within 30 calendar days after receipt of the billing, unless the federal awarding agency or pass-through entity reasonably believes the request to be improper. The appropriate Contract and Grant Accounting Department (Main Campus or HSC):
- reviews each incoming invoice;
- verifies the index number and general encumbrance number;
- compares the actual cost to the sub-award budget;
- verifies the invoice contains all required information;
- signs to indicate approval; and
- sends it to the principal investigator.
The principal investigator:
- verifies the invoice is accurate;
- certifies the work being billed for was performed;
- verifies the costs are allowable;
- verifies that all progress and deliverables through the date of the invoice have been received, reviewed, and accepted;
- signs or otherwise acknowledges approval; and
- forwards the invoice to the University Accounts Payable Department for payment processing.
6. Utilization of Small, Disadvantaged, and Women-Owned Businesses
The University of New Mexico encourages the utilization of small businesses, small disadvantaged businesses, and small women-owned businesses, in compliance with Public Law 95-507 and the FAR.
7. Close-Out of Sub-Awards
Before a sub-award can be closed out, the appropriate (Main Campus or HSC) Contract and Grant Accounting Department will:
- require the sub-recipient to sign a certification form indicating the sub-award has been billed in full and all the provisions of the Sub-Award Agreement have been fulfilled;
- review the sub-award to ensure that all provisions have been met and all required reports have been submitted; and
- finalize any disposition of equipment. If title for the equipment is to pass to the University or the sub-recipient, the Contract and Grant Accounting Department will process all required documents.