Subawards : Overview and Issues

1. Subawards: Overview and Issues Thomas Egan, Assistant Director OSP, Research Subawards Team (RST)

2. Overview and review of the subawards process • Roles • Responsibilities • Procedures • Possible issues and what to do

3. Before committing to a subaward relationship… • Determine whether the planned subaward is a subawardee, vendor or independent contractor • PI’s responsibility • Contract Administrator and RST advise and consult Will the subreceipient direct her or his part of the science ? If no, not likely a subaward Is the subreceipient doing science or providing service? If not generating new knowledge, not subaward

4. How to recognize subawardee relationship Subawardee • Performancemeasured against its portion of the scope of work of MIT’s program • Responsibility for programmatic decision-making • Responsibility for adherence to program compliance requirements • Uses funds to carry out a portion of the scope of work of MIT’s program • Rather than providing goods or services for MIT’s program • Principal investigator/project director may be a co-author on publications or may seek patent protection for inventions • Have IP rights to results of work they’ve performed

5. Independent contractor or vendor relationship • Must have a history of independent contracting to the general public • Typically, may not be a former MIT employed hired to provide services shortly after leaving MIT • Provides knowledge and skills not available at MIT • Delivers work on a project basis • May not… • Be an MIT student • Be a current MIT employee • Supervise or be supervised by MIT employees • Use office space or MIT administrative services

6. MIT must manage audit and financial exposure • When a subaward is proposed, RST evaluates ability to comply with flow-down regulation and financial systems Can sub. manage terms that flow down using adequate control policy and systems? How financially and managerially sound is the organization?

7. Subaward information neededat proposal phase • When submitting to your contract administrator: • Subaward statement of work (SOW) • Subaward budget • Commit letter from an authorized officer at the subaward recipient organization

8. Ask What would you do? What questions or concerns do you have about whether this company can: • Perform the work? • Establish a stable F&A rate? • Meet DCAA audit requirements?

9. When the award is received, DLC requisition triggers issuing the subcontract • Award phase • In the requisition, include subawardee information: • Statement of work • Budget • Contact information at receiving organization • RST works with contract administrator and DLC to collect this information • RST contracts with the subawardee • Using standard subaward research terms and conditions, if standard grant • Or in consultation with OSP contract specialists, if non-standard

10. Subawardee invoices serve four purposes • Award phase • For Subawardee… • Payment process starts • For RST… • Monitor: Consistent invoicing • For PI… • Review research progress • Approve invoice • For DLC administrators… • Triggers sub. spending-rate review • Review and return with approval

11. Ask What is happening? • Subaward recipient invoice dates • December 31, 2009 • January 31, 2010 • February 28, 2010 • May 30, 2010 • June 30, 2010 • September 30, 2010 • November 30, 2010

12. Subreceipient monitoring • Award phase • Subrecipient monitoring • No regular invoicing is interpreted as subawardee not performing • If not timely, • May affect funding from prime sponsor • Following consultation with DLC, RST contacts subawardeeaccounts payable

13. Subawardee can be source of cost sharing • Award phase • Cost sharing commitments flow down to subawardee • If the cost sharing obligation… • Isnot being fulfilled at a reasonable rate: • Recommend DLC communicate with RST • RSTcontacts the subawardeeto learn more, plan how sub will meet cost sharing obligation • Cannot be fulfilled, • After consultation with the DLC • RST reduces the Federal amount accordingly • May in some cases terminate the subawardagreement

14. Subaward closeout • In DLC • Receive the final invoice • Triggers a form that is sent by RST • Send to person with signature authority on the account • Four questions about PI’s satisfaction with the performance of the sub • RST • Audit and closeout • Confirm patent or invention filing disclosure • De-obligate funds, return excess to parent if not restricted

15. Ask What’s gone wrong? • It’s been frantic in your department since the beginning of the academic year and you’re catching up on an project that ended recently. • Today is 51 days after the project end date • While you can complete the closeout review on time, you discover that the subaward recipient has not sent a final invoice. • You had no reason to anticipate that this would be a problem. • You discover when you call to request the invoice that the contact person you talked with last time has left.

16. The effect of late subawardee invoices • Subawardees Final Invoice is required 60 days after the subaward expiration date • Late invoices impacts timely subaward closeout

17. Follow-on award: When is closeout required? • Closeout is a significant effort • Despite similarity of follow-on awards, some awards close out for administrative reasons • RSTdoes not closeout awards that are… • Multiyear awards funded one year at a time • Continuing segments that do not require changing subaward number • RSTcloses out awards… • New subaward SOW and budget or new sponsor award • New award number for any other reason

18. Questions?