Outgoing Federal Subawards

Outgoing Federal Subawards

Office of Sponsored Programs Guidance Outgoing Federal Subawards

Outgoing Federal Subawards

When UAB is the prime recipient of a federally funded grant or contract, it may allocate a portion of the scope of work for the project to another organization (subrecipient). UAB will generate an outgoing federal subaward to the subrecipient organization detailing terms and conditions of the award including funding obligations and scope of work requirements.

The Third Party Agreement Determination Form has been developed to help determine whether a third party organization meets the definition of a subrecipient or a contractor.

Submission Process

UAB Policy - Establishing a Subrecipient Agreement

The UAB Letter of Intent to Establish Subaward should be submitted for each subaward at the time the application is submitted to the sponsoring agency at osp@uab.edu.

Once awarded, department personnel should submit the UAB Federal Grant Subaward Request Form. The UAB Subrecipient Questionnaire should be submitted if the subrecipient is not a member of the FDP Clearinghouse along with a finalized Statement of Work and budget. These forms should be attached to the subaward request form and sent to subawards@uab.edu.

If an active subaward has not had an initial risk assessment, the UAB Subrecipient Certifications Ongoing Projects should be submitted instead of the LOI.

Subrecipient vs. Contractor

Guidance on Appropriate Classification
Uniform Guidance 2 CFR 200.330
Effective Date: December 26, 2014

When UAB provides funds from a federal award to another party, the other party receiving these funds must be classified as either a subrecipient or contractor based on the nature of the relationship and agreement, which is mandated by federal law 2 CFR §200.330 OMB Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, which went into effect on 12/16/2014. Section 200.330 Subrecipient and Contractor Determinations, as well as section 200.22 Contractor and 200.92 Subaward of the Uniform Guidance provide guidance on making subrecipient and contractor determinations.

Responsibilities

Principal investigators and grant administrators are responsible for determining whether an entity that will assist with research under a sponsored award represents a subrecipient or a contractor (vendor). Advice may be sought from OSP.

OSP will review, negotiate and sign subawards, assuring that appropriate signatures and approvals have been obtained from the other entity.

Why is the determination important?

  • Before commencing a relationship with another party under a sponsored award in which the other party will provide goods or services or substantive, programmatic work to UAB as the prime recipient of funding, a determination must be made as to the nature of the legal relationship of UAB and the other party.
  • It is important that the correct agreement determination is made early in the process of preparing a grant application, as overhead treatment and monitoring requirements for these types of agreements vary and will impact the grant budget and, in some cases, the grant narrative.
  • This is a significant decision because it determines the allocation of responsibilities and influences the appropriate application of F&A cost reimbursement rates. This decision then drives the type of legal agreement required to document the relationship.
  • In addition, if specified in the award terms and conditions (as sometimes occurs), sponsor approval may be required prior to executing a subaward; sponsor pre-approval is rarely, if ever, required for UAB to enter into a contractor agreement for purchase of services.
  • In the case of a subaward, it is incumbent upon UAB to ensure that subrecipients conduct their portions of research projects in compliance with all applicable terms and conditions of awards and subawards and that project costs incurred by subrecipients are reasonable and allowable.
  • Agreements with contractors (vendors) for the purchase of services, however, typically do not bind vendors to the full set of sponsor terms and conditions, and are subject to competitive bidding procurement practices, to assure that funds paid to vendors do not exceed fair market value.

Framework

The criteria used for determining the type of relationship are set forth below:

Subrecipient

A subrecipient relationship is appropriate when:

  • Substantive, programmatic work or an important or significant portion of the research program or project is being undertaken by the other entity.
  • The research program or project is within the research objectives of the entity.
  • The entity participates in a creative way in designing and/or conducting the research.
  • The entity retains some element of programmatic control and discretion over how the work is carried out.
  • The entity commits to a good faith effort to complete the design or conduct of the research.
  • The entity makes independent decisions regarding how to implement the requested activities.
  • A principal investigator has been identified at the entity and functions as a “Co-Investigator”.
  • There is the expectation that the entity will retain ownership rights in potentially patentable or copyrightable technology or products that it produces in the course of fulfilling its scope of work.
  • Publications may be created or co-authored at the entity.
  • The entity provides cost sharing or matching funds for which it is not reimbursed by UAB.
  • The entity regards itself, and/or is regarded by UAB, as “engaged in research” involving human subjects under the Common Rule and therefore requires approval for its interactions with human subjects.

Subawards should have a detailed scope of work and a budget that specifies salary, fringe, supplies, and other direct costs, as well as appropriate F&A costs consistent with the subrecipient’s F&A cost rate. Terms and conditions from a prime award are typically imposed on the subrecipient to the same degree that they are imposed on UAB; in other words, terms and conditions are flowed down to the recipient.

Contractor

It is the responsibility of the principal investigator to determine whether the price is competitive and reasonable for agreements with both subrecipients and vendors. In either case; however, the agreed-upon cost is not relevant in determining whether the relationship is that of subrecipient or vendor. It is required by federal grant terms and conditions and by good business practices that competitive bids are sought for goods and services from multiple vendors, whenever possible and when the cost exceeds $5,000. Sole source contractor (vendor) relationships may be prohibited by the conditions of the prime award, and if allowed, are typically subject to specific conditions and procedural requirements.

A contractor relationship (including that of an individual acting as a vendor of consulting services) is appropriate when:

  • The entity is providing specified services in support of the research program.
  • The entity has not significantly participated in the design of the research itself, but is implementing the research plan of the UAB investigator. Little or no independent decision-making is involved in the design and conduct of the research work being completed.
  • The entity is not directly responsible to the sponsor for the research or for determining research results.
  • The entity commits to deliverable goods or services, which if not satisfactorily completed will result in nonpayment or requirement to redo deliverables.
  • The entity does not expect to have its employees or executives credited as co-authors on papers that emerge from the research.
  • The expectation is that the work will not result in patentable or copyrightable technology or products that would be owned by the entity.
  • The entity markets its services to a range of customers, including those in non-academic fields.
  • The agreement only specifies the type of goods/services provided and the associated costs.

In the case of an individual vendor of consulting services, the person has no employment relationship with UAB, either academic or administrative in nature.

Other Subaward Forms