Introduction
Defining A Subaward
What is a Subaward?
A subaward is when a portion of Stanford's sponsored project is passed through to another entity in order to complete a portion of the sponsored project's scope of work. It does not include payments to a contractor or payments to an individual that is a beneficiary of a program.
A subaward agreement is formal written contract made between Stanford University and another institution or organization to perform an intellectually significant portion of Stanford’s SOW (Statement of Work) under a Stanford sponsored project. The What Makes a Good Statement of Work Tool may be consulted when developing or reviewing the subrecipient Statement of Work.
A subaward must include a clearly defined, intellectually significant SOW to be performed by the subrecipient's personnel, using its own facilities and resources. The subrecipient takes full responsibility for adhering to the terms and conditions of the subaward including those flowed down from Stanford's sponsor, and assumes creative and intellectual responsibility and leadership as well as financial management for performing and fulfilling the subrecipient's SOW within the subrecipient's approved budget.
A subaward SOW may include fabrication of specialized equipment to be used for the Stanford sponsored research project as a project related asset or as a deliverable to the sponsor.
Subawards differ from procurement contracts used to acquire goods or services from vendors.
Distinguishing Between a Subaward and a Procurement Action
The agreement is likely a subaward if you can answer “yes” to the following questions (should meet most criteria below):
Is the Scope of Work of assigned to the entity intellectually significant? (as opposed to executing something designed or directed by Stanford)
Will the entity’s performance be measured against whether the objectives of the sponsored program are met? (The work should directly support the objectives of the sponsored project SOW)
Does the Subrecipient have responsibility for programmatic decision-making? (The entity is responsible for independently making decisions that support the objectives of the SOW)
Will the Subrecipient assume responsibility for adherence to applicable sponsor program compliance requirements? (Subawards are subject to more stringent compliance and contractual requirements than procurement/consulting arrangements)
Is the work being performed significant to the objectives of the project?
Could the entity’s work result in intellectual property development or publishable results (including co-authorship)?
The agreement is likely a procurement action if you can answer “yes” to the following questions:
Does the entity provide the goods and services within its normal business operations? (This is something they do for everyone)
Does the entity provide similar goods or services to many different purchasers?
Does the entity operate in a competitive environment?
Will the entity provide goods or services that are ancillary to the operation of Stanford's sponsored project?
Will Stanford own the work product of the entity?
Will the entity be carrying out the work at the instruction of Stanford? (E.G. administering surveys created by Stanford or collecting data for Stanford to analyze)
Does the entity not have the infrastructure to comply with direct requirements of Stanford's sponsor?
Subaward vs. Consultant
The difference between a consultant and a subrecipient typically comes down to who is going to own the work. While the work of a consultant may be intellectually significant, if Stanford is going to own what the entity/individual produces, then it is likely a consulting arrangement. Also, as subawards cannot be between Stanford and an individual (as opposed to an entity), any arrangement with an individual would be consulting rather than a subaward.
Proposing a Subaward
Proposing a Project with Subawards
Once the potential subrecipient is identified to support the objectives of a proposed sponsored research project, and it is determined that a subaward is the appropriate mechanism, the PI assisted by the department administrator obtains the subrecipient proposal elements from their subrecipient.
The proposal should be compiled in the format required by the sponsor and Stanford, then forwarded to the institutional official for review. The proposal must include the following elements for each named subrecipient to be endorsed by institutional official.
The subrecipient's statement of work (SOW), including a clear description of the work to be performed, proposed timelines, and deliverables. The SOW should be detailed to ensure expectations are clear and can be enforced in case of disagreement between Stanford and the subrecipient.
The subrecipient's budget and budget justification, including the subrecipient's direct and indirect costs, calculated using both the subrecipient's F&A and fringe benefit rates, and verifying any committed cost sharing.
The Subrecipient Commitment Form (OSR Form 33) completed and signed by the subrecipient's institutional official.
(Federal Contracts Only) A Fair and Reasonable Cost Analysis & Sole Source Justification (OSR Form 45) if the funding mechanism is known to be a Federal contract at time of proposal. The PI's signature on this form certifies s/he has selected the subrecipient in accordance with Stanford policy, and determined their costs are reasonable with respect to the proposed SOW. In addition, the PI certifies s/he has reviewed the subrecipient's proposed budget to ensure all proposed costs are allowable under the sponsor's anticipated terms and conditions. PIs are responsible for working with their subrecipients to modify proposed budgets to bring them into conformance.
Additional elements which may be required by Stanford's sponsor.
On very rare occasions, a PI may recognize the need for outside involvement on a project but is either unable to identify the best subrecipient by the time of proposal submission. In these instances, proposals may be submitted with a subrecipient To Be Named.
Integrating the Subrecipient's Proposal into Stanford's Proposal
The PI, assisted by the administrator, integrates the subrecipient’s statement of work into the proposal and includes the full amount of the subrecipient’s budget (including the subrecipient’s F&A) as a direct cost line item in the Stanford budget. The subrecipient’s proposed costs must be separate from Stanford’s costs.
When calculating Stanford’s budget, it is important to apply the F&A Stanford will collect for administering the subaward based on the sponsor’s inclusion/exclusion criteria. While the federal government includes the first $25,000 in its F&A base, other sponsors may have different criteria.
Modified Total Direct Cost (MTDC) Base: Stanford’s indirect costs (F&A) are applied to the first $25,000 of each competitive segment of each subaward. (Typical of federal awards).
Total Direct Cost (TDC) Base: Stanford charges indirect costs on the whole subaward amount. (Typical to foundation or other non-fed sponsors).
Subrecipient Proposal Review and Submission by Stanford
At the time of proposal review & submission if submitted in accordance with Stanford's Proposal Policy, the institutional official will do the following:
Review the Statement of Collaborative Intent (OSR Form 33)
Review the subrecipient’s scope of work to verify that a subaward is the appropriate vehicle to fund the work
Review the subrecipient's budget and budget justification
Review the proposal for compliance with Stanford and sponsor policy
Submit the full proposal to the sponsor for consideration
*Initiating an Unanticipated Subaward after a Proposal Is Submitted
If a subrecipient was not included as part of the proposal documentation, the sponsor may require prior approval to add a new subrecipient to the sponsored project. All subaward paperwork should be completed at the time the subrecipient is identified.
If the subaward is under a grant, the prime sponsor award terms and conditions may require prior approval or notification for adding a new subrecipient. Read the terms and conditions carefully and confer with your OSR/RMG official if you need guidance. Be prepared to wait at least 30 days for a response from the sponsor for prior approval of the new subrecipient.
Use the SeRa Central Office Request Form to seek sponsor approval for new subaward if approval is required.
If a subaward is under a federal contract, the sponsor may require Stanford to obtain written approval or notification to enter into the subaward even if the sponsor approved the subrecipient at the proposal review and acceptance stage. A federal sponsor may require: a detailed written cost analysis of the subrecipient’s proposal, a certificate of cost and pricing data together with a sole source justification (form 45) and a small business subcontracting plan (FAR 52.219-9).
Preparing Proposals with Subawards Seminar Presentation Slides
Starting the Subaward Process
Pre-Award Spending for Subawards
A subaward will not be issued, nor payments to a subrecipient authorized, prior to Stanford's receipt and acceptance of a funding commitment from the prime sponsor. A Stanford PI or designee may not authorize a subrecipient to begin working without a fully executed subaward agreement in place. Proposed subrecipients who commence work without a fully signed subaward agreement from OSR do so at their own risk and have no assurance of payment from Stanford. Once a subaward is in place (typically for a year at a time), additional increments of time and funding will not be issued until first received by Stanford from the sponsor.
In the event a subaward is subsequently issued to a subrecipient, the subrecipient may claim costs properly incurred under its own risk, provided that the costs are otherwise allowable. In such cases, the subrecipient must furnish evidence to Stanford that all required compliance approvals were in place at the time the costs were incurred.
Subaward Period of Performance and Duration
The period of performance of a subaward (including any requested extensions) must be within Stanford's period of performance under the prime award. Subawards are issued for one year at a time to ensure annual monitoring requirements have been met (regardless of whether funding for multiple years was received from the sponsor).
Competitive Segment vs. Non-Competing Continuation
Under a non-competing continuation, additional increments of time, funding, supplements, etc. are added to the existing subaward under the current Purchase Order using a Standard Change Order – Subaward requisition.
Whenever Stanford's sponsored project receives funding under a new competitive segment, a new subaward and Purchase Order must be issued using a Standard Subaward requisition. This will require the collection of all new documents including OSR Form 33, SOW, Budget, Budget Justification, etc.
Subaward Funding Mechanisms
Stanford issues subawards on a cost-reimbursement basis. Rare exceptions may be made when it can be demonstrated that a fixed-price agreement is in the best interest of the University and all required prior approvals are in place.
Subaward expenditure types 54710 (IDC) and 54720 (Non-IDC) should be used for all subaward requisitions. If BOTH the sponsor AND the Subrecipient are federal entities then expenditure types 54715 (IDC) and 54725 (No IDC) should be used. If the subaward is under a University Research project, expenditure type 54320 (ISC) should be used.
Expenditure types are for the IDC Stanford recoups for administering subawards and should not be confused with the indirect costs the subrecipient is allowed to recoup for performing the work.
PTA Setup and Management
When an award has been received from the sponsor, if subawards were budgeted as part of the proposal process, SeRA PTA Manager will automatically create a single Oracle Task for subawards. If there are multiple subawards under an award, the department can request additional Oracle Tasks for each subaward to make management of the project easier.
If the award is carryover/carryforward restricted (annual soft close), a new Oracle Task will be created annually and prior Oracle tasks will be closed at the end of each period. The department is responsible for knowing the end dates of Oracle Tasks and Awards, and ensuring invoice payments are posted within allowable timeframes.
"Subawards" under University Research, Department, or Gift Funding
University Research Agreements - These are processed the same as typical sponsored research subawards, but requisitions must be submitted using Expenditure Type 54320. These subawards are subject to 8% ISC and are tracked by Expenditure Type separately from externally sponsored subawards with IDC implications.
Department or Gift funding - These Agreements are called Research Collaboration Agreements instead of Subawards because the funding to support them is non-sponsored, such as department funding or gift funding. These Agreements should still meet all the parameters for a subaward (E.G. an intellectually significant scope of work, reporting terms and conditions, the collaborator will own their intellectual property, etc.), but will be negotiated without sponsor flow-down terms.
To initiate a Collaboration Agreement, a requisition for a Standard Subaward must be submitted in iProcurement using Expenditure Type 54320. Collaboration Agreements are subject to the 8% ISC.
Initiating a Subaward Requisition
After a prime award has been accepted by Stanford and PTA’s have been set up, the PI or his/her authorized administrator must submit an iProcurement Standard Subaward Requisition to start the subaward agreement issuance process. The requisition will require department and OSR review and approvals before assignment to an OSR Contract and Grant Officer for negotiation. OSR does not draft the subaward agreement until an approved requisition and required documents have been received by OSR. The negotiation process for new subawards can be lengthy depending on the subrecipient size, type, location, industry, etc. so requisitions should be submitted as soon as possible once the Notifice of Award (NOA) has been received and the Oracle PTA is active.
The requisition initiates the subaward transaction process, specifies the subrecipient, funding amount and performance period for the subaward. Subawards are issued with a one-year period of performance to ensure adequate monitoring of technical progress and compliance with university and sponsor audit requirements. The New Subaward Requisition Checklist may be consulted prior to initiating a subaward requisition.
Change order requisitions are required for each subsequent funding year to add time and funding to the subaward. Subawards cannot be issued for a performance period outside of Stanford’s prime award performance period. A Stanford PI or designee may not authorize a subrecipient to begin work without a fully executed subaward agreement in place, however a subrecipient may commence work at their own risk.
Documents and other important required information to be attached or included in the requisition are:
Statement of Collaborative Intent known as the OSR Form 33 (ensure complete and signed)
Scope/Statement of Work (SOW)
Budget (to match requisition amount)
Budget Justification
Fair & Reasonable Cost Price Analysis and Sole source Justification known as the OSR Form 45 (if Federal Contract)
IRB/APLAC approvals (if applicable and available)
Department is also responsible for:
Incorporation of the subrecipient in Stanford’s approved protocol as a collaborating/performance site (done in eProtocol)
Applicable sponsor requested information such as: updated Certificate of Cost or Pricing Data, Small/Small Disadvantaged Business Plan, etc.
If needed, prime award sponsor approval to issue a subaward or any other prior approvals
Department should include the following information if applicable:
Special requests or terms PI or administrator may want included in the subaward agreement
Required prior approval by Stanford/PI for actions such as: rebudgeting of funds across line items or carry forward of remaining funds to the next budget period
Required deliverables or progress reports as condition for additional funding or time
Specific payment terms or schedules
Specific invoice detail or backup Increased requirements
Any concerns or prior issues in dealing with the subrecipient
Any documents that are not provided as part of the requisition or are not complete and accurate, may delay the issuance or negotiation of the subaward agreement.
Agreement Timeline Expectations
There is no standard time in which it takes to negotiate a subaward or amendment due to the vastly different processes and policies of subrecipient organizations. Typically subaward delays are due to the time it takes to negotiate terms with subrecipients, or for subrecipients to obtain approval and signature from their authorized officials. However, the following can also cause delays in the negotiation process:
Incorrect requisition (make sure details like dates, amounts, carryforward are accurate before submitting)
Missing or inaccurate documents (Budget, Justification)
Insufficient SOW (should be sufficiently detailed to be relied on for desired outcomes and in case of dispute)
IRB/APLAC approvals not obtained by the subrecipient, or subrecipient is not in eProtocol as collaborating institution or site
Subrecipient has not providing audit/financial docs and certification for risk assessment
Subrecipient has not obtained their DUNS number (all subrecipients) or SAM Registration (Fed Sponsor only) or registration has expired
Negotiation of indirect costs if the subrecipient does not have a federally negotiated rate
Managing a Subaward
Monitoring a Subaward
Stanford is responsible for ensuring that sponsor funds, including those provided by Stanford to other entities, are spent in accordance with all applicable terms, conditions, laws and regulations, and that subrecipients are risk assessed and monitored prior to contracting and throughout the life of the award.
Principal Investigator & Departmental Responsibilities for Monitoring Subawards
It is the PI’s responsibility to monitor their subawards throughout the life of the project so there is reasonable assurance that the subrecipient uses the award for authorized purposes, complies with laws, regulations, and the provisions of the agreement, invoices Stanford for allowable expenses in accordance with the agreement, and achieves its performance goals. PI’s and administrators should be familiar with the subaward agreement, sponsor requirements, and the subrecipient budget to ensure appropriate enforcement.
The PI and department administrators should obtain invoices in a timely manner and manage and monitor the subaward invoice payments on the purchase order to ensure invoices are posted timely and to the correct award, task, and line.
Invoice Review and Signature
Invoices should be generated by the Subrecipient and signed by the Subrecipient’s authorized official. If the prime sponsor is federal, invoices must include the following certification language (if the invoice is missing the certification, it should be returned for correction):
By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).
The department or PI must review the subrecipient’s invoices, and the PI must indicate approval by personally signing each invoice for payment and including the certification language below on each invoice. If the PI is not on site to sign the invoice, the email approval or electronic signature must include the certification language and be attached to the invoice when uploaded for payment. The department administrator must upload the invoice for payment in iProcurement within 85 days of the task or award end date to ensure the invoice posts to the award, rather than the suspense PTA.
In signing below I approve payment of this invoice and attest that charges appear reasonable, and progress to date on this project is satisfactory and in keeping with the statement of work.
Stamps with the above language printed on it for affixing on an invoice can be ordered by emailing the JP Cooke sales department directly at sales@jpcooke.com and request the stamp ordered by Stanford University Dept. of Sponsored Research on February 7, 2013.
As part of the invoice review, the PI and departmental administrators may consult the Invoice Payment Checklist tool prior to payment, and must verify that the invoice was prepared in accordance with the subaward requirements and that invoiced costs are:
In accordance with the approved budget or permissible rebudgeting
Incurred within the approved period of performance and overall cost limitations (invoices for subaward periods not yet obligated to the subrecipient via contractual Amendment may not be paid, even if sponsor time and funding is received)
Aligned in terms of cost and type of expense with the scientific progress reported to date
Allowable, allocable, and reasonable
Include the subrecipient signature and certification (if federal)
Include a current and cumulative total and breakdown by major cost category
Have the subaward number which matches the PO number in iProcurement
Includes any cost sharing (if applicable)
Clarification of Invoiced Charges: In the event the level of detail included on an invoice is not sufficient, or if it appears that some costs may be excessive, unallowable, or understated, the PI or departmental administrator should question the subrecipient's expenditures by requesting further documentation or explanation prior to approving an invoice. If the explanations are not sufficient to render a prudent judgment on the allowability of costs, and the terms of the subaward permit, department grant administrators may request detailed justifications from subrecipient. Department administrators may also periodically request, if the terms of the subcontract permit, particularly from high-risk subrecipients, detailed support for selected invoiced charges to verify their appropriateness and reasonableness. Such inquiries must be done in a timely manner (e.g., within thirty days after receipt of an invoice) so that the subrecipient can be promptly paid for their approved costs.
Examples of detailed justifications that may be requested from subrecipients include: payroll records, receipts, copies of paid invoices showing the cost of items purchased, descriptions of services rendered by consultants, including hourly rates, time reports and details of incurred travel charges stating the purpose, airfare, meals, ground transportation, unallowable costs, etc. Copies of all such documentation and the ultimate outcome of the investigation should be retained in the project file.
When there is a concern about the allowability of cost, the administrators can contact OSR for coordination of subsequent actions. OSR staff are available to assist the PI and their departmental staff in resolving any invoice review issues that may arise.
Technical Progress & Compliance
The PI must be in contact with the subrecipient regularly to discuss technical progress, receive and review required reports or deliverables, and verify that the subrecipient maintains current human and animal subjects approval when applicable. The subaward monitoring and compliance obligations of the PI may be shared with department administrators or other Stanford employees; however, in no event may such monitoring and compliance obligations be delegated to a non-Stanford employee.
Quarterly Review & Certification
At quarterly review and certification, the PI certifies the allowability, allocability, reasonableness, and consistency of the subrecipient's expenditures and the related sufficiency of the subrecipient's technical progress under each subaward involved in the research project, as well as expenses incurred directly at Stanford.
Financial Monitoring and Management
The PI and department are responsible for ensuring subrecipient invoices are received timely, are reviewed, signed, and certified, are uploaded in a timely manner (prior to task and award closure), funding is available on the PO, and invoices are applied to the appropriate PTA. Departments should use the Requisition and PO Query tool in iProcurement to monitor and manage each subaward and track invoices. Invoices that are uploaded after task or award closure will post to the department’s suspense PTA and iJournals are not permitted on active subawards.
Regulations and Assurances
In addition to terms and conditions of the sponsor, University Policy, federal, state, and local laws, and contractual requirements, Stanford is subject to the requirements of Uniform Guidance CFR Part 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards which dictate many of Stanford’s subaward processes, policies, and procedures. If the sponsor is a federal contract, the FAR regulations will apply.
Modifying an Existing Subaward
Modifying an Existing Subaward
When a subaward period of performance ends (usually annually), if the PI wishes to continue the subaward, an iProcurement Standard Change Order - Subaward requisition must be submitted to add the next years’ time and funding. A contractual amendment to extend the subaward Agreement is required prior to paying any invoices after each period of performance ends.
The department must be aware of the timing of incoming invoices for the prior period (especially if there is an annual soft close) to ensure all invoices are paid prior to submitting a change order. This ensures the reporting on the FFR is accurate and prevents invoices from being placed on hold for the duration of the amendment negotiation (PO's re-open when a change order is submitted and invoices cannot be paid).
A subaward requires a modification under the following circumstances (this is not a comprehensive list, other circumstances may warrant modification):
Addition of time to the period of performance
Addition of funding to the agreement
Reduction in funding of the agreement (deobligation)
Requisition should be for $.01 since negative amounts cannot be processed by the system. Funding will be reduced once the Amendment is fully executed
Authorization of carryover (see below for additional information)
Alteration of any contractual terms and conditions
Revision of the SOW
Early termination of a Subaward agreement
Subaward agreements require 30 days written notice prior to terminating, so the desired date of termination may not be possible if the dept. has not notified the subrecipient prior to submitting the req
The following documents should be attached to the change order requisition when applicable:
SOW (if changed)
Budget (to match change order amount)
Prior approvals from the sponsor (such as carryforward)
If authorizing carryover to the subrecipient:
Once you have recieved carryover authorization from the Sponsor (if carryover is restricted by the sponsor), a Standard Change Order - Subaward requisition must be submitted in iProcurement (receiving authorization to carryover from the sponsor will not automatticall flow down to the subrecipient, a contractual amendment is required)
The dollar amount of the requisition should be $.01 since the funding is already committed to the Purchase Order and is being moved, not added
The description on the requisition should note that the request is for carryover, the amount to carryover, and the period the funds are being carried over from
The sponsor authorization for carryover should be attached to the requisition
Check the Requisition and PO Query commitments to ensure the amount requested for carryover is available on the PO for the year you are authorizing
Consult the Amendment Subaward Requisition Submission Checklist for more information
Once the subaward amendment is fully executed, funds will be moved within the Purchase Order to allow funding to be spent in the current year. This movement of funds on the Purchase Order only occurs when the funds must be moved across different PTA's. If the restriction is internal, the amendment to allow the carryover of funds is still required to authorize the subrecipient to carryover, but funding will not be moved due to all funding residing on the same PTA.
Closing Out a Subaward
Close Out Procedure
A subaward is closed out when its period of performance comes to an end, regardless of whether Stanford's overall research project is ending or continuing. When feasible and at the PI’s discretion, a subaward final period of performance may be slightly shorter than Stanford's to allow sufficient time for collection and review of the subrecipient's final reports, verification of subrecipient data, and incorporation of the subrecipient's research results into Stanford's final technical report to the sponsor.
PIs are responsible for obtaining final invoices and technical reports from their subrecipients within contractual timelines, and retaining a copy in their project file. PIs are encouraged to remind subrecipients of this need well in advance of the due date for such reports.
Other final reports, including property reports, patent reports, small/small disadvantaged business reports, and Assignment and Release documents may be required. PIs and departments may be asked to assist OSR in obtaining necessary closeout reports from the subrecipient in a timely manner.
The PI/Department is responsible for ensuring all cost sharing requirements have been met by the subrecipient. Failure to do so may result in Stanford taking on additional cost share to fulfill obligations.
Final Invoice
In order for Stanford to comply with its financial report requirements, subrecipients are required to submit a final invoice, clearly marked “Final”, to Stanford by the date that is required in the subaward agreement, typically no later than 45-60 days (see subaward agreement) after the end of the Subrecipient's period of performance. In the event no invoice is received within the required timeframe, Stanford may treat the Subrecipient's last invoice as the final invoice. Payment for Subrecipient invoices submitted to Stanford later than the due date may not be paid. PIs and departments are responsible for obtaining final closeout information, including final invoices, from their subrecipients.