Subaward And Research Services
When a UAF Principal Investigator (P.I.) partners with another P.I. to carry out a portion of a project awarded to UAF, Procurement & Research Services issues a Subaward to the P.I.'s institution or eligible entity to allocate that part of work to the P.I. In this case, the external entity becomes the subrecipient, and the subrecipient P.I. is responsible for the design, conduct, and reporting of the research.
Each subrecipient not only must have requisite policies and procedures in place to manage and ensure responsible use of sponsored funds but also adequate facilities to carry out the work.
This relationship differs from a purchase, service agreement, or a work for hire relationship, in that a subaward is a public assistance agreement in contrast to a procurement or acquisition of goods and services to the benefit of the procurer. There are significant impacts to a project budget if costs are not budgeted correctly at the proposal stage given that UAF’s indirect cost rate is calculated only on the first $25,000 of each subaward, but on the total amount a procurement in a vendor relationship.
Improper determinations of relationships with external entities could lead to disallowed costs, more frequent audits, or perhaps even the loss of a sponsored project.
Do I have a Subaward or A Procurement?
The subaward process is used when UAF passes-through a portion of the sponsored award to another entity for the purpose of programmatic effort on the project. All of the terms and conditions that are part of the primary award must be included in the subaward document. Acceptance of these terms by an authorized signatory of the receiving entity is required. The entity receiving the funds is a subrecipient.
A procurement process is used when UAF buys goods or services for the benefit of the project. In this instance, the activity is a procurement, and the entity receivingthe funds is a contractor/vendor.
Subawards are defined, issued, monitored and executed (closed out) under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, generally referred to as "Uniform Guidance." Procurement activities under these federal awards are subject to the Procurement Standards in sections 200.317-200.326 (eff. July 1, 2018).
The regulations applicable to federal awards (grants, cooperative agreements and "other") are not to be confused with contracts received by the university from the federal government. A contract is defined, issued, administered and executed under CFR Title 48, Federal Acquisition Regulations (FAR). The FAR applies to procurement activities only and does not make any distinction between a subaward and a procurement. A procurement made under a federal contract is a subcontract. There are NO subawards under federal contracts.
Consider the following guidance when preparing proposal budgets and determining whether an activity is a subaward or a procurement.
Does the entity receiving a portion of the funds from you:
- Have their programmatic involvement identified as a separate scope of work, with separate budget and organization approval?
- Have their performance measured against whether the objectives of the project are met?
- Have responsibility for programmatic decision-making?
- Have responsibility for adherence to applicable program compliance requirements?
- Use the sponsored funds to carry out a program of their organization as compared to providing goods or services for a program at UAF?
- Have responsibility for assisting in completion of a project deliverable and/or technical report?
- Have the right to publish project results or serve as a co-author?
- Have the option to develop patentable technology?
If your answers to these questions are "Yes," this activity should be classified as a subaward.
Does the vendor/entity receiving a portion of the funds from you:
- Provide the goods and services your project requires within their normal business operations?
- Provide similar goods or services to many different purchasers? (this includes fabrication of new goods, consultants, editors, etc.)
- Operate in a competitive environment? (a for-profit organization or an entity/ university providing a testing service)
- Not subject to terms and conditions/compliance of the sponsoring agency?
- Not involved in the programmatic work of the project, including project deliverable or technical report?
If your answers to these questions are "Yes," this activity should be classified as a procurement from a vendor.
The following documents may be used to by research administrators to assist in helping their faculty & PI’s in correctly classifying their relationships with external entities.
Once you have determined whether the funds should be classified as a subaward or a vendor procurement, the activity should be correctly categorized in your proposal budget.
- Subawards are listed as contractual agreements in the proposal and itemized in your budget. Subaward documents required by the subrecipient at the proposal stage include a detailed budget and statement-of-work from the subrecipient organization, a copy or link to their indirect cost rate agreement, the Subrecipient Commitment Form (OSP-007) and a signature from the authorizing official of that organization. UAF’s indirect cost rate is calculated on the first $25,000 of each subaward.
- Procurements are listed as supplies, equipment, or services. An example would be "lab testing services", "vessel rental", or "fabrication of equipment." UAF’s indirect cost rate is calculated on the total amount itemized in your budget.
Incorrect processing of sponsored funds distributed to outside entities can lead to significant findings in our annual external audit.