April 5, 1995
CONTRACT AND GRANT OFFICERS
Subject: Subagreement Procedures--Sample
At the last Contract and Grant Conference, the issue of ONR purchasing reviews was discussed. Some campuses reported having problems while others reported having little or none The Office of the President Research Administration Office offered to collect procedures and forms from the campuses that were not having problems, and share them with other interested campuses. The Berkeley campus graciously consented to share their procedures, and they are enclosed for your information.
If any other campus would like to do the same, please let us know.
Subject Index: 16
Organization Index: U- 115
Contract and Grant Officer
BERKELEY: SPONSORED PROJECTS OFFICE
March 1, 1995
Research Administration Office
Office of the President
RE: Subagreement Procedures
At Berkeley, subagreements to nonprofit entities are administered by the Sponsored Projects Office. Those with commercial entities and DOE labs are administered by Purchasing.
The last two Office of Naval Research Procurement Reviews have included the subagreement activity administered at SPO. Our procedures and documentation have been found satisfactory, and we have had to respond to no findings or recommendations. The most recent review recommend that the campus consider consolidating all subagreement activity in one location; we are discussing with Purchasing having all subagreements for work scope collaborative activity be handled by SPO and leave to Purchasing those subagreements for goods and services or transactions requiring advertisement and bid.
ONR uses the term "memorandum of negotiation" when discussing file documentation of major decisions, evaluation, or negotiation points. While SPO does not have a document specifically named as such, our checklist and telephone documentation form have contained the type of information ONR looks to find in the file, and they have been satisfied with SPO's documentation.
The enclosed procedure and forms are in need of updating, but provide an outline of our procedures, and are the documents provided to ONR for the 1992 and 1994 CPSR. Our CPSR in 1992 was performed by John Starcher; in 1994 it was performed by Robert Bachman.
Marion B. Lentz
Any purchase order, agreement or subcontract that we enter into using funds from an extramural source falls within the broad general description of being a subaward. We frequently term them "subcontracts," although only subawards issued under prime contracts are actually subcontracts. The Purchasing Office issues subawards to profit making entities, Business Services handles consulting agreements with individuals and Sponsored Projects Office prepares and administers subawards with nonprofit organizations. This document will concern itself with those subawards for which Sponsored Projects Office is responsible.
THE SUBAWARD REQUEST
Upon receipt of an award which contemplates one or more subawards the Research Administrator should request that the principal investigator complete and return the Subaward Request Form (Exhibit A). The completed form should be reviewed by the RA for completeness and to determine that a precise work statement has been provided. PI's frequently offer a very brief, vague statement, claiming that they have a very clear understanding with their collaborator(s) about what must be done. Beware! We have had several cases in which a PI and his/her collaborator have had a falling out and subsequently disagreed about the subawardee's contractual obligation. The best way to avoid this kind of problem is to be as specific and complete as possible in stating the requirements. After all, that is what a contractual document is for -- to document as precisely as possible the duties, obligations and rights of the parties for future reference. Sometimes a subawardee will have submitted a proposal for inclusion in our proposal to the prime sponsor. Such a proposal often will serve nicely as a statement of work and can be attached to the subaward or incorporated by reference.
The subaward request form should also be reviewed to determine that a plausible reason has been given for selection of the proposed subawardee and that the proposed amount of the subaward has been Justified. Since we're dealing with nonprofit organizations, usually other educational institutions, there is a very low probability of over pricing. Therefore an extensive cost analysis should not be necessary but there should be sufficient input from the principal investigator to satisfy you that the costs/rates in the budget are proper and reasonable.
The first step in preparing the subaward is review of the prime award. It is necessary to get a sense of the overall project and the nature of the relationship between the work of the subawardee and the overall project in order to arrive at a concept for the subaward. Each subaward should be tailored for the particular circumstances of the particular project and prime award. There is no set formula. You must consider questions such as whether it should be fixed price or cost reimbursement, should it include provision for advance payment, should it be incrementally funded, etc. A fixed price agreement says, in essence, you do the work and we'll pay you x dollars. The subawardee does not have to account for the cost it incurs. As long as it performs the work it is entitled to payment of the entire fixed price, no questions asked. On the other side of the coin, the subawardee is obligated to complete the work for the fixed price regardless of its actual cost. As a general rule, therefore, a fixed price agreement should be used only for very small projects for which there is little likelihood that the actual cost will be significantly more or less than our estimate. Normally we don't make advance payments but there may be cases in which it's warranted, such as when dealing with a nonprofit organization which doesn't have a great deal of working capital to cover its costs pending reimbursement. If advance payments are made you must be alert for signs of trouble and provision must be made for liquidation of the advance payment. You must be alert to guard against the situation in which we've advanced a lot of money and the subawardee can't or won't complete the work and we're faced with the problem of trying to get our money back.
Sometimes review of the prime award will raise important questions that must be clarified with the PI. He/she may have overlooked something in spelling out the requirements of the subaward. Review of the prime may also reveal special requirements and/or conditions which must be covered in the subaward in order to satisfy our obligations under the prime award. There also may be provisions in the prime which the prime requires to be included in subaward ("mandatory flowdown provisions").
THE SUBAWARD DOCUMENT
A subaward typically consists of a heading, recitals (the "whereas"), the subaward provisions/clauses, a close and signatures. The recitals serve as an introduction to the subaward. They are not strictly required but serve as background to the rest of the agreement and can be helpful in interpreting the terms of the agreement. Exhibit B is a list of standard and frequently used clauses. The list is by no means a complete one and it will be necessary from time to time to create a provision which is totally unique because of the circumstances of the particular project.
Select a recent subaward, written under similar circumstances under an award from this or a like sponsor, and use it as the framework for the new subaward. Using notes from the review of the prime and the information provided by the PI mark up the specimen subaward to reflect the changes required by the case in hand, including special conditions and requirements.
Normally we will ask the subawardee to sign the subaward before we sign it.
If the subawardee receives a presigned agreement they may be less careful return a signed copy to us. There are cases, however, in dealing with a subawardee in a remote area when it maybe more expeditious to presign the subaward. The normal procedure is to send two copies of the subaward to the subawardee with a letter asking that both copies be signed by an authorized representative of the subawardee and returned to us for countersignature. A copy of our transmittal letter should be sent to the PI so that he/she will know the status of the subaward. If the subaward is complex send a copy of to the PI with the copy of the transmittal letter so that he/she can review it at the same time that the subawardee is processing
You may have noted during your review of the prime award that sponsor approval of the subaward is required before we can execute it. To save time you can submit the subaward to the sponsor for approval at the same time that you send it to the subawardee for execution. If the subaward has been prepared well it is unlikely that the sponsor will require any change. You should attach a note to the SPO copy of the subaward in your pending file to remind you not to execute the subaward until sponsor approval has been received.
THE COMPUTER RECORD
At this point you can initiate the computer record of the subaward. The FOCUS file for subawards is SUBREC. Inputting is done only on SPO001. On SPO001 you would select #3 - "exit to CMS" from the menu. From CMS you then enter "SUBREC." You will get a screen in which you can enter the data elements. They are:
SUBKN -- Subaward Number (up to seven spaces) you can use the fund number for the subaward number with a suffix if there is more than one subaward under a particular prime.
SUBKR -- Name of the subawardee (30 spaces).
SUBKAMT -- Estimated cost/maximum amount/fixed price...whatever (9 spaces).
STARTDT -- Start date of the subaward (6 spaces--YYMMDD)
ENDDT -- End date of the subaward (6 spaces-YYMMDD)
PI -- UCB Principal Investigator (14 spaces)
SPONSOR -- Name of Sponsor (35 spaces)
AU -- Campus Administering unit (25 spaces)
FILLER -- (16 spaces) Use for variable management information. When you first set up a subaward you can enter the date that you gave it to the typist. For example "to typing mm/dd." When the subaward is typed and mailed it to the subawardee you could change the filler to reflect that status. (Once the basic subaward record is established all changes can be made by changing the fields on the SPO001 SUBREC screen.) When the award is received back from the subawardee, and we return to them and distribute the fully executed subaward, FILLER can be cleared.
You can access the SUBREC file for information or reports from your own user ID. Get into FOCUS and enter USE FOCUS G <return> END <return>.
Once you have done this you can do any TABLE report or execute a preprogrammed FOCEXEC.
To review the status of subawards in process enter the command EX INPROS. The screen will show all subawards that have any entry in FILLER.
On very rare occasions you may find it necessary to delete a subaward file altogether. Either we have decided not to proceed with the subaward or, somehow, garbled data got into the file. The FOCUS command on SPO001 to delete a subaward completely is EX UPDATEY. The computer will prompt for SUBKN, SUBKAHT, SUBKR. If all entries match exactly the computer will delete that subaward.
Copies of fully executed subawards are distributed to the PI, administering unit, and Accounting.
Subawards generally require that invoices be submitted to SPO. You should review invoices to make sure that there are no charges which conflict with the terms of the subaward (dates incurred, prior approval, rebudgeting, etc.). After an invoice has been determined to be administratively in order it is forwarded with our form letter (Exhibit C) to the PI for review and approval for payment.
At the beginning of each month a computer printout of subawards ending on or before the end of the month should be generated. (To get any report printed you must first enter the FOCUS command OFFLINE. After producing reports you must enter ONLINE or anything else you do also will be printed.) The command to produce the report of expiring subawards is EX ENDDATE. The computer will ask "WHAT END DATE?" Enter YYMMDD for the end of the month. When the report is received the contract and grant assistant should prepare form letters (Exhibit D) to PI's regarding further disposition of the subaward. We do this for two reasons. To remind the PI that the subaward is ending and that further action may be necessary and to determine if the subaward was completed satisfactorily. If a PI responds that all work has been satisfactorily completed the subaward file should be marked as expired and filed with expired award files. Update the computer file by changing the FILLER to "Expired MMYY."
Frequently the PI will want the subaward extended either with or without funds. There are numerous examples of simple amendments in our files. You may maintain the progress of amendments by changing the FILLER in the same way that you do for the initial subaward. Updates to the subaward data are made using the SPO001 SUBREC procedure.
You may find it helpful to have a print out of all active subawards to refer to and some what less handy to have a complete inventory of all subawards since inception of the file. To look at the file of active subawards on the screen the command is EX SUBKA. To print it out you must first enter OFFLINE. The heading of this report contains an "as of" date. You should change this using the CMS xedit procedure. This is also true of the complete inventory report. The command for that report is EX SUBKI.
TO: Sponsored Projects Office
Please prepare a subaward based on the information provided below. Attached is a copy of the subawardee's proposal and/or budget and a detailed work statement, which includes reporting requirements, other special requirements, and due dates.
Name of sponsoring agency
Name of proposed subaward institution
Responsible persons at subaward institution (name, address, telephone number)
For technical matters (PI/PD):
For administrative matters:
Reason this proposed subawardee was selected (if no others considered, sole source justification is provided):
Basis for determining that the estimated cost is fair and reasonable:
The Berkeley principal investigator (does/does not) have a financial interest of any kind in the proposed subawardee, If PI does have any financial interest, a Statement of Economic Interest (form 730-U) is attached.
Signature of Berkeley principal investigator