Sub-Recipients

Sub-Recipient Overview

Sub-Recipient Management

A sub-recipient agreement is an agreement made by the University to a third party for the performance of a substantive portion of the work of a sponsored project. In most cases, a sub-recipient award will be for a particular phase or area of a sponsored project which has been identified in both the proposal and subsequent agreement of the prime grant or contract and where the University maintains overall scientific, administrative, and financial responsibility (as opposed to covering the use of professional or consulting services).

In most cases, sub-recipient agreements will be to other universities for services similar to those performed by the University (research, instruction, and public service). The sub-recipient agreement document will be referenced as either a sub-contract, sub-grant, or sub-agreement. This determination will be based on the prime award being issued as a contract, grant, or agreement.

Sub-recipient Monitoring

UNC Asheville is responsible for the programmatic and financial monitoring of its Sponsored Programs sub-recipients. The procedures outlined in the documents below are intended to define specific responsibilities around sub-recipient establishment and monitoring and to assist in defining appropriate ways in which monitoring may be accomplished.

• Sub-recipient vs. Contractor
• Sub-recipient Risk Assessment Questionnaire (xls)
• Sub-recipient Monitoring Guide (pdf)
• Sub-recipient Invoicing

Closeout of Sub-awards

UNC Asheville will not close out a prime award until all sub-awards issued under the prime award have been closed out.

• Sub-awards must be processed for closeout and formally closed on a timely basis
• Closeout actions should begin immediately following the expiration of the sub-award performance period
• Sub-awards will only be considered formally closed when all applicable closeout requirements have been accomplished

In Summary

Sub-award closeout requirements:

1. Verification with UNC Asheville technical representative of the following:
   • Deliverable items/services have been delivered/performed
   • Inventions or discoveries report from UNC Asheville principal investigator (PI)
   • Residual property – property remaining at sub-award facility
2. Items provided by sub-awardee
   • Reports of patents, inventions, or discoveries
   • Report of residual property
   • Final certified cumulative invoice statement
3. Interim sub-award change order/amendment to deduct/add funds
4. Final invoice processing and payment

Sub-Recipient vs. Contractor

Under the OMB Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, which went into effect on 12/16/2014, the term “vendor” was replaced with “contractor.” The terms vendor and contractor substantially have the same meaning and may be used interchangeably in other guidance. For consistency purposes, when UNC Asheville provides funds from a federal award to a non-federal entity, the non-federal entity receiving these funds is classified as a sub-recipient or a contractor based on the nature of the agreement and the criteria in 2 CFR §200.330.

Definitions

Under the Uniform Guidance (2 C.F.R. §200), an organization is considered a sub-recipient of a federal award when it:

• 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 the University of North Carolina at Asheville.
• The entity regards itself, and/or is regarded by the University, as “engaged in research” involving human subjects under the Common Rule and therefore requires approval for its interactions with human subjects.

Under the Uniform Guidance (2 C.F.R. §200), an organization is considered a contractor (vendor) when it:

• 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 University’s investigator.
• The entity is not directly responsible to the sponsor for the research or for determining research results.
• The entity markets its services to a range of customers, including those in non-academic fields.
• Little or no independent decision-making is involved in the design and conduct of the research work being completed.
• The agreement only specifies the type of goods/services provided and the associated costs.
• 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.
• In the case of an individual vendor of consulting services, the person has no employment relationship with the University, either academic or administrative in nature.

It is the responsibility of the principal investigator to determine whether the price is competitive and reasonable for agreements with both sub-recipients and vendors. In either case; however, the agreed-upon cost is not relevant in determining whether the relationship is that of sub-recipient 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 $35,000. 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.

What’s Essential?

To comply with the requirements in Uniform Guidance 2 CFR §200.330, UNC Asheville must determine whether services provided to further the purposes of an award (grant or contract) should be paid as a contractor (vendor) agreement or sub-recipient of the award.

Why It’s Important

The nature of the relationship determines whether or not an entity is a sub-recipient or a contractor (vendor). Neither the dollar amount of the engagement nor the associated overhead is a determining factor. Careful review of the nature of services to be provided and an appropriate determination as part of the proposal budget review process eliminates post-award problems such as:

• Obtaining sponsor prior approval for unbudgeted sub-contracts.
• Delays in processing sub-contracts.
• Meeting audit and compliance requirements with for-profit organizations where a contractor (vendor) relationship should exist.
• Appropriate classification as sub-recipient or contractor (vendor) also is important to the external entity, since significant audit and compliance requirements are attached to a sub-recipient.

How to Comply

Principal investigators are responsible for seeking advice when determining whether an entity that will assist with research under a sponsored award represents a sub-recipient or a vendor. Advice may be sought from the Office of Research and Sponsored Programs.

The Office Of Research and Sponsored Programs (ORSP) will review, negotiate and obtain endorsements on sub-agreements, assuring that appropriate approvals were obtained from the other entity. ORSP is also available to answer questions and provide consultation on research policies as well as general sponsored practices.

Assistance with bids or other questions regarding vendors can also be provided by Procurement Services.

There may be unusual circumstances or exceptions to the listed characteristics. In determining whether a sub-recipient or contractor (vendor) relationship exists, the substance of the relationship is more important than the form of the agreement. It is not expected that all characteristics of either relationship will be present. Classification can be complex and requires the exercise of informed judgment; ORSP and UNC Asheville Purchasing Staff are available to assist in the interpretation and determination of how an award should be administered.

Final decisions are at the discretion of the Directors of Purchasing and ORSP.

Sub-Recipient Invoicing

Sub-recipients should submit quarterly invoices for review by the UNC Asheville principal investigator (PI) for programmatic matters and timeliness of deliverables. The PI’s review and signature indicate that the programmatic progress is satisfactory and the financial consideration requested aligns with the budget and progress made to date.

A checklist for reviewing sub-recipient invoices (pdf) is available to assist PIs with this process.

1. The sub-recipient sends invoices directly to the PI.
2. The PI reviews and approves the invoices. (The PI’s signature indicates that the programmatic progress is satisfactory and that the financial consideration is in line with the budget and progress made to date.)
3. Designated department administrator submits the invoices to the Special Funds Accountant for review and approval.
4. Once the Special Funds Accountant approves, they will forward the invoices to Accounts Payable. Accounts Payable verifies whether the Purchase Order (PO) has sufficient funds and makes payment to the respective sub-recipient.