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Subawards (Subgrants, Subcontracts)
Documentation at Proposal Stage
Subrecipient F&A Restriction
Subrecipient Costs on the Prime Award Budget
Fixed Price Subaward
Prime Proposal F&A Costs
A subaward is normally budgeted as part of a prime award received at the University of Arizona. It provides funds to a third party to achieve the research goals outlined in the scope of work and budget. The collaboration between the two parties involves a lead principal investigator/co-investigator at the University of Arizona and a principal investigator/co-investigator at the other entity. It is the responsibility of the University of Arizona to determine if the collaboration meets the definition of a subaward. There are Federal guidelines, as well as University policies, that must be followed. The Sponsored Projects Services (SPCS) Subaward Services team is available to answer any questions or discuss a situation that might require additional guidance.
Subrecipients are often identified in the proposal to the sponsor, and if the proposal is awarded, the sponsor expects that the University will proceed to put into place the relationships that were approved in the proposal and are now part of the prime award. So it is important that the relationship with subrecipients be properly structured when the proposal is submitted. Completion of the Subrecipient Qualification Form (SQF) prior to proposal submission allows the necessary determinations to be made.
Part A, The Subrecipient vs. Vendor determination, is used to assist the PI and SPS in determining whether a subrecipient relationship is the correct one based upon the role the subrecipient is playing. If the guide results in a determination that a vendor relationship is more appropriate, the SQF does not need to be completed, and engagement with the vendor will occur after the award is made, through standard processes managed by Purchasing Services. OMB Uniform Guidance (2 CFR, 200), Section 200.93 provides additional guidance to which we are subject regarding proper classification. Note that this determination impacts the budget as well, since per UA policy, F&A is applied only to the first $25,000 of the subrecipient budget, but to the entire amount of budgeted vendor costs.
Part B, Sole Source Justification, documents compliance with University and Board of Regents procurement policies. In most cases, the first response in Question B.1 will be chosen, indicating that we are selecting the subrecipient without further justification, such as a competitive bid process, because the sponsor has directed us, by virtue of approving the award, to use the named subrecipient.
Part C, Cost/Price Analysis, establishes our compliance with OMB Uniform Guidance (2 CFR 200), Section 200.323 and Federal Requisition Regulation (FAR), Subpart 12.209. If the response here is “No,” additional discussion will most likely be necessary to understand why we cannot certify compliance.
Part D, Conflict of Interest, allows evaluation of potential conflicts that would prevent the subaward from being put into place.
When it is determined that a subaward will be included as part of the proposal, the Subrecipient Qualification Form should be completed by the University of Arizona Principal Investigator and submitted as an attachment in the UAR proposal development document. Should the Subrecipient Qualification Form not be submitted with the UAR proposal, we will proceed with proposal submission, but the unit and PI will bear responsibility for any complications arising after the award is made and resulting from the inabilty to review compliance issues at proposal submission. This could include additional F&A costs resulting from misclassification of vendors as subrecipients, the need to request that the sponsor revise the terms of the award should we not be able to palce subawards as promised, and the associated project delays.
The following documents should also be obtained from the subrecipient organization prior to submitting the prime proposal:
Documents to be retained by the business/finance office:
- Subrecipient Commitment Form - If the subrecipient is an FDP Expanded Clearinghouse participant, only the first page of the subrecipient commitment form is required.
- NASA Assurance of Compliance– China Funding Restriction (only applicable if prime award is NASA funded)
Documents to be included in the prime proposal in accordance with the sponsor’s guidelines:
- Scope of Work to include work to be performed by subrecipient as well as deliverables and milestones
- Detailed budget*
- Budget justification or budget narrative
- Performance period
- List of key personnel
- Letter of support as required by Request for Proposal (RFP)
- Copy of F&A rate agreement (if applicable)
*Budget cost categories should be broken down in the same manner as that of the prime organization. See Subrecipient F&A Restriction section below regarding subrecipient’s options available for the F&A rate.
The subrecipient organization cannot use the University of Arizona’s F&A rates. The two options available are:
- Use of the Subrecipient's Federally Negotiated Facilities & Administrative (F&A) Rate
- A 10% de minimus rate—per OMB Uniform Guidance (2 CFR 200), Section 200.331 Requirements for Pass-Through Entities.
*For NIH prime funded awards for which an outgoing subaward will be issued to a foreign subrecipient, with the exception of the American University of Beirut and the World Health Organization, F&A cost reimbursement is limited to 8% of modified total direct costs, exclusive of expenditures for equipment.
Costs in the various categories (personnel, operations, capital, etc.) are outlined in the subrecipient’s budget. The total cost of the subaward is entered as a single line item on the budget of the prime organization and included in the total costs for the project. Only the first $25,000 of each subaward will be subject to the University of Arizona F&A rate application.
The budget for the primary organization should include the name of the subrecipient as well as an explanation on the selection of the specific subrecipient in the budget justification.
The period of performance of a subaward may not be extended outside of the University of Arizona’s period of performance under the prime award. Subawards may be issued for shorter periods of time than University of Arizona’s full period of performance. A new subaward should be budgeted whenever University of Arizona is applying for a competing renewal.
There are two possible scenarios for issuing a fixed price subaward.
If the prime award is issued as a grant or cooperative agreement:
- The subrecipient must propose the work as fixed price and it should be clearly noted as such in the budget justification to the prime organization at the prime award proposal stage.
- No cost sharing is required on the prime award.
- The amount requested is below the Simplified Acquisition Threshold defined by OMB Uniform Guidance (2 CFR 200) under Section 200.332, Fixed amount subaward. Currently, the Simplified Acquisition Threshold is at $150,000 (effective 10/1/10).
If the prime award is issued as a contract:
- FAR clauses of the prime award will apply to the Fixed Price Subaward, NOT the above-referenced OMB Uniform Guidance.
For prime proposals that include subrecipients and the modified total direct cost (MTDC) calculation is being used, the University of Arizona’s F&A cost amount for the subrecipients is calculated as follows:
- If the first year subrecipient amount is more than $25,000, the F&A cost is calculated on the first $25,000 for the first year and no F&A costs are budgeted in subsequent years.
- If the first year subrecipient amount is less than $25,000, the F&A cost is calculated on the full amount. In the next budget year, the F&A cost is calculated only on that portion up to a cumulative amount of $25,000. In the following years, no F&A costs are budgeted on the subcontract.
See the Modified Total Direct Costs/Total Direct Costs page for more information.
As soon as the principal investigator and/or the business/finance office receives notice from the prime sponsor of the impending award, the required subaward paperwork and forms should be gathered and completed. Once the prime award is processed in Sponsored Projects Services and assigned a UAccess Financials account number, the subaward initiation process should start. Please move to the next section – Subaward Initiation and Setup.