Sponsored Projects Administration

A subcontract is a financial assistance mechanism used when the intent is to have another institution or party carry out an integral portion of the project’s scope of work. The subcontract is a formalized agreement that spells out the fiscal arrangements, defines the scope of work to be performed by the subcontractor, and flows down the terms and conditions of the prime award to the sub-recipient. 

INCOMING SUBCONTRACTS

Grants and Contracts reviews and negotiates all sponsored projects contracts, including incoming subcontracts:

  • The draft agreement and sponsor contact information must be sent to [email protected] for negotiations with the sponsor and contract execution.
  • Once the Sponsored Projects Administrator finalizes the agreement and has all internal documents, the agreement will be sent to the PI for review and approval, or signature when required.
  • SPA will also ensure that all approvals/certifications are completed prior to signatures are obtained.
  • After the PI signs-off on the agreement, SPA will obtain signatures from authorized signing official and route back to prime institution for final execution.
  • Once received, SPA will submit the fully-executed contract, R&A, and all applicable assurances to PAF for account set-up.
  • The PI, DMO, and other appropriate personnel will be notified by email when the account has been established.

OUTGOING SUBCONTRACTS

When an award, including the proposed subcontract, is made to the University, SPA will draft the subcontract.

  • Prime award to UTHealth is made and set up. SPA determines that subcontract funds are included in award.
  • SPA will draft the subcontract and request scope of work and budget for each specific subcontractor as well as any other information to complete draft.
  • Subcontract agreement will be sent to the PI for review and approval, or signature when required. Inquiries will also be made about the subrecipient’s history with the project to determine risk if award is a continuation.
  • After the PI approves subcontract, SPA will route finalized agreement to subrecipient for review and partial execution.
  • Once partially executed agreement is received from subrecipient, SPA will have signing official fully execute subcontract agreement. The subcontract will then be routed back to subrecipient and PAF for set up.
  • The PI, DMO, and other appropriate personnel will be notified by email when the subcontract has been established.

SUBRECIPIENT VS.VENDOR

U.S. Office of Management and Budget (OMB) Circular A-133 and Circular A-81 require awarding entities to determine whether an arrangement resulting from a particular award the awarding entity makes to another organization creates a subrecipient or vendor relationship between the awarding entity and that organization. The OMB defines the terms “vendor” and “subrecipient” and provides guidance for distinguishing between the two relationships. The information below expands on the guidance provided by OMB.

Subrecipient
Subcontractor

An entity that expends awards received from a pass-through entity to carry out a project. According to >A-133 and A-81, a subrecipient relationship exists when funding from a pass-through entity is provided to perform a portion of the scope of work or objectives of the pass-through entity’s award agreement with the awarding agency. A pass-through entity is an entity that provides an award to a subrecipient to carry out a project.

Subrecipients/subcontractors generally:

  • Determine who is eligible to receive financial assistance, and which specific type of federal assistance is to be distributed.
  • Have its performance measured against whether it meets the objectives of the project.
  • Have responsibility for programmatic decision making.
  • Have responsibility for adherence to applicable program requirements.

Subrecipients use funds to carry out a project of the organization as compared to providing goods or services for a project of the awarding entity.
Vendor

A vendor is generally a dealer, distributor or other seller that provides, for example, supplies, expendable materials, or data processing services in support of the project activities. A vendor provides generally acquired goods or services related to the support of the prime award.

Vendors generally:

  • Provide goods and services within normal business operations.
  • Provide similar goods or services to many different entities.
  • Operate in a competitive environment.
  • Provide goods and services that are ancillary to the operation of the project.

A Vendor is not subject to compliance requirements of the project.

The FDP Subcontracts Committee developed this checklist to help determine when an entity is a subrecipient or a vendor.

Federal Demonstration Partnership (FDP)

UTHealth is a member of the Federal Demonstration Partnership (FDP). The FDP is a cooperative initiative among federal agencies and institutional recipients of federal funds. It was established to increase research productivity by streamlining the administrative process and minimizing the administrative burden on principal investigators while maintaining effective stewardship of federal funds. A result of the FDP is the agreement to use a common template with specific terms and conditions. This standardization can greatly reduce the length of time needed to negotiate and process subcontracts between the parties.

Whenever possible, SPA utilizes this template.

PI Responsibilities of Subrecipient Monitoring

As the prime grantee, both the University and the PI have certain obligations for oversight of the entire sponsored project. These obligations include appropriate monitoring of a subawardee’s performance and costs.

The subawardee is required to submit periodic invoices to the University for payment. Those invoices must be reviewed and approved by the PI authorizing payment. Prior to approval, the PI should review the invoice to determine that the amount being requested for payment is consistent with the scientific progress of the subawardee during the billing period.

Normally, the PI will be familiar with the subawardee’s performance through telephone conversations, technical meetings, progress reports, or site visits. If the PI believes there are problems with the invoice, the PI should not approve it for payment, but rather, consult with their department administration and Post Award Finance to resolve the issues.

Final invoices should only be approved for payment if the PI is satisfied the subawardee has completed its performance under the award and that the costs incurred are appropriate for that performance.

Should it be necessary to terminate the award early, the PI should notify PAF in writing. Sponsored Projects Administration will then coordinate the termination with the PI.

Contact SPA team members if there are any questions about the PI obligations with respect to subawards issued under the grant.