Policy Number: 705

Policy: Establishment and Monitoring of Sub-Recipient Agreements

Date Adopted: 05/00

Revision Date: 08/04

References: 1984 Single Audit Act and Amendments (31 USC 7501-7505; OMB Circular A-110 & A-133

Approved By: Robert A. Duringer, Vice President for Administration & Finance


Determining the Appropriate Type of Sub-recipient Agreement

The staff of the Office of Research and Sponsored Programs (ORSP) will determine whether the use of a subcontract, re-grant, memorandum of understanding, or contracted services agreement is appropriate for each sub-recipient included in externally funded projects.

Generally, contracted services agreements are entered into with a vendor for the purpose of performing a specific objective within the scope of work. Typically, vendors provide goods or services within their normal business operations, and operate in a competitive environment where they provide similar goods or services to many different purchasers. The program compliance requirements of the university's award do not apply to the goods or services being provided and the terms and conditions of the award are not passed down to the vendor. The monitoring requirements of OMB Circulars A-110 and A-133 and the Single Audit Act do not apply to contracted services agreements.

In contrast, subcontracts, re-grants, and memoranda of understanding are used when the sub-recipient is functioning as a co-investigator on the project, i.e., they are involved in a creative way in designing and/or conducting the sponsored activity and often the sub-recipient's qualifications were instrumental in helping the university obtain the award. The program compliance requirements and other terms and conditions of the prime award are passed down to these sub-recipients.

Contracted services agreements are prepared by the staff of the Purchasing Department within Business Services. All other sub-recipient agreements for externally funded projects are prepared by the staff of ORSP. For the remainder of this document, the term "sub-recipient" will be used to refer to non-vendor relationships only.

Obtaining Sponsor Approval of Sub-recipient Agreements

Sponsor approval is required prior to the preparation of a sub-recipient agreement. If the desired sub-recipients have been identified at the time of the application for external funding, the role and unique qualifications of the proposed sub-recipients should be described in the application narrative and the sub-recipients' budgets should be included in the proposal budget section. If the sub-recipient was not identified at the time of the initial application for funding, written approval must be obtained from the sponsor before entering into an agreement. A formal request must be prepared and approved by ORSP prior to submission to the sponsor. Once the sponsor has provided written approval, the sub-recipient agreement can be prepared.

Preparing Sub-recipient Agreements

The staff of the Office of Research and Sponsored Programs will prepare all sub-recipient agreements for externally funded projects. All negotiations concerning the terms of the agreement will be conducted by ORSP staff.

Sub-recipient Monitoring

Responsibility for monitoring of sub-recipient agreements is jointly held by ORSP and the Internal Audit Office. ORSP is responsible for sending the Audit Certification Form to all sub-recipients, collecting the completed forms and requested documentation and forwarding it to the Internal Audit Office for review, and for maintaining the official files of sub-recipient audit forms and documentation. The Internal Audit Office is responsible for reviewing the completed forms and back-up documentation, notifying ORSP if they discover significant audit issues that impact the sub-recipient agreement, and contacting the sub-recipient to resolve areas of concern that need to be addressed. Failure of a sub-recipient to provide the requested documentation and/or to address any concerns raised by review of the submitted materials will be grounds for withholding payment or terminating the agreement.