Subaward Management

Choosing a Partner

What to look for in a partner?

• An organization (a university, other non-profits, or research entities) in good standing in country: performs due diligence through public searches, discrete reference checks, etc.
• Quality of previous relationships with the partner
• Not on the The Office of Foreign Assets Control (OFAC) list

Choose the partner that will take your concerns seriously even if issues are not highly scrutinized or priorities in their country.

Important issues to discuss and agree on with the local partner:

1. Clarity on deliverables: scope and accountability; timelines
2. Agreement on a reasonable budget: local hire rates; employment laws that would affect the budget; exchange rate standards
3. Address intellectual property
4. Review export/import rules
5. Safety and security: safeguard and protections for faculty and students, proper insurance, currency management
6. PI relationship with partner: work with the PI to understand the concerns and assist University in negotiations when needed, and on the following three issues:
7. Understanding the decision making process
8. Agree on dispute resolution process
9. Agree on and understand exit strategy

Assessing Risk

Subrecipient Questionnaire is a tool developed to collect information on the foreign subrecipients.

Federal Demonstration Partnership has developed international Subawardee Template Agreements that institutions can use or adapt to fit their institution's policies and in accordance with the needs and location of the research project.  The questionnaires look for the following issues/risks:

• Registration in CCR/SAM
• COI
• A-133 Compliance
• Financial:
  • Management
  • Cost accounting system
  • T&E Reporting
  • Cost and Asset Control
• Written Policies
• Property Inventory
• Annual audits/statements
• Budget to actuals control
• Documentation of expenses
• Account reconciliation
• Cost Transfers
• Cost Sharing
• Time from cash to expense
• OFAC scanning and review

Additional risks:

• IRB training and conduct
• IACUC
• Financial Conflict Of Interest (disclosure, determination, and reporting)
• Conflict Of Commitment and time reporting
• Use of UC name
• Audits and Cost Controls
• Responsible Conduct of Research Training
• Export Controls (negotiations, due diligence, licenses)

Choosing the Right Agreement

Subaward, Subagreement, Subawardee?

Subaward: A subaward is a document written under the authority of and consistent with the terms and conditions of a prime award (cooperative agreement, grant, or contract) that transfers a portion of the resources to another entity for the purpose of supporting and implementing specific activities.

Subagreement addresses flow-down of original, prime, award agreement terms from the prime institution that has entered into a Cooperative Agreement with a funding agency.

Subrecipient or Subawardee are terms that are interchangeable and represent a legal entity to which a subaward is made. The subrecipient and/or subawardee is accountable to the recipient of USG funding or the prime.
 

Our campuses have developed useful material to help with the subaward management process:

UCSF: Outgoing Subaward Process and Monitoring.  Also, contact UCSF Global Health Sciences and their Global Programs Office for a copy of their GSI Guidelines for Subaward Management, developed for their CDC HIV/AIDS subaward process.

Grant Subcontract or Subaward

A grant or an award subcontract engages a subrecipient (third-party organization) to perform a portion of a sponsored project. UC may be the primary recipient overseeing the subrecipient, or UC may be a subrecipient on a grant issued to another organization.

This type of contract is often used by UC to delegate in-country management to an organization with local knowledge or infrastructure in that country. In some cases, overseas grantors may find it advantageous to award a grant to a local organization but make UC a subrecipient for those portions of the grant that require specialized knowledge.

Flow-down of Prime Sponsor Terms for Subawards

Be aware that many prime sponsor terms, including terms from federal sponsors most often  flow down to foreign subawardees. For example, foreign subcontracts under NIH grants must adhere to the public policy requirements in the NIH Grants Policy Statement. In addition, they must have assurances filed with NIH that cover the activities that relate to the project. These requirements must be part of the formal written subcontract agreement with the grantee and include:

• Human subjects
• Research misconduct
• Research involving vertebrate animals
• Inclusiveness in research design
• Non-delinquency for any federal debts
• Restrictions on lobbying
• Drug-free workplace
• Financial conflict of interest
• Debarment and suspension—applies to all subgrantees except foreign government or public international organizations.

Note that these federal “flowdown” obligations may be novel to foreign entities, and it is the prime grantee’s obligation to work with legal counsel to carefully draft a subaward agreement and to engage in subrecipient monitoring.

Subaward Contracting

Please visit Contracting for more information.

Subaward Accounting

Banking

Wire transfer fees are an allowable direct expense, but should be budgeted in the subaward contract.

Note that some foreign institutions can not receive funds from US Sources. Department of Treasury keeps a list of those sanctioned institutions. Also, contact the UC Campus Offices of Contracts and Grants to run a list for sanctioned individuals: this is a prudent measure to take when contracting foreign nationals.

Exchange Rates

The currency exchange rates will vary over the project lifecycle, from the proposal to when the funds are transferred, drawn and spent, and when the financial reports are prepared and submitted. As a result of these fluctuations, the awardee and subawardee may end up with less (or more) foreign currency than originally anticipated. Federal awards typically will not allow for direct charging of currency losses to the awards, currency hedging cost items, or currency exchange cost reserves without prior approval and it is subject to the availability of funding. Approval of the exchange rate fluctuations is required only when it would result in significantly reduced scope of the project, but note that it will always remain up to the sponsor to decide if augmenting the award for this purpose is possible. To determine the best accounting method to track and change gains and losses due to the foreign exchange, work with your Campus Controller’s Office who are responsible for releasing funds to subawards.  Note that the mechanisms to pay for goods and services have to be verifiable: you will need invoices, and the subaward must be audited annually by an outside accounting firm. Determine if the audit can be paid with F&A (indirect) funds.

Cash Funds

Keeping a pile of money to pay people is considered non-standard accounting practices. It is very important that the payment mechanism be auditable. Campus Controller Offices provide mandatory online training for UC personnel handling cash:

• UCB
• UCD
• UCM
• UCLA  Policy
• UCSB
• UCSC
• UCSD
• UCSF
• UCOP Policy

Paying Human Subjects

Reimbursement to research participants is subject to IRB requirements and the regulations of the host country. The payment to a subject cannot be deemed enticing, or sway their decision to participate, merely redeem the inconvenience of participation. That means that local conditions will determine what is appropriate. The best course of action will be to work with the local IRB to determine what is customary locally.

Assets Custodian

If the original funding source is set up as a subaward, you avoid the complications of capital assets controls. If you have UC owned property abroad, you will have to account for it annually in an inventory: for details work with your campus Controller's Office.

Personnel

There are many issues that arise with staffing a project. Much will depend on who you are partnered with, and what your legal status is within your host country.

Depending on your funding, you may be a business, in which case all the necessities of business ownership apply, including licensing requirements, staffing (laws and benefits) and business insurance. Alternatively, if your funding is dispersed through a UC campus, your staff may be entitled to University protections, including health insurance and pensions. Currently most programs are paying field employees through the mechanisms of their partner institutions. Some ongoing problems which affect international projects are delays in subaward disbursements and fund transfers.

Subaward Monitoring

When a subagreement is issued under a federally funded grant or contract, the prime recipient of those funds is still accountable to the funding agency for how the project is managed. It is important to communicate this to the subawardee, as monitoring of the grant activities is an involved process and a part of the prime awardee obligation. It is best to develop a sub-recipient monitoring plan that would:

• Ensure that funding is used only for authorized purposes
• Be in compliance with applicable statutes, regulations, and policies
• Help achieve performance goals

Monitoring activities should include:

• Review of financial and programmatic reports
• Monthly review of invoices (prior to payment)
• Request back-up documentation

For larger subawards it is important to budget and plan for the external audit, and for annual on-site visits to:

• Review financial and programmatic records
• Observe operations
• Research administration capacity building activities

Be prepared in advance to address these most frequent international subaward monitoring challenges:

• Subaward advance payment tracking
• Currency conversion, calculation, and documentation
• Timesheet and effort reporting
• HR, finance, and procurement policies
• VAT reporting for federally-funded projects

Best practices include:

• Stay abreast with changes in laws and regulations of the countries we are working in
• Partner with central campus services and seek support from other campuses and UCOP (use systemwide listservs)
• Partner with the funder
• Budget for your monitoring activities and expenses
• Close collaboration with the subawardee also builds capacity of your foreign partner to manage international (US government) research awards, and can result in a long, trusted partnership with the subawardee.