USC Department of Contracts and Grants

Outgoing Subawards

Outgoing subawards are appropriate when another institution is independently performing a significant portion of the awarded scope of work. Principal Investigators can establish subawards to collaborate with external partner institutions on research projects. DCG’s Subcontract Team supports the review, drafting, negotiation and execution of outgoing subaward agreements. Below is guidance on determining if a subaward is appropriate, how to establish and amend subaward agreements, and PI requirements for monitoring subrecipients.

Subawards transfer a portion of the programmatic work under a USC prime award to another institution or organization, a subrecipient. To qualify as a subaward, the subrecipient must have responsibility for programmatic decision making and measurable performance requirements related directly to the USC prime award. A subaward is written under the authority of the USC prime award and is consistent with the USC prime award’s terms and conditions (a grant, contract or cooperative agreement).

A subaward must include a clearly defined, intellectually significant Statement of Work (SOW) to be performed by the subrecipient. The subrecipient’s SOW is performed by its personnel, using its own facilities and resources and usually at the subrecipient’s site.

The subrecipient is responsible for adhering to the terms and conditions of the subaward, including those flowed down from the prime award.  By doing so, the subrecipient is assuming creative and intellectual responsibility and leadership as well as financial management for performing and fulfilling its SOW within their approved budget.

A subrecipient is a non-USC entity that expends awards received from USC to independently carry out a significant portion of USC’s programmatic effort under a sponsored project. The subrecipient may be another educational institution, an independent laboratory, a foundation, a for-profit corporation, a non-profit corporation or other organization, and may be a domestic or foreign entity.  Generally, USC does not issue subawards to individuals.  A subrecipient can also be referred to as a subcontractor or subawardee.

Before entering into a relationship with another entity under a sponsored award in which the other entity will provide goods or services or substantive, programmatic work to USC, a determination must be made as to the nature of the legal relationship between USC and the other entity, which in turn will determine the type of agreement required to document the relationship.  This is a significant decision because it determines the allocation of responsibilities and influences the appropriate application of indirect cost rates.

In the case of a subaward, it is incumbent upon USC to ensure that a subrecipient conducts its portion of the programmatic work in compliance with all applicable terms and conditions of the sponsored award and project costs incurred by a subrecipient are reasonable and allowable.   

A subaward is likely appropriate under the following circumstances:

  • The entity performing the statement of work will use its own facilities, employees and resources.

  • The entity performing the statement of work will contribute substantively to the scholarly and scientific conduct of the project and will have responsibility for programmatic decision making.

  • Performance is measured against whether the objectives of the sponsored program are met (e.g. technical progress or final reports).

  • The entity performing the statement of work will provide unique knowledge and expertise to the project and conduct their work independent of USC’s direct supervision or control with only general technical direction and coordination from USC.

  • The entity does not provide the same goods and services as identified in the statement of work to others as part of its normal business operations.

In the case of a contractor or vendor, USC will be purchasing goods or services.  Typically, contractors are not bound to the full set of sponsor terms and conditions, and are subject to competitive bidding procurement practices, to assure that funds paid to contractors or vendors do not exceed fair market value.  

A contractor is likely appropriate under the following circumstances:

  • The entity is providing the same goods or services to USC as it provides to others as part of its normal business operations.

  • The entity provides similar goods or services to many different customers.

  • The entity operates in a competitive environment to provide the types of goods or services to be procured.

  • The goods or services being provided are ancillary to the operation of the sponsored program.

  • The entity is not subject to the compliance of the sponsored program terms and conditions.

Subawards transfer a portion of the programmatic work under to another institution or organization, a subrecipient. To qualify as a subaward, the subrecipient must have responsibility for programmatic decision making and measurable performance requirements related directly to the USC prime award. 

When USC submits a proposal with subawards, we are submitting scopes and budgets on behalf of another institution and USC must ensure that the authorized representative of the Subawardee Institution has approved the submission and the submission is consistent with sponsor guidelines.  In order to ensure this, a Subaward Proposal Package is required for each named subawardee prior to submission of the Proposal.

A Subaward Proposal Package consists, at a minimum, of the below listed documents:

  • Subaward Scope of Work (specific to the work being performed by the subrecipient).

  • Subaward Budget

  • Subaward Budget Justification

  • Subawardee Letter of Commitment: This can consist of a letter or signed document from the subawardee institution signed by an authorized official of the subrecipient approving/endorsing the proposal or a complete and signed Subrecipient Certification Form signed by the authorized official of the subawardee institution. Please Note: If prime sponsor is NIH and the subaward is international then either a Subrecipient Certification Form or a letter of commitment containing a statement as specified in  NOT-OD-23-182.

  • FCOI Confirmation(if PHS funding). This can be located on the FDP FCOI Clearinghouse or confirmed in the letter of commitment or can be confirmed in a letter of intent or on Subrecipient Certification Form

  • Any other documents required by the Solicitation from the Subawardee at Proposal Stage

It is critical to check and ensure that the F&A rate budgeted for Subawardees at proposal stage is correct as this can lead to delays later on in the process.  Except if the Sponsor is subject to a reduced F&A rate, USC will honor the subrecipient’s approved indirect cost rate negotiated between the subrecipient and the federal government. A federally negotiated rate agreement will be required at subaward stage to verify the accuracy of the rate.  If no such rate exists, USC will approve indirect costs at the de minimis rate of 10% Modified Total Direct Costs for US institutions and 8% for International Institutions.

A subrecipient can voluntarily opt to forego F&A, but will need to document that they are choosing to forego their F&A voluntarily.

No.  A subaward will not be issued prior to USC’s acceptance of an award from the prime sponsor. The University may not authorize a subrecipient to begin working without a fully executed subaward in place. Proposed subrecipients who commence work without a fully executed subaward do so at their own risk or at the risk of the school who authorized work to commence and have no assurance of payment from the Prime Award.

Prior to proposal submission with NIH funding, subawardees must fulfill several requirements. Firstly, they must confirm compliance with Financial Conflict of Interest (FCOI) regulations, ensuring transparency and integrity in research conduct. Additionally, for international subawardees, confirmation of compliance with NIH guidance NOT-OD-23-182 is necessary,

The HHS regulation 42 CFR Part 50 Subpart F, Promoting Objectivity in Research (FCOI regulation), establishes standards that provide a reasonable expectation that the design, conduct, or reporting of NIH-funded research (grants and cooperative agreements) will be free from bias resulting from any Investigator’s conflicting financial interest. NIH requires recipient institutions and their investigators to fully comply with all FCOI requirements. If the Institution carries out the NIH-funded research through a subrecipient, the Institution must take reasonable steps to ensure that any subrecipient Investigator complies with FCOI requirements.

In order to ensure compliance please provide one of the following as part of your Subaward Package to confirm Subawardee Compliance

  • Letter of Commitment stating that the entity is FCOI compliant signed by an authorized rep of the Sub institution.

  • Screen Shot of the institution in the FDP FCOI Clearinghouse

  • Completed Subaward Certification Form signed by an authorized rep of the Sub institution.

For more information about this policy, please feel free to review:

The National Institutes of Health (NIH) have begun to implement new requirements for outgoing subawards, effective January 1st, as set forth in NOT-OD-23-182. The new policy requires that foreign subrecipients clearly commit (at time of proposal) to abide by all requirements set forth in the solicitation, including but not limited to, the requirement to provide the USC PI access to copies of all lab notebooks, all data, and all documentation that supports the research outcomes as described in the progress report, in alignment with the timing requirements for Research Performance Progress Report submission (but not less frequently than annually).  In order to ensure compliance, PI’s and Research Administrators will need to take the following actions for any foreign subawards under NIH funding:

At Proposal Stage:

  • A letter of commitment and/or a signed Subaward Certification Form signed by an authorized representative of the Subrecipient institution is required at the time of proposal for all named subrecipients. The Subaward Certification Form has been updated to collect the appropriate assurances in order to comply with the new NIH policy. For all Letters of Commitment provided by foreign subrecipients, please ensure that a statement including the following is included in order to ensure compliance with the new NIH policy.

    “Subrecipient has carefully reviewed the requirements set forth in the solicitation and is aware of these requirements and is willing to abide by all requirements, should an award be issued. The Subrecipient understands that they shall be expected, not less frequently than once per year and/or upon request of the PTE or Prime Sponsor to provide access to copies of all lab notebooks, all data, and all documentation that supports the research outcomes as described in the progress report to the primary recipient, in alignment with the timing requirements for Research Performance Progress Report submission but with a frequency of no less than once per year.”

Once an award or modification has been fully executed by DCG and is active in USC’s systems, the PI/Department Administrators can initiate the request for DCG to issue a new subaward or subaward modification, as appropriate. Please ensuring that all sponsor approvals required for issuing the subaward or subaward modification are secured before making the request to DCG.  Should prior approval be needed please consult with your DCG Officer.  Making this request promptly is also essential to minimize any delay in the subawardee’s ability to commence their work effectively.

Once a fully executed prime award is established in USC’s systems, the departmental administrator or Principal Investigator can request a new subaward by initiating a Supplier Contract (“New” or in the case of Modifications, “Mods”) in Workday (“SCON”). Please reference the Workday Quick Guide for assistance with this process. Workday can be accessed here.

The Department of Contracts and Grants (DCG) uses the information provided in the “Contract Overview” section of Workday to guide and issue new subawards and modifications. DCG’s review in Workday consists only of the information in the “Contract Overview” and “Attachments” sections.  Once the SCON is complete in USC Workday and all school required approvals are in place, it will route to a DCG Subaward Officer who will ensure that the subaward is put in place and assist you with any questions you might have regarding the terms of your subaward agreement.

Please ensure that the below information is included in the “Contract Overview” section:

New Subawards 

Please include the below information in the “Contract Overview” section in Workday:

  • USC Principal Investigator
  • USC Sponsor
  • Prime Sponsor Award Number (Not the AWD# or GR#)
  • Subcontractor Principal Investigator
  • Title of the Subcontract
  • Will there be Animal or Human Subjects at the Subaward site?
  • Subcontractor Contact Information
  • Description of Action (Ex: “We are funding Year 1 of 5. Year 1 funding will be $30,000, and total anticipated funding is $150,000. The Year 1 period of performance is 7/1/2021-6/30/2022.”)

Please include the following attachments in Workday:

  • Subrecipient specific scope of work
  • Subrecipient budget and budget justification (Cost Reimbursable Subs) or a payment schedule (Fixed-Price Subs)

Modifications

Please include the below information in the “Contract Overview” section in Workday:

  • Subcontract Number (The number assigned on the subcontract document (original SCON#).
  • USC Principal Investigator
  • USC Sponsor
  • Prime Sponsor Award Number (Not the AWD# or GR#)
  • Will there be Animal or Human Subjects?
  • Description of Action – (Ex: “We are adding $10,000 and extending the end date to 8/31/2021. We are also adding the attached supplemental SOW and budget.”)

Please include the following attachments in Workday as applicable to the modification:

  • Modified Scope of Work
  • Modified Budget & Budget Justification
  • Modified Payment Schedule

Administrative/Internal Corrections

Please include the below information in the “Contract Overview” section:

“THIS WORKDAY ACTION IS TO CORRECT A USC INTERNAL WORKDAY ISSUE. PLEASE DO NOT ISSUE ANY CONTRACT OR MODIFICATION TO THIS SUBCONTRACTOR.”

1. The SCON will first route through school and Workday approvals and then will route to DCG.

2. The DCG Subaward Officer assigned to your department will retrieve the SCON and assign it to themselves in the Workday system.

3. The DCG Subaward Officer will review the information in the “Contracts Overview” and the “Attachments” section of the SCON to determine that we have the appropriate sponsor approvals and complete information to draft and issue the new Subaward or modification to the subrecipient. 

If information is missing, the DCG Subaward Officer will reach out to the initiator and requests corrections and/or additional information. This will need to be completed prior to DCG issuance of the Subaward.

4. DCG will collect the following documentation from the Subrecipient for new Subawards:

  • A new Subaward draft (for their review).

  • A Subrecipient Certification Form (for Subawardees not in the FDP Expanded Clearinghouse) A current F&A Rate Agreement (unless noted on the Certification Form that the de minimis or lower is being applied).

  • A current Single Audit Report or a completed Audit Certification and Financial Analysis Questionnaire.

  • Applicable Compliance Approvals (e.g., IRB, IACUC).

  • Other Applicable Documentations to Comply with USC Prime Award Requirements.

  • DCG will perform a subrecipient risk analysis based on the subrecipient’s responses in the Subrecipient Certification Form, and associated attachments. If a subrecipient is determined to be medium or high risk, departmental notification will be required to proceed with the subaward. DCG will also suggest special subaward terms to help mitigate potential risk for the Department/PI’s consideration.

5. The DCG Subaward Officer will coordinate with the Subrecipient and the PI/Dept/School to negotiate and finalize the terms of the Subaward agreement.

6. Upon receiving the partially executed subaward agreement, DCG will sign the agreement, return a fully executed copy to the subrecipient, and approve the SCON in Workday.

You should modify an existing Subaward when there are:

  • Changes to Statement of Work.

  • Changes to the Awarded Budget (e.g. an increase or reduction).

  • Budget reallocations that require a formal modification to the subaward.

  • Modification of any terms and conditions, including the addition of special terms and conditions, reporting requirements, etc.

  • Changes to the Period of Performance, including no cost time extensions.

  • Early termination (advance written notice of termination is typically required).

To initiate a subaward modification, the PI or departmental administrator must submit an modification modification to their Supplier Contract (SCON) request.

1. Log into Workday and initiate an modification to your existing SCON. Please note: if carryforward is restricted then you will need to issue a new SCON for each year in order to issue the next year of funding..

2. Complete the “Contracts Overview” and the “Attachments” section of the SCON. DCG will use information in those sections to determine that we have the appropriate sponsor approvals and complete information to draft and issue the modification to the subrecipient. 

If information is missing, the DCG Subaward Officer will reach out to the initiator and requests corrections and/or additional information. This will need to be completed prior to DCG issuance of the Modification. 

Please ensure that the below information is included in the “Contract Overview” section or the SCON:

  • Subcontract Number (The number assigned on the subcontract document).

  • USC Principal Investigator

  • USC Sponsor

  • Prime Sponsor Award Number (Not the AWD# or GR#)

  • Will there be Animal or Human Subjects at the Subaward site.?

  • Description of Action – (Ex: “We are adding $10,000 and extending the end date to 8/31/2021. We are also adding the attached supplemental SOW and budget.”)

3. If there are changes to the Statement of Work, budget and/or budget justification, revised versions of the affected documents should be attached.

If a Principal Investigator would like change subcontractors or add subcontractors that were not originally anticipated as part of a proposal, USC will generally need to obtain prior approval from its sponsor.  To initiate the request, the departmental administrator or Principal Investigator should contact the DCG Officer assigned to their unit and provide:

  • Statement of Work

  • Budget & Budget Justification

  • Subrecipient Letter of Commitment with all required certifications or Subaward Certification Form

The DCG Officer will use the above documentation to seek prior approval to issue the subaward from the sponsor.  Upon receipt of the sponsor’s approval, you can proceed to submit the Supplier Contract in Workday. Upon receiving the Supplier Contract in Workday, the assigned DCG Subaward Officer will initiate their review and agreement with the subrecipient, consistent with University policies and procedures.

Before executing a subcontract agreement, DCG performs several key checks to ensure compliance and proper stewardship of sponsor funds. This thorough review process helps ensure that all compliance requirements are met and that the subrecipient will responsibly manage the sponsor funding:

  • Allowability: Verifies that issuing the subcontract is allowable under the terms of the prime agreement.
  • Consistency: Confirms that the proposed scope of work for the subrecipient aligns with the definition of a subcontract as outlined in 2CFR200.331.
  • Compliance: Reviews the Subaward Certification Form or Federal Demonstration Partnership Expanded Clearinghouse Profile, Subrecipient’s Single Audit or Audit Certification and Financial Status Questionnaire, Federally Negotiated Rate Agreement (if available), Fair and Reasonable Cost Analysis form (as applicable), IRB / IACUC approvals and any other documents required to meets all Prime sponsor requirements. This includes annual checks for any updates to these documents to address potential issues.
  • Risk Assessment: Conducts a risk assessment of the subrecipient and advises the Principal Investigator or School on any additional terms or oversight needed to manage potential risks effectively.

How to ensure appropriate monitoring of outgoing subcontracts?

The Principal Investigator (PI), plays a crucial role in managing and overseeing outbound subcontracts to ensure compliance and successful project outcomes. The diligent oversight by the PI and department administrators is essential for the successful execution of project goals and the integrity of the research process.

PI responsibilities include:

  • Approval and Documentation: Ensure you have Sponsor approval prior to requesting a subcontract be issued and if not work with your DCG Officer to get approval prior to placing a request in Workday. Also ensure all information in workday including subcontractor scopes of works and budgets, requested time period and funding levels are correct according to institutional policies and funding agency requirements.
  • Monitoring Performance: Regularly monitor subcontractor performance to ensure that deliverables and milestones are met in accordance with the project’s scope and schedule.
  • Budget Management: Carefully review subcontractor invoices and deliverables to oversee budgets and expenditures, ensuring they align with the approved project budget and addressing any issues promptly.
  • Compliance Assurance: Ensure subcontractors comply with all relevant regulations, including those related to ethics, safety, and reporting requirements.
  • Communication: Maintain clear and consistent communication with subcontractors to facilitate problem-solving and provide guidance as needed and your Subcontract Officers at DCG should any revisions or concerns arise where their assistance and guidance is needed.

The sections below provide your DCG contacts on the Outgoing Subcontract team. Additionally, a helpful tool is included to provide the USC party to contact based on specific outgoing subaward questions.

UPC and HSC

Alzheimer’s Therapeutic Research Institute (ATRI)

Do you have questions about outgoing subawards? Not sure who to ask for help? Our team is here to make things clear and help you with any questions you have about sending out subawards. 

Click here to download our grid outlining prevalent issues you may encounter, along with the designated contacts who can assist.  

In order to collect necessary information to ensure compliance with sponsor requirements and assess the risk posed by the outgoing subcontractor DCG has developed the below forms:

  • Subaward Commitment Form – A Subrecipient Commitment Form is required for all Subrecipients at time of proposal. The document must clearly indicate that the Subrecipient is committed to participating and will comply with the prime sponsor terms and conditions if awarded. Depending on the sponsor requirements different requirements and certifications need to be secured at proposal stage.  The Subrecipient Commitment Form will ensure that all certifications necessary are in place at time of proposal.

  • Audit Certification and Financial Status Questionnaire – This form is required for outgoing subawards who are exempt from the single audit requirement to assesses the financial health and compliance of potential subrecipients to ensure they meet necessary audit and certification standards.

  • Fair and Reasonable Cost Analysis – This form should be completed and signed by the PI for outgoing subawards to for-profit entities to ensures that the costs proposed by industry subrecipients are fair and reasonable and any conflicts of interest are identified.

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