Principal Investigators seeking collaboration with external partners for their research can establish subawards. These outgoing subaward agreements are supported by DCG’s Subcontract Team. This process is initiated when USC secures a sponsored research agreement, and a significant portion of the research will be conducted independently by another institution or organization. Below are some common questions that will help you determine if a subaward is the appropriate mechanism and provide guidance on how to work with DCG to establish an outgoing subaward agreement.
Subaward forms:
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 carry out a 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 vendor contract, USC will be purchasing goods or services. Typically, vendors 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 vendors do not exceed fair market value.
A vendor contract 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.
Once USC receives a fully executed prime award, the departmental administrator or Principal Investigator can request a new subaward by initiating a Supplier Contract (“New” or in the case of Amendments, “Mods”) in Workday (“SCON”). Please reference the Workday Quick Guide for assistance with this process. Workday can be accessed here.
Note: The Department of Contracts and Grants (DCG) only uses the information provided in the “Contract Overview” section of Workday to guide and issue new subawards. DCG does not review any portion of the Workday SCON request outside of the information in the “Contract Overview” and “Attachments” sections.
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
- Sponsor Award Number (Not the AWD# or GR#)
- Subcontractor Principal Investigator
- Title of the Subcontract
- Will there be Animal or Human Subjects?
- 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.”)
Amendments
Please include the below information in the “Contract Overview” section in Workday:
- Subcontract Number (The number assigned on the subcontract document (original SCON# or Req#).
- USC Principal Investigator
- USC Sponsor
- 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.”)
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 AMENDMENT TO THIS SUBCONTRACTOR.
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.
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.
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
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, a formal requisition should be entered in Workday. Upon receiving the requisition in Workday, the assigned DCG Subaward Officer will initiate their review and agreement with the subrecipient, consistent with University policies and procedures.
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 and complete information to draft and issue the new Subaward or amendment 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 before DCG issuance of the Subaward.
4. DCG will send the following documents to the Subrecipient for new Subawards:
- A new Subaward draft (for their review).
- A Subrecipient Certification Form if the following are applicable:
- There was no Certification form attached to the SCON.
- The Subrecipient is not in the FDP Expanded Clearinghouse.
- A request for current F&A Rate Agreement (unless noted on the Certification Form that the de minimis or lower is being applied).
- A request for a copy of their 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.
5. The subrecipient will need to return the completed documentation above before USC can finalize the Subaward agreement.
6. 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.
7. The DCG Subaward Officer will coordinate with the Subrecipient and the PI/Dept/School to negotiate and finalize the terms of the Subaward agreement.
8. 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.
Except if the awarding federal program is subject to a reduced F&A rate (e.g., statutory or regulatory F&A reduction or exception granted by the federal agency head), USC will honor the subrecipient’s approved indirect cost rate negotiated between the subrecipient and the federal government. If no such rate exists, USC will approve indirect costs at the de minimis rate of 10% Modified Total Direct Costs.
A subrecipient can voluntarily opt to forego F&A, but will need to document that they are choosing to forego their de minimus 10% F&A voluntarily.
The USC Principal Investigator is responsible for monitoring the programmatic and financial activities of their subrecipients in order to ensure proper stewardship of sponsor funds. This includes confirmation of receipt and review of all deliverables and approval of all invoices received from the Subrecipient. OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR §200) (“Uniform Guidance”), specifically sections §200.330 and §200.332, requires prime recipients of federal funds to monitor subawards and to ensure subrecipients meet the audit requirements and use funds in accordance with applicable laws, regulations and terms of the award.
This applies to all subawards issued under sponsored research awards without regard to the primary source of funding.
Principal Investigators have the primary responsibility for monitoring subrecipients’ technical and financial progress and ensuring compliance with Federal regulations and both prime and subrecipient award terms and conditions. This includes:
- Monitoring scientific progress and subrecipient’s adherence to terms.
- Verifying that cost sharing commitments are met.
- Verifying compliance approvals are current for subrecipient’s portion of statement of work (human subjects, animal subjects, biosafety).
- Approving invoices for payment.
Departmental Administrators assist Principal Investigators in their monitoring responsibilities, reviewing subrecipient invoices, identifying and following up on questionable expenditures and, if necessary, maintaining documentation of monitoring efforts.
Department of Contracts and Grants performs a risk analysis of the subrecipient prior to issuing a subaward. If a subrecipient is found to be medium-high risk based on their Single Audit or information submitted via their Subrecipient Certification form, the subaward may include additional terms such as:
- Corrective Action Plan.
- On-Site Monitoring.
- More Detailed Invoicing.
- Receipt of Technical Progress Reports Tied to Payments.
- More Stringent Termination Language for Failure to Comply with Requirements.
The frequency and scope of monitoring procedures should be consistent with the terms of the subaward. The PI and departmental administrators should use the following subrecipient monitoring procedures when appropriate:
- The PI should review technical performance reports or other specified deliverables on a timely basis. Any unforeseen issues should be documented, investigated, and resolved.
- The PI and departmental administrator(s) should perform an expense to budget comparison for cost-reimbursement subawards.
- The PI and departmental administrator(s) should review invoices and financial reports. When issuing payments on cost-reimbursement subawards, USC is expected to issue payment on allowable costs within 30 calendar days after receipt of the billing, unless USC reasonably believes the payment to be improper.
- PIs are required to document their review and approval of invoices. Such documentation may include, for example: PI initials or authorizing signature on invoices, email communications, notes of meetings with the department/school administrator(s), etc.
- Departmental administrators should request the subrecipient to provide clarification of invoiced charges that appear unusual, excessive, or otherwise questionable. If the subaward terms permit, departmental administrators may request detailed justification to verify the allowability of the cost. Examples of detailed justifications include:
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- Payroll records.
- Copies of paid invoices showing item cost if required.
- Descriptions of services rendered by consultants including hourly rates and time reports.
- Details of incurred travel charges stating the purpose of the travel.
- Records identifying any unallowable costs.
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- If the subaward terms permit, the PI and/or departmental administrators may conduct on-site visits and audits to evaluate compliance with the project’s scientific objectives, and the appropriateness of the subrecipient’ s administrative systems, processes and charges. PIs and departmental administrators should work with the Department of Contracts and Grants if on-site visits or audits are deemed necessary.
- Check that the invoice meets the invoicing requirements set forth in the subcontract. Requirements may address level of detail, frequency, formatting, certification and possibly additional requirements from the USC prime award.
- Invoices should not be approved if the cost claimed exceeds the amount of the subaward or the invoice dates are not consistent with the period of performance.
- If the subrecipient committed to cost share on the project, ensure that the invoice accounts for the cost sharing provided to-date and compare this amount to the subrecipients total cost sharing commitment.
- Invoices should be reviewed to ensure that invoiced costs are allowable, allocable and reasonable and are aligned with the programmatic work performed during the respective period.
- Question any costs that differ materially from the subrecipient’s approved budget or appear unusual or unallowable. Payment for the portion of the invoice that appears unusual or unallowable should be withheld until a satisfactory explanation is received and/or an appropriate review is performed to resolve the difference and/or the unallowable costs are removed or corrected.
Please note: Payments to subrecipients, under cost-reimbursement subawards, must be made within 30 calendar days after the receipt of the billing, unless the request is improper (i.e., costs appear to be unusual or unallowable).
If you have any questions or concerns about subrecipient invoicing, please promptly contact the DCG Officer assigned to your unit.
Payments to subrecipients, under cost-reimbursement subawards, must be made within 30 calendar days after the receipt of the billing, unless the request is improper (i.e., costs appear to be unusual or unallowable). Payments to subrecipients, under fixed-price subawards, should be made consistent with the terms of the subaward.
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 amendment 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 amendment to their Supplier Contract (SCON) request.
- Log into Workday and initiate an amended SCON.
- Complete all required fields and upload all appropriate documents.
- If there are changes to the Statement of Work, budget and/or budget justification, revised versions of the affected documents must be attached.
Note: The Department of Contracts and Grants (DCG) only uses the information provided in the “Contract Overview” section of Workday to guide and issue new subawards. DCG does not review any portion of the Workday SCON request outside of the information in the “Contract Overview” and “Attachments” sections.
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 (original SCON# or Req#).
- USC Principal Investigator
- USC Sponsor
- 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.”)
For Subawards where Carryforward is restricted you will need to issue any amendment as a new SCON and not an amended SCON.
The USC PI should contact the subrecipient 90 days prior to the end of the period of performance to confirm the status of the project. To successfully close out the subaward, the University PI must:
- Follow up on late or missing reports or deliverables, including final technical, invention and/or property reports.
- Obtain the final invoice – clearly marked “FINAL”.
- Send a copy of the approved final invoice to Accounts Payable for processing.
- Work with Workday to close out the SCON in the system.
(Please Note: Any outstanding issues with the subrecipient should be resolved prior to approving the final invoice for processing.)
A Letter of Commitment or 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. For subawards with PHS sponsors (e.g., NIH, SAMSHA, HRSA), the letter of commitment needs to state that the entity is either (1) Compliant with Federal Conflict of Interest (FCOI) requirements; or (2) Will comply with USC’s FCOI policies. This letter of commitment should be signed by the Subrecipient’s Authorized Official.
In the event the Subrecipient requests guidance on what to include, below is the template form that you can provide for the Subrecipient to complete and sign:
- Subrecipient Commitment Form for Subrecipients that are in the FDP expanded clearinghouse (click here).