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Subaward/Subcontract Closeout Considerations

Early Termination

Early termination of a subaward agreement may occur for a number of reasons.  Reasons for early termination include, but are not limited to:

  • Failure of the subrecipient to perform,
  • Subrecipient’s PI becomes unable or unwilling to continue,
  • PI transfers to another institution,
  • Subrecipient’s PI transfers to another institution,
  • Termination by the project’s prime sponsor.

If the PI decides that the subaward agreement will not be renewed or needs to be terminated, the PI will notify Research Services of this determination. Research Services will review the Terms and Conditions set forth regarding the termination of the subaward agreement and make a determination if an amendment needs to be completed to shorten the project period or to reduce the project funding for the subaward agreement.

With regard to failure to perform, the PI and Research Services should retain documentation supporting the lack of performance by the subrecipient (for example, by not approving invoices because of inadequate progress) and communications with and efforts to correct the situation.

If the prime sponsor terminates the project, the PTE should represent the subrecipient’s interests towards a fair and orderly closeout and settlement. The subaward agreement provisions will typically allow for payment of all non-cancelable costs, if applicable, prior to the date of termination. In early termination situations, the prime sponsor usually still requires the submission of all reports. Therefore, closeout procedures will be very similar, if not identical, to the procedures followed if the project had continued to the projected subaward end date.

Subaward Closeout

Due to the strict enforcement of the 90-day award closeout deadline (2 CFR §200.343), the subrecipient’s final invoice must be received by the due date, according to the Terms and Conditions of the subaward agreement.  Therefore, the PI may want to remind the subrecipient to submit the final invoice marked “FINAL” by the due date.

When the final invoice is received, the PI must certify that all technical reports andor deliverables have been received and that the subrecipient has fulfilled its obligations.

A subaward is generally considered closed when all deliverables have been met and the final payment has been made.

All files related to the subrecipient’s performance and administrative and financial management of the subaward must be retained for a minimum of three (3) years after submission of the final financial report to the prime sponsor.

Last updated: 4/27/2021