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Subawards and Subcontracts

There are a number of shared responsibilities and issues associated with management and monitoring of subawards/subcontracts.  Research Services, Research Accounting, and the PI are jointly responsible for regular monitoring of subawards throughout the life of an award to ensure performance goals are met and federal funds are spent in compliance with applicable laws, regulations and provisions.  The university serves as the pass-through entity (PTU) for all subawards.

Funds Setup

Once the subward/subcontract has been initiated, the PI should work with the assigned Research Accountant to encumber funds for the subaward/subcontract and obtain a Purchase Order for future payment to the subawardee.

Monitoring Activities

After a subaward has been fully executed, monitoring activities begin.  

Research Services, Research Accounting, and the PI are jointly responsible for regular monitoring of the subaward throughout the life of the award. The purpose of monitoring is to 1) ensure federal funds are spent in compliance with the applicable laws, regulations and provisions, and 2) ensure performance goals are met.

The active amount of monitoring will vary depending of the level of risk identified.  Although specific monitoring activities may be assigned on a case-by-case basis (as described above), in general, the following monitoring activities will be performed:

Low Risk

Review audit reports on an annual basis to determine significance of audit findings and whether they pose an increased risk to the subrecipient’s ability to maintain compliance and meet their responsibilities as defined in the Statement of Work.

Review the subrecipient’s invoices to ensure that:

  • Work is performed within the project period (and any applicable budget periods);
  • Invoices are complete and accurate;
  • Expenditures are allowable per subaward’s budget; and
  • PI has approved as acceptable for payment.

Moderate Risk

Perform all review steps as listed in the “Low Risk” category in addition to the following:

  • Request expenditure detail as supporting documentation for invoices on a monthly or quarterly basis;
  • Evaluate documentation received for sufficiency; and/or
  • Request and review financial reports more frequently, if deemed necessary.

High Risk

Perform all review steps as listed in the “Low Risk” and “Moderate Risk” categories in addition to the following:

  • Request expenditure detail as supporting documentation for all invoices;
  • Maintain regular contact with subrecipient’s PI to ensure subrecipient is meeting programmatic expectations.  Document communication in Subaward files;
  • Exercise the option to audit or consider performing a site visit or desk review; and/or
  • Withhold payments to Subrecipient if deemed necessary.

Performance/Progress Reports

When reviewing performance/progress reports, the PI should:

  • Ensure progress reports are received based on the terms and conditions of the subaward.
  • Verify that the work conducted and results provided are in line with the proposed scope of work.
  • Review progress reports (may include a detailed budget for the next budget period, updated key personnel) as well as IRB or IACUC approvals, if applicable.
  • Ensure changes or updates are addressed, as required.
  • Communicate with the subrecipient if there are concerns or questions with regard to the reports provided.

Invoices

Subrecipients should submit their invoices in a timely manner, consistent with the terms of the subaward for review and processing.

The subrecipient’s invoices should include:

  • Subrecipient name and subaward ID number;
  • Purchase Order number, if available;
  • Total amount of subaward is listed and accurate;
  • Current and cumulative expenditures are in accordance with the approved budget, including breakdown of costs by major categories;
  • Time periods of invoices coincide with the previous invoices (they generally should not overlap, have gaps in time or exceed the project end dates);
  • Cumulative expenditures of invoices coincide with the previous invoices (the cumulative expenditures of the previous invoice plus the current period expenditures of the current invoice should match with the cumulative expenditures of the current invoice)
  • Invoice includes the following certification, if applicable, signed by an official, as required by 2 CFR 200.415(a): “By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).”
  • F&A rates are calculated correctly and are the approved rates;
  • Cost sharing and match commitments are documented on the invoices.

Modification and Continuation

The process for modification or continuation of an existing subaward is outlined below and starts by contacting your grant coordinator. 

  • Modification requests to existing subawards must be directed to the grant coordinator.
  • The grant coordinator reviews the requested modification.  Some modifications may require prior approval by the sponsor.
  • The grant coordinator drafts the subaward agreement or amendment using the appropriate FDP template.  The draft agreement or amendment is reviewed by Research Services and by the PI as applicable.  Once all parties approve, the draft agreement or amendment is sent to the subrecipient for review and signature by an Authorized Official Representative.  Upon receipt, review and approval of returned subaward agreement or amendment, the Authorized Official Representative signs, constituting full execution of the agreement or amendment.  Copies of the fully executed agreement or amendment are then provided electronically to the subrecipient institution.

Corrective Action

Subrecipients are subject to periodic reviews in the forms of audits and monitoring to assure compliance with all applicable requirements. Such reviews may result in the identification of “Findings of Non-Compliance.”

“Findings of Non-Compliance” may originate from single audit reports, desk or field compliance reviews. Findings represent operational deficiencies or errors, material program weaknesses or unacceptable program liabilities that may result in questioned sponsored program costs or, collectively characterize a significant risk to program integrity.

The Subrecipient Corrective Action Plan (CAP) provides instructions to the subrecipient regarding requirements for corrective action(s) relative to reviewed “Findings.” Whenever a finding is issued, the Subrecipient is required to formally respond and demonstrate that the subrecipient proposed and/or completed corrective actions.  By answering such questions, the subrecipient develops a plan that provides detailed information for the activities either completed or planned to address the issue(s) referenced in the finding.

For Non-Compliance findings that have not been resolved, laws and regulations permit the PTE and the subrecipient to enter into a formal compliance agreement that is represented by the subrecipient’s Corrective Action Plan (CAP).  An approved CAP allows the PTE to suspend enforcement actions, pending resolution of outstanding findings. The PTE is obligated to resume enforcement actions if the subrecipient does not resolve the Non-Compliance findings before the end of the CAP.

In order to determine if the subrecipient’s CAP is sufficient, the CAP must:

  • Identify the original finding(s) of Non-Compliance, including specific identifiers listed in the report (e.g., Finding #1) and the terms of non-compliance.
  • Identify the subrecipient staff responsible for corrective action, including title and complete contact information.
  • Describe the specific corrective action taken (or to be taken) for each Finding.
  • Show the planned completion date for each major activity.
  • Include documentary evidence to verify compliance of findings that have been resolved.
  • Include the signature of an authorized official of the subrecipient.

When the CAP is received, the PTE will determine whether the plan reasonably and sufficiently addresses the Non-Compliance findings. The PTE will notify the subrecipient if the CAP is approved, or, if further information or documentation is required.

For each Finding where the subrecipient has proposed planned activities, resubmission of the CAP prior to the end date may be required, indicating that planned activities have been completed along with certification that the subrecipient is now compliant, along with the applicable date(s) and documentary evidence to verify compliance.

Non-Compliance Remedies

If the Subrecipient fails to comply with the subaward’s Terms and Conditions including reporting and invoicing requirements, or does not fulfill its Corrective Action Plan, the PTE may impose sanctions upon the Subrecipient including, but not limited to, withholding of payment, suspending or terminating the subaward, or other remedies legally available (2 CFR §200.331(h)).

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.

Last updated: 6/29/2021

Georgia Southern University Research Services

Office of Research • P.O. Box 8005, Statesboro, GA 30460-8005 • 912-478-5465 • research@georgiasouthern.edu