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OSP Main > Policies > Subaward Procedures


Subaward Procedures

Introduction

The purpose of this document is to assist university faculty and staff in the preparation and administration of subaward agreements issued under sponsored agreements.

If you need assistance with an outbound subaward (i.e., a portion of the work related to your sponsored project is to be performed by another entity), please contact cu_subawds@cornell.edu. This mailbox is monitored daily.

Sponsored awards made to Cornell are usually conducted within the physical boundaries of the university. On occasion, a portion of the required effort may be provided by one or more other institutions or companies (third parties) who are made responsible for a discrete part of the project. When the portion of effort to be performed by a third party constitutes a substantive component of the “science” of the sponsored award the third party is required to provide the resources and personnel necessary to conduct that portion of the work as an independent contractor. Costs normally associated with third party effort could include any or all of the following: labor, employee benefits, materials and supplies, travel, equipment, consultants, other direct costs, and facilities and administrative costs (indirect costs). In the for-profit sector, it is common to include costs such as labor overhead, material overhead, general and administrative expense, and a profit or fee.

These procedures provide guidance for issuing subawards for non-construction activities. If a sponsored award involves issuing subawards for physical construction of facilities or renovation of existing facilities, the Facilities Services Division, Facilities Contracts Department (255-3982) must be contacted prior to submission of the proposal to ensure compliance with the Board of Trustees and university administrative procedures and to ensure that necessary approvals are obtained. The Office of Sponsored Programs (OSP) is available to assist departments in these procedures and would be involved in assisting Facilities Contracts in the preparation of any subaward.

  1. SUBAWARD RELATIONSHIP

    The document that OSP generates to formalize a third party relationship with another organization to perform substantive work based upon an award made to Cornell is a subaward agreement. The third party performing the effort under a subaward agreement is the subrecipient.

    Activities performed by a third party that do not constitute a substantive portion of the work effort of the project, are not unique or may be obtained competitively in a commercial environment, or are not performed independently and with decisions making authority are not obtained using a subaward and should be contracted for using either a consulting agreement or a purchase order. When such activities are performed by an individual under a sponsored award they are administered through a consulting agreement issued by Supply Management Services. A purchase order must be used when purchased services may involve an organizational entity. For example, a purchase order would be appropriate for the performance of repetitive tests or activities requiring little or no discretionary judgment on the part of the provider. In these instances, a consulting agreement or a purchase order may be issued through the normal Cornell Procurement process.

  2. SUBAWARD PROCEDURES
    1. Subrecipient Selection
      • Sponsor or Peer Reviewed

        If the subrecipient is specified in the proposal and the collaboration is funded, it is not necessary to comply with the procurement requirements for competitive bidding or sole source justification because the sponsor or peer review process already approved the selection. If this is not the case, you must comply with the following procedures for selection.

      • Non-Sponsor or Non-Peer Reviewed

        It is the responsibility of the Cornell Principal Investigator (PI), along with OSP, to comply with procurement requirements of the sponsor in selecting a subrecipient. There are two methods of selecting a subrecipient: competitive bidding or sole source procurement. Competitive bidding is the preferred method of subrecipient selection. This method requires OSP, in conjunction with the PI, to solicit proposals from a number of sources and make a final selection of a subrecipient from those responding based on technical merit and cost objectives, normally the lowest price from a technically qualified respondent.

        When the procurement requires performance from a specific entity because services or expertise are unique or not available from other sources, the PI is required to provide sole source justification, identifying the need for the services and why the selected subrecipient is the only source available for the needed services. Sole source selection is not justified simply by the fact that there has been an ongoing collaboration between the researchers and the potential subrecipient. It must be further justified with reasons for the unavailability of the services or expertise from other sources.

    2. Subaward Proposal

      If a Cornell PI plans to include another institution in an upcoming proposal where such institution will be expected to perform a substantive portion of the effort, a number of documents must be obtained from the proposed subrecipient prior to submission of the proposal to the sponsor:

      • Institutional letter of commitment to participate in the project and abide by all of the associated terms and conditions;
      • Statement of work
      • Budget

      There must be adequate time provided between the receipt of a subrecipient's proposal and the sponsor's proposal due date, to allow Cornell's PI sufficient time to discuss and negotiate the statement of work, the unit administrator to review the subrecipient’s budget and letter of commitment and for the OSP to review all of the subrecipient’s documents.

      The budget should be itemized by major budget category, such as salaries and wages, employee benefits, supplies, equipment, travel, consultants, and other direct costs, in a fashion similar to that required by the prime sponsor. More specific itemization of budget categories may be needed if required by the sponsor. Facilities and administrative costs (F&A) must be included if it is to be charged, and should be calculated using the subrecipient’s applicable rate(s).

      The subrecipient's budget is included in Cornell's budget as a direct cost. When calculating Cornell's F&A costs, the amount that exceeds $25,000 of each subaward should be excluded from the calculation, in accordance with the Uniform Guidance (2 CFR 200). F&A costs on the first $25,000 is calculated using the on-campus rate applicable to the award.

      The subrecipient's proposal must be accompanied with a letter of commitment signed by an Authorized Organization Official who is authorized to commit the subrecipient’s resources to the proposed project.

    3. Preparing to Issue the Subaward Agreement

      Subawards are issued only after a fully executed award is received by OSP from the prime sponsor. After receipt of a fully executed award from the prime sponsor, the award is distributed to the PI and the unit by OSP. The PI and unit are responsible for submitting a request to issue a subaward to OSP via the subrecipient tab in the "Sponsored Projects Portal." PIs/units should submit this request as soon as possible after they receive a fully executed award. The information requested via the portal is necessary for OSP to draft the subaward and ensure that the proper steps and determinations have been made prior to issuance of the subaward.

      If the subrecipient was not proposed in Cornell's original proposal, prime sponsor approval will be necessary prior to issuance of the subaward. Prior approval may also be necessary even if the subrecipient was proposed in the original proposal. In some very rare instances, prime sponsors request to review and approve the proposed subaward prior to Cornell's release of the subaward to the subrecipient.

      Risk Assessment

      In preparing to issue a subaward, OSP gathers information about the subrecipient and creates a profile that provides information about the subrecipient’s financial status and internal controls. The Subcontract Coordinator drafts the subaward and adheres to the prime award agreement's terms and conditions and flows down the appropriate clauses. The GCO will review the draft subaward and make other modifications to Cornell's standard subaward based on a subrecipient risk assessment he/she conducts which includes review of:

      1. Subrecipient financial status and internal controls
      2. Amount of subaward
      3. Percentage of award passed through to subrecipient
      4. Program complexity

      In some instances a subrecipient may be designated as elevated risk. This means that based on an evaluation of many factors including the award, supporting financial documents, the institutional profile completed by the subrecipient, and prior history of working with the entity that there is an above-average likelihood of programmatic or financial concerns during the subaward period. Examples include:

      • A small organization receives a very large subaward and may not have the business systems in place to account for the award in the manner prescribed by the prime sponsor.
      • A university has a history of multiple audit findings
      • A company has a track record of failing to deliver on Cornell projects
      • A non-governmental organization is operating in a remote area of the world where communication and monitoring is difficult

      Once the subaward draft is complete the GCO sends it unsigned to the subrecipient for review. The subrecipient may want to negotiate changes or request clarification of the terms and conditions. The GCO negotiates the changes and may coordinate requested changes with unit administrators and the PI, where appropriate. Once negotiations are complete and the signed subaward is received, the GCO executes it on behalf of Cornell, returns the fully executed document to the subrecipient, and distributes the fully executed award to the PI, unit administrator, and Sponsored Financial Services. If a subrecipient is deemed to pose "elevated risk," the PI will be responsible for specific monitoring and approvals.

    4. Special Consideration for Small Businesses

      The following applies when issuing a subaward to a small business (under 50 employees):

      1. A small business does not need to obtain an audited facilities and administrative costs rate from the government until it has reached $10,000,000 in government sales.
      2. A small business must submit its facilities and administrative costs rate with its cost proposal. If the small business does not know how to estimate a rate they should be referred to Section H of OMB Circular A-21, entitled "Simplified Method for Small Institutions."
      3. It is Cornell's responsibility to make the determination that the proposed rate is fair and reasonable. The file must be documented to show that Cornell has (or has not) found this to be a reasonable rate.
    5. Advance Payments to Subrecipients

      Advance payments are generally not allowed because:

      1. Sponsor guidelines typically state that subrecipients are reimbursed for expenses incurred for performing the work.
      2. Cornell does not usually receive advance funding from its sponsors, therefore as a matter of practice, Cornell does not advance funds to a subrecipient.
      3. Prepaying an award reduces the university’s leverage for ensuring that the scope of work is delivered, therefore it is considered poor fiscal management to advance funds to a subrecipient.

      Requests for advance payments to subrecipients will be considered only in very unusual circumstances and on a case by case basis. Any advance payment, if approved by OSP and Sponsored Financial Services (SFS), is issued after a fully executed subaward agreement is in place.

  3. MANAGING SUBAWARDS

    Cornell University is required to monitor the programmatic and financial activities of its subrecipients as part of the terms and conditions of its prime awards and as required by the federal government.

    1. Establishing an Account

      A separate KFS subaccount is established by SFS once a fully executed subaward is received from OSP. Units do not need to issue a request for this subaccount. The appropriate allocation is then transferred from the prime award account to the subaward subaccount by SFS.

    2. Subrecipient  Monitoring: Technical

      Cornell is responsible for ensuring that the subrecipient’s work is conducted and completed in a timely manner. Progress reports and other technical deliverables must be reviewed by the Cornell PI and discussed with the subrecipient as needed. These reports are usually incorporated as part of the deliverables along with the technical reports submitted to the sponsor by the Cornell PI. OSP is responsible for obtaining the other reports required by the subaward terms and conditions. For example, invention, fiscal, property and audit reports may be required.

    3. Procedure for Payments to Subrecipients on Sponsored Awards

      As required by the subaward, subrecipients will send invoices to the unit administrator, typically every quarter. Principal Investigators (PI) are primarily responsible, with assistance from department research administrators (DRA), for ensuring that sponsored funds are spent in accordance with regulations, policies, and award terms. Where a project subcontracts (also known as subawards) work and funding to a subrecipient (also known as subawardee), the PI may be the only one aware of the subrecipient’s technical progress and whether a particular payment should be made. The PI, therefore, should authorize payment and be given the opportunity to raise any concerns prior to payment. Under normal situations payments must be made within 30 days. Delays required to resolve invoice concerns should be fully documented in the payment eDoc.

      Procedure

      1. The Office of Sponsored Programs (OSP) and Sponsored Financial Services (SFS) determine if a subaward or subrecipient is assessed as posing “elevated” risk and notify the DRA and PI of the risk determination and all actions required to manage this risk. A designation of “elevated risk” is assigned following a review of subcontractor documentation related to financial status and financial management controls. A subcontractor will be deemed “elevated risk” if it is determined that they lack essential controls and thus pose an increased risk for non-compliance with technical or administrative requirements of the award.The designation is provided to allow the PI,  the DRA, OSP and SFS to use additional caution in monitoring and during the review of invoices to ensure that procedures and subcontract terms are followed.
      2. The DRA receives the subaward invoices.
      3. The DRA and PI have responsibilities defined under "Roles and Responsibilities."
      4. For   a) all invoices from elevated risk subrecipients and

                       b) all final invoices from all subrecipients: 

      1. The DRA provides the PI (or formal technical designee*) a copy of the invoice, any supporting documentation, and review instructions. 
      2. The PI (or designee) must review** and approve or disapprove the payment, by signing the invoice, e-mail notification, or other written means.
      3. The DRA must obtain and this documentation attach it to the Disbursement Voucher (DV) eDoc when processed.

      5. For all other invoices (i.e. not elevated risk nor final invoices):

      1. The DRA provides the PI (or formal technical designee*) a copy of the invoice, any supporting documentation, and review instructions.
      2. The PI (or designee) must review the payment and notify the unit administrator within three business days if there is any reason that the payment should not be made.
      3.  If no response is received by the DRA within three business days it is presumed that PI has no concerns with the payment. The DV eDoc note field or invoice must include the notation “PI notified, no issues communicated” or have attached any PI response.

      * The PI may designate an individual on their project team to provide the technical review and approval. A designee must have sufficient responsibility within the project (e.g. research associate, lab manager), technical understanding, and knowledge of subrecipient requirements and performance. DRAs are not technically qualified to assume this responsibility. Delegation must be documented in writing and maintained by the DRA.
      ** The purpose of PI review is to ensure that the subrecipient’s technical progress is aligned with the amount of the specific and cumulative invoice.  When approving the invoice the PI should be comfortable that:

      1. Performance on the subaward as of the invoice date is satisfactory (if not, the PI should discuss this with the subrecipient).
      2. The proportion of the overall subrecipient invoice is commensurate with the progress to date, or that the PI understands and agrees with a significant deviation (e.g., it is reasonable if 10% of the subaward has been billed, and the work is 10% complete or if front-loaded costs such as equipment result in a 25% expended/10% completed ratio, however, a project 10% complete and 50% billed may be cause for concern).
      3. All required technical progress reports or deliverables have been received and reviewed.

      Note: the PI should contact OSP if a sufficient lack of progress or deliverables could negatively impact the project, or if there are other significant  irregularities with the invoice.


      Subaward Sample Invoice
      The above link may be used to obtain a sample invoice template.

      The subrecipient shall submit invoices for payment as outlined in the terms and conditions of their subaward.

      All subrecipients shall certify on each invoice the costs are the actual costs as recorded in the subrecipient's records and as expended for the actual work performed per the agreement. Federally funded awards shall have a certification equivalent to that required under 2 CFR 200.415: [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)].

      All invoices must be approved by an individual with payment authority on the award. Such approval asserts that the PI has performed their required review. In order to be eligible for reimbursement invoices shall be for allowable, approved costs incurred in accordance with the terms of the agreement and shall indicate expenses for reimbursement by budget category, identifying the total project costs, the reimbursable costs and the subrecipient’s cost share pursuant to the submitted budget. An authorized representative of the subrecipient shall certify on each invoice that the costs, including those requested for reimbursement and those shown as the subrecipient cost share, are the actual costs as recorded in subrecipient’s records and as expended for the work actually performed in accordance with the terms of the subaward.

    4. Amendment to Subaward Agreements

      In most cases, the terms and conditions of a subaward will remain unchanged for the duration of the subaward. However, during the term of a subaward, it may be necessary to change or modify one or more of the terms and conditions of the subaward. Amendments to the subaward, such as time extensions, rebudgeting or fund changes are accomplished by an amendment to the subaward. Some changes, such as scope of work or PI may require sponsor approval before an amendment can be issued. Requests for changes should be submitted by the subrecipient's authorized official to the unit administrator and have the approval of the Cornell PI. The request to change the subaward must then be submitted to OSP via the Sponsored Projects Portal. The GCO will request sponsor approval for the change if necessary and draft the amendment to the subaward. When amending a subaward, the GCO will identify the specific change by referencing the old and the amended text and will indicate that, except for the specific changes identified, "all other terms and conditions of the original subaward remain unchanged." If there is a change in the total estimated cost, a revised budget must be incorporated with the amendment. 

    5. Close-Out Requirements

      In accordance with the terms of the subaward, the subrecipient may be required to submit one or more of the following documents upon completion.

      • Final Fiscal Report
      • Final Technical Report
      • Final Inventory of Property
      • Final Statement of Inventions
      • Small and Small Disadvantaged Business Report
      • Final Audit Notification if subrecipient is subject to Single Audit
  4.  ROLES AND RESPONSIBILITIES

    Roles:

    • Principal Investigator
    • Unit Administrator
    • Grant and Contract Officer (OSP)
    • Subaward ServicesTeam (OSP)
    • Sponsored Financial Services (SFS)
    • Subrecipient

    Principal Investigators (PIs) have primary responsibility for:

    • establishing and maintaining communication with subrecipients during proposal preparation and submission, and after subaward is issued
    • oversight of subrecipient's compliance with subaward terms and conditions
    • ensuring technical performance goals are achieved and aligned with subrecipient's statement of work
    • ensuring technical deliverables identified in subrecipient statement of work are complete and received in a timely manner
    • reviewing subrecipient invoices as an indication of PI's acknowledgement that subrecipient's technical progress is aligned with invoiced charges
    • discussing poor performance or non-performance, or other problems relating to the subrecipient's performance under the subaward with subrecipients and with GCOs as they arise
    • approving requests for annual increments of funding for multi-year subawards

    Unit administrators have primary responsibility for:

    • assisting PIs with the subrecipient proposals to be included in the Cornell proposal to sponsor (statement of work, budget, letter of commitment signed by the subrecipient Authorized Organization Official)
    • submitting to OSP via the Sponsored Projects Portal a request to issue a subaward agreement after the prime award is fully executed
    • receiving and reviewing subrecipient invoices to ensure:
      1. compliance with subaward terms and conditions
      2. costs are aligned with subrecipient's proposal (budget and statement of work)
      3. costs are allowable, allocable and reasonable
      4. F&A is calculated correctly
      5. all costs were incurred within the period of performance of the subaward
      6. subrecipient expenses are aligned with subrecipient technical progress
      7. cost-sharing commitments (if applicable) are met by the subrecipient
      8. the correct subaward number is identified on the invoice
      9. the invoice has a certification statement that the costs for reimbursement and any corresponding cost-sharing are the actual costs as recorded by subrecipient and expended for the work performed in accordance with the terms of the subaward
      10. the invoice is signed by an Authorized Institutional Official
      11. the invoice is correctly marked "Final" if it is the final invoice
      12. the invoice is reviewed by the Cornell PI in accordance with the procedure in III C. above
    • requesting subrecipient clarify invoiced charges if any unusual, unreasonable, unallowable, unallocable charges are invoiced.  If explanations are insufficient, detailed justifications should be requested from subrecipient to verify appropriateness and reasonableness of charges in question.
    • discussing subrecipient poor compliance or non-compliance with subaward terms and conditions with GCO
    • sending signed, reviewed, and approved subrecipient invoices to SFS
    • assisting PIs in carrying out their subrecipient monitoring responsibilities
    • maintaining documentation of subrecipient monitoring efforts
    • submitting to OSP via the Sponsored Projects Portal requests to modify existing subaward (additional time, money, etc.)
    • assisting PIs with requests for annual increments of funding on multi-year subawards

    Grant and Contract Officers (Office of Sponsored Programs) have primary responsibility for:

    • reviewing subrecipient proposals prior to proposal submission
    • assessing the level of subrecipient risk prior to issuing a subaward
    • determining the appropriate type of subaward to issue
    • working with SFS to identify additional terms and conditions for the subaward for medium and high risk subrecipients
    • negotiating terms and conditions and issuing resulting subaward to subrecipients
    • notifying PIs and units when additional post-award subrecipient monitoring by PI and unit is required for medium and high risk subrecipients

    Subaward Services Team (Office of Sponsored Programs) has primary responsibility for:

    • identifying subrecipients who have been suspended or debarred from receiving federal funding, identified as terrorist entities, or associated with terrorist entities
    • reviewing Single Audit reports or other audited financial reports of subrecipients in collaboration with SFS
    • ensuring each subrecipient completes a profile questionnaire
    • gathering associated documentation from subrecipients: certificate of insurance, compliance approvals certifications, etc.
    • requesting and reviewing annual audit reports of subrecipients during the life of the subaward agreement
    • receiving fully executed subawards from subrecipients
    • distributing fully executed subawards to PIs and units

    Sponsored Financial Services (SFS) has primary responsibility for:

    • reviewing Single Audit reports or other audited financial reports of proposed subrecipients in collaboration with Subaward Services Team and providing recommendations for medium and high risk subrecipients
    • reviewing subrecipient risk assessments for medium and high risk subrecipients and recommending post-award subrecipient monitoring actions to Grant and Contract Officers
    • establishing subaccounts for subawards
    • reviewing and processing invoices submitted for payment

    Subrecipient has primary responsibility for:

    • submitting a letter of commitment signed by an authorized institutional official, a statement of work, budget, negotiated rate agreement and employee benefit rate agreement if applicable, letters of institutional approval if human participants or vertebrate animals are involved in the proposed work
    • completing a subrecipient profile questionnaire and other documentation requested to assess subrecipient risk
    • reviewing, negotiating and executing the subaward
    • complying with terms and conditions of subaward
    • submitting invoices according to timetable and form defined in subaward
    • submitting Technical Progress Reports and other deliverables as defined in the subaward
    • requesting changes to subaward

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