What is a Subaward
- A Subaward is required when an institution or organization outside of the University will contribute to the programmatic portion of the research effort under a grant or contract awarded to the University. If the subaward is part of a proposal to a federal sponsor or from federal funds, please work with your OSP Grants & Contracts Administrator to determine whether the subawardee should be treated as a vendor or subrecipient. A subrecipient is different than a vendor, and it is important to accurately classify them. OMB Circular A-133 requires determination as to whether an arrangement resulting from a particular award that the awarding entity makes to another organization creates a subrecipient or vendor relationship. You can find information and guidance here to help determine if a subaward or vendor relationship exists. Making the appropriate decision before proposal submission can avoid problems after the project is funded.
- Subawards are always awarded to an organization or institution, not to an individual. MSU project employees cannot have financial interests in any organization receiving a subcontract. (See Conflict of Interest for more information.) If an individual not affiliated with an organization is doing part of the work, that individual must be paid as a consultant.
- For more information on setting up vendor or consulting agreements, please go to Procurement & Contracts website.
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Subaward Roles and Responsibilities Matrix
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Subcontracts at the Proposal Stage (working with your OSP Grants & Contracts Administrator):
- In the proposal budget the total cost of the subaward, including F&A costs, is shown as a single line item. This total becomes part of the project’s direct costs. A description of what is included in the subaward total, at the same level of detail as the proposal budget, should be provided. Remember when budgeting for subawards that MSU is only allowed to collect F&A on the first $25,000 of each subaward, regardless of the number of years in the period of performance.
A signed Subrecipient Commitment form will be submitted by a potential subrecipient along with the budget breakdown to indicate that all institutional requirements have been satisfied. Some agencies also require a letter of collaboration from the subrecipient organization. Funding for the subaward is provided by and must be approved by the sponsor. Your OSP Administrator will need the following information from the subrecipient before submitting the final proposal:
- Subrecipient’s Scope of Work
- Subrecipient’s Budget and Budget Justification
- Signed Subrecipient Commitment form
- Copy of Subrecipient’s Federally Negotiated Indirect Rate Agreement
- Any additional forms required by the specific proposal guidelines (RFP)
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Preparing the Subaward at the Award Stage (handled by the OSP Subaward Unit):
- When MSU receives a fully executed award from the prime sponsor that includes a subaward, Sponsored Programs Accounting will assign a fund number to the account and the PI and Departmental Administrator will receive a Fund Notice email containing the new fund number. The Fund Notice also includes general information on how to request any necessary subawards and a link to the Office of Sponsored Projects website. When the PI is ready for the subaward to the issued, the PI and/or Departmental Administrator will submit the following forms to the OSP Subcontracting Unit at Subcontract@osp.msstate.edu.
- The information on these forms is necessary for the OSP Subaward Unit to ensure that the subaward is properly written. The OSP Subaward Unit cannot start preparing the subaward until these forms are completed and returned.
- The OSP Subaward Unit will check the list of debarred and suspended (excluded) parties (EPLS) on the web. Individuals on the list of EPLS are not permitted to receive Federal contracts or assistance. MSU will not be able to issue a subaward to this individual/organization regardless of the type of award. By law, people and institutions in the U.S. are not allowed to deal with individuals/organizations on the restricted parties or denied parties list.
- Once the subaward is prepared, the subaward is sent to the subrecipient for review. The subrecipient may want to negotiate changes or request clarification of the terms and conditions; the OSP Subaward Unit will negotiate and coordinate those changes with legal counsel, Sponsored Programs Accounting, Office of Entrepreneurship and Technology Transfer, and the Departmental Administrator and PI, where appropriate. The process of preparing and negotiating the terms and conditions of a subaward takes time. The length of time required to establish a subaward will vary depending on how responsive individuals are to requests for information/data and the extent of negotiations required. Once negotiations are completed and the signed subaward is received, the OSP Subaward Unit executes the agreement on behalf of MSU. A fully executed copy will be emailed to the subrecipient, the PI, and the Departmental Administrator.
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The Principal Investigator is responsible for monitoring the technical progress of the subrecipient to ensure that they are: 1) advancing toward the completion of their programmatic duties as outlined in the scope of work, and 2) submitting accurate and timely reports as required.
- Payment of Invoices:
- According to the terms set forth in the subaward, the subrecipient will use the Subaward Invoice template to submit invoices to Sponsored Programs Accounting at Subcontracts@controller.msstate.edu. When an invoice arrives, Sponsored Programs Accounting checks it for appropriateness of charges (correct line items, appropriate time periods, sufficient funds, etc.) and sends the invoice to the PI for authorization of payment. Once it has been approved by the PI, then the Departmental Administrator will process a Direct Pay Voucher to pay the approved invoice.
- Subaward Modifications:
- Many times a subaward must be modified before completion. Most commonly, these modifications add dollars to the subaward, extend the end date, or both. When a modification is required, the PI and Departmental Administrator will complete the Request for Subaward Modification form and submit it to the OSP Subaward Unit at email@example.com. The OSP Subaward Unit prepares the modification and emails it to the subrecipient for review and signature. After being signed and returned by the subrecipient, the amendment is signed by MSU and one fully-executed copy of the amendment is emailed to the subrecipient, the PI, and the Departmental Administrator. Fully executed subaward modifications are entered into Banner and turned over to Sponsored Programs Accounting.
- Subaward Closeout:
- A vital element of subaward monitoring is the closeout of the subaward. All subawards must be processed for closeout and formally closed on a timely basis. The requirements of the prime award under which a subaward is issued will be considered during the closeout process. This is the point at which final determination is made as to whether the Subrecipient has fulfilled all of its responsibilities. When the final invoice is received, a special closeout approval is sent to the PI with the invoice to be approved. Final payment may be held until all documentation is completed and the PI confirms all work is satisfactorily completed. MSU will not close out a prime award until all subawards issued under the prime award have been closed out.
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