OSU GCG 206: Subcontracts

Background

Oregon State University (OSU) annually receives over 130 million dollars in support of research and sponsored projects.  Most of the funds come from federal agencies and OSU subcontracts some of those research dollars to other entities.  Those entities consist of other universities, private companies and, occasionally other federal agencies who will assist and/or collaborate with the OSU principal investigators on sponsored projects.  The agreements with other entities are called subcontracts and are written by the OSU Contracts Office.  The terms and conditions of a sponsored award received by OSU in support of a project are incorporated into the subcontracts.

Effective July 1, 2001, new account codes for subcontracts were established by OUS.  The series of numbers was expanded to allow for tracking of budget, revenue and expenditures for individual subawards.  The series allows for tracking of up to fifteen different subawards per grant fund.  These new account codes apply only to NEW subawards written after July 1, 2001.  Subawards written on or before June 30, 2001 (even if subsequently amended) continue to use 39910 and 39920 account codes.  The list of account codes and their descriptions can be found on the OUS Fiscal Policy Manual, formerly known as the FASOM Manual

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Subcontract Information

Encumbering Subcontracts
Beginning July 1, 2001 all subcontract balances have been encumbered in Banner.  The encumbrance number and account codes to be used for payment are noted on the invoice sticker when it is routed to the department for approval and processing in FIS Banner.  All invoices must be tied to their encumbrance number or they will be disapproved.

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206-01:  Subcontract vs. Procurement

To determine whether a distribution of grant funds is a procurement or subcontract, see the Sponsored Programs website for guidelines.

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206-02:  Managing Subcontracts

Responsibility of PI and Department

• To notify the university Contracts Office when a subcontract or amendment needs to be written.
• To provide an adequately prepared statement of work concise as to what, when, and how the prime recipient (OSU) expects the sub-recipient to accomplish the tasks.
• To review invoices, approve for payment and input into Banner.
• To communicate with Key Personnel listed in subcontract.
• To make sure all reporting obligations are met.
• Verify that the subcontract scope of work has been completed.

Important
The legal relationship is between the prime recipient (OSU) and the sub-recipient.  It is important to maintain this relationship and not to create a relationship of privacy between the sponsor and sub-recipient.  All project administrative matters of the subcontract must go through OSU.

Responsibility of Subcontractor

• To be aware of all contract terms and conditions; OMB Circulars A-110 and A-133 are the guides for flow down from a federal assistance award.
• To submit invoices with signed certification, detailed by budget line item to the university no more frequently than monthly, but at least quarterly.
• To maintain acceptable financial systems and accurate records that identifies the expenditures of project funds.
• Maintain effective control over and accountability for all funds, property, and other assets.
• Maintain consistency with applicable cost principles.
• To communicate with the Principal Investigator at Oregon State University.
• Ensure all reporting requirements are met.
• Submit final invoice and closeout documentation within 60 days after termination date.
• To comply with record and retention requirements.

Responsibility of the Office of Post Award Administration

• Set up subcontract file and enter into subcontract database.
• Encumber subcontract in Banner and verify budget dollars. Notify department accounting staff if any adjustments are necessary.
• To review invoices prior to sending to department, and monitor subcontracts. Make sure invoices are tied to general encumbrance, appropriate account codes were used for payment, equipment purchased only if allowed on subcontract, monitor reporting of cost share, and verify correct indirect cost rate used. Enter invoice into subcontract database.
• Send closeout letters to subcontractor 45–60 days prior to termination date.
• Facilitate closing of subcontract; make sure all closeout information is received in a timely manner.
• Has final invoice been mailed?
• Has required cost share been met and reported?
• Are there any patents and/or inventions to report?
• Are there any patents and/or inventions pending? (please attach documentation)
• If required, tech report completed and mailed on ____________.
• Was equipment purchased? If so please provide list.
• Must be certified by an authorized representative of subcontractor’s institution or agency.
• Assure compliance with all applicable terms of the award.

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206-03:  Property in the Hands of Subcontractors

Subcontracts are usually predicated on the prime award and a copy of the prime is always attached to the subcontract agreement.  The terms of the prime award flow down to the subcontractor.  If there are unusual property requirements, they will be stated in a special conditions attachment to the subcontract.  These will include title restrictions and reporting requirements.

Any equipment purchased or constructed by a subcontractor with project funds must be approved in the budget.  If property is federally owned, the subcontractor is required to comply with federal regulations (per A-110 or FAR 45.510, as appropriate) to adequately care for and maintain that property and assure that it is used only as authorized by the contract.  The subcontractor’s approved property control system must include procedures necessary for accomplishing this responsibility.  Equipment reports must be submitted to OSU for referral to the sponsoring agency, as required by the prime award and/or at contract closeout.

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