Recently, the Office of Sponsored Programs (OSP) has noticed that an increased focus on subrecipient monitoring has more agencies asking to see what type of risk assessment we perform on proposed subrecipients during the selection process.
Creating a risk adverse collaborative relationship with an external entity starts at the proposal stage. We ensure that the subrecipient is eligible to receive funding under the proposed federal program, determine the classification of the activity (services vs. subaward), and develop a plan to manage the relationship so that we meet program requirements.
Federal agencies require pass-through entities to follow federal standards for responsible contractors when issuing subawards under 2 CFR 200 or subcontracts under the Federal Acquisition Regulations. A pre-award risk assessment can prevent post-award surprises. Risk assessments should identify a subrecipient’s eligibility to receive federal dollars, identify and mitigate any potential conflicts of interests, and ensure the subrecipient has the skills, facilities and an adequate business model to ensure programmatic and financial compliance.
A subrecipient’s eligibility to receive federal funding can be verified via the government’s System for Award Management. Active exclusions to receive federal funding will be identified on a subrecipient’s record. In most cases, the record also provides representations and certifications for compliance with federal regulations and statutes. OSP can assist in determining if agency specific representations and certifications should be received during the proposal stage. For example, NASA has required representations and certifications. In addition, Department of Defense solicitations include agency-specific representations and certifications. Regardless of the agency, you should always require the subrecipient to assert data rights to any background intellectual property that may be used on the project. These type of documents, in addition to publicly available audit reports can help in determining if the subrecipient has adequate resources to carry out the scope of work as well as the business and management system to comply with government rules, regulations, and statues.
Note: Nonprofits who expend more than $750K of federal dollars annually have a single audit on file at the Federal Audit Clearninghouse Image Management System. This document will identify whether the subrecipient is low risk and also provide a list of the type of federal awards it receives.
Next, determining the correct classification can prevent a budget shortfall. For example, based on our indirect costs rate agreement, Georgia Tech adds the first $25K of a subaward to our modified total direct cost base for resident instruction projects, but charges indirect costs on the total cost of a consultant. In compliance with Georgia Tech’s federally approved accounting standards, we must treat costs consistently. Therefore, during the post-award stage and prior to issuing a subaward, OSP verifies the relationship and consults with the Department on any misclassification. Keep in mind, not proposing the appropriate type of relationship may adversely affect the project’s budget and in most cases require sponsor approval prior to budget reallocation. For more information about the classifications visit the Subawards section of OSP’s website. A tool for determining the appropriate third party relationship (i.e. services vs. subrecipient) is also available on our website.
Pre-award considerations should include past performance information, the need for any human or animal protocols, export control issues, verification of adequate facilities to perform the work, whether the subrecipient relationship makes sense logistically, and whether there has been a meeting of the minds about the expected outcomes. A few of the most common issues that come up post-award includes 1) award terms such as subrecipient can’t accept the award requirements, specifically related to security clearances or publication restrictions and 2) miscommunication about technical expectations and availability of funding to carry out the proposed scope of work and programmatic outcomes. Post award considerations for managing a subaward can be viewed on the Subrecipient Monitoring section of our website.
For more information about managing a subaward, please visit Managing a Subaward FAQs.
