Policy RA80 SUBAWARDS AND SUBCONTRACTS

Policy Steward:  Vice President for Research, and Corporate Controller

Contents:

  • Purpose
  • Definition Of Terms
  • Policy Statement
  • Examples
  • Further Information
  • Cross-References

  • PURPOSE:

    To establish appropriate policies for the issuance and administration of Subawards and Subcontracts awarded by the University.

    DEFINITION OF TERMS:

    Federal Financial Assistance Award - The legal instrument issued by a Federal awarding agency to provide financial assistance to a non-Federal entity in support of a public purpose. See Uniform Guidance 2 CFR 200.51 (Grant agreement), 2 CFR 200.24 (Cooperative agreement), and 2 CFR 200.40 (Federal financial assistance).

    Federal Contract - The legal instrument issued by a Federal awarding agency under the Federal Acquisition Regulation to enter into a procurement relationship with a non-Federal entity. See FAR Subpart 1.1 (Purpose, Authority, Issuance).

    Subaward –The legal instrument issued to a lower-tier collaborator under a Federal Financial Assistance Award. The recipient of a subaward is called a Subrecipient.

    Subcontract - The legal instrument issued to a third party under a Federal Contract to perform a portion of the programmatic effort. The recipient of a subcontract is also called a Subrecipient.

    Purchased Services Contract – The legal instrument issued to a vendor to perform routine services. Such services are typically commercial and provided within the vendor's normal business operations. The recipient of a Purchased Service Contract is called a Contractor. (See Uniform Guidance 2 CFR 200.23 for further definition of Contractor. See BS17 – Use and Procurement of External Consultants for further definition of Purchased Services Contracts.)

    POLICY STATEMENT:

    Penn State must make a case-by-case determination whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a Subrecipient or a Contractor. In general terms, Subrecipients are collaborators who contribute to programmatic decision making, whereas Contractors are vendors who provide routine services on a commercial basis. More guidance on this distinction can be found at Uniform Guidance 2 CFR 200.330.

    The Office of Sponsored Programs (OSP) issues Subawards to Subrecipients performing collaborative effort under Federal Financial Assistance Awards. OSP issues Subcontracts to Subrecipients performing collaborative effort under Federal Contracts. All such Subawards and Subcontracts must be requested through the Office of Sponsored Programs (OSP), which is responsible for the negotiation of terms and conditions. (Note: The College of Medicine, the Applied Research Lab, and the Electro-Optics Center have been delegated authority to negotiate subawards and subcontracts on behalf of their respective units.) Prior to issuing a Subaward or Subcontract, OSP must perform a risk assessment to evaluate whether the proposed Subrecipient has the demonstrated ability to perform its portion of the work in compliance with federal terms and conditions. Once issued, Subawards and Subcontracts must be monitored by the Principal Investigator and the College Research Office in accordance with RAG80 – Subrecipient Monitoring. Additional guidance regarding the issuance, administration, and closeout of such agreements can be found in the following procedure guides:

    "Procedures for the Administration of Subawards"

    "Procedures for the Administration of Subcontracts"

    Penn State sometimes issues Subawards and Subcontracts under non-Federal funds. Penn State applies the same basic procedures outlined above for such arrangements.  

    Penn State Purchasing is responsible for the issuance of Purchased Services Contracts (via purchase orders). See BS09 for further guidance.

    EXAMPLES:

    Example 1: Penn State receives an NSF grant, which is a Federal Financial Assistance Award. The PI wants to collaborate with a researcher at Cornell University. Penn State must issue a Subaward to the Subrecipient (Cornell).

    Example 2: Penn State receives a DOE cooperative agreement, which is a Federal Financial Assistance Award. The PI wants to purchase services from a company. Penn State should issue a purchase order (through Purchasing) to procure the service.

    Example 3: Penn State receives a DoD contract, which is a Federal Contract. If the lower-tier recipient will be contributing to the programmatic work, Penn State will issue a Subcontract (through OSP). If the lower-tier recipient will be performing routine services on a commercial basis, Penn State will issue a purchase order (through Purchasing).

    FURTHER INFORMATION:

    For questions, additional detail, or to request changes to this policy, please contact the Office of the Vice President for Research or the Office of the Corporate Controller.

    CROSS-REFERENCES:

    Other Policies may have specific application and should be referred to, especially:

    BS09 - Initiating Purchases From Vendors Outside the University,

    BS17 - Use and Procurement of External Consultants, and

    RAG80- Sub-Recipient Monitoring (Formerly RAG22)


    Effective Date: February 26, 2016
    Date Approved: February 22, 2016
    Published Date: February 26, 2016

    Most recent changes:

    Revision History (and effective dates):

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