GAP 200.280, Subrecipient Management

General
Definitions
Subrecipient Compliance Risk Assessment
Subrecipient Management/Roles and Responsibilities
Special Conditions and Escalation Procedures
Federal Regulations

I. General

A subrecipient (subcontractor or subawardee) is a third-party organization that receives funding from Duke to collaborate in carrying out an externally funded program.

Duke University is responsible for monitoring the programmatic, financial, and conflict of interest (COI) compliance of its sponsored project award subrecipients. Subrecipient management responsibilities are shared among the department (the Principal Investigator (PI) and the grant management staff), Office of Post Award Administration (OPAA) and the pre-award offices.

The following guidelines and procedures are provided to address institutional responsibilities and to assist responsible faculty and staff in ensuring that subrecipients conduct their portions of research projects in compliance with regulations and that their expenses are reasonable and allowable.

2 CFR PART 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that institutions receiving federal awards have financial management systems and internal controls which:

Provide reasonable assurance that the use of federal funds is consistent with laws, regulations, and award terms;
Safeguard federal funds against waste, loss, and misuse;
Obtain, maintain, and fairly disclose reliable data in reports.

As a pass-through entity providing federal funds to a subrecipient, Duke University must:

Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information specified in 2 CFR 200.331 numbers 1-6 at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modifications;
Evaluate each subrecipient's risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining appropriate subrecipient monitoring activities;
Consider imposing specific subaward conditions upon a subrecipient, if appropriate, based on the subrecipient’s compliance risk assessment;
Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved;
Verify that every subrecipient is audited as required;
Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to Duke University’s own records;
Consider taking enforcement action against subrecipients when noncompliant activities related to the subaward are discovered.

II. Definitions

§200.330 Subrecipient and contractor determinations.

In 2 CFR 200.330, the UG states that a non-federal entity may concurrently receive federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with federal awarding agencies and pass-through entities, such as Duke. Therefore, the UG requires the pass-through entity to make case-by-case determinations on whether a third party organization is receiving federal funds in the role of a subrecipient or a contractor.

Departments must determine the nature of the relationship with a third party organization/entity when the department initiates the relationship. The process by which the department makes these determinations must be consistent and auditable, and the department must retain documentation for each decision. The process and documentation must include references to the characteristics of subrecipient and contractor relationships as defined in 2 CFR 200.330 a-b and listed on the Subrecipient/Contractor Determination Form. The use of this form in a departmental process is highly recommended. Please note that when making a determination, the nature of relationship is more important than the nature of the agreement.

§200.74 Pass-through entity.

Pass-through entity means a non-federal entity that provides a subaward to a subrecipient to carry out part of a federal program.

§200.93 Subrecipient.

Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a federal program; but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency.

§200.92 Subaward.

Subaward means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract.

Clinical trial site

A non-federal entity that enrolls subjects and collects data for the completion of a clinical trial in which Duke acts as the pass-through entity. These are fixed-rate subawards, in which the rate per subject is dictated by the sponsor, or payment is based on number of subjects enrolled and is paid in installments, and no further documentation of the nature of the relationship is necessary.

§200.22 Contract.

Contract means a legal instrument by which a non-federal entity purchases property or services needed to carry out the project or program under a federal award. The term as used in this part does not include a legal instrument, even if the non-federal entity considers it a contract, when the substance of the transaction meets the definition of a federal award or subaward (see §200.92 Subaward).

III. Subrecipient Compliance Risk Assessment

Duke University has established a formal process for evaluating the capacity of a subrecipient to perform the work proposed and compliantly manage federal funds. This process consists of extensive annual evaluation of audit reports, financial reports and other documents, review of past performance and experience with a subrecipient, and escalation of risk assessment procedures as warranted. Based on specific metrics, subaward language is customized and adjusted to ensure appropriate documentation and management of federal funds. The OPAA utilizes a formal risk assessment metric tool to produce a scoring range for initial evaluation. The Office of Research Administration (ORA) and the Office of Research Support (ORS) then correlate this with the specific scope of work to be performed, resulting in a customized subaward. This tool also helps to determine if there is a need to adjust any other subaward currently in force with the subrecipient, and what monitoring is appropriate for the subrecipient moving forward.

Per 2 CFR 200.331(d)(3), OPAA will issue a management decision letter to subrecipients with audit findings pertaining to the subaward from Duke, requesting additional information regarding corrective action specific to these findings. OPAA maintains a current listing of all subrecipients from whom corrective action is expected and ensures that follow-up occurs on a timely basis. If the subrecipient fails to establish that corrective action has been taken, OSP will inform the appropriate pre-award office and the proper course of action will be determined. In noted instances of non-compliance, OPAA will maintain documentation of action taken and the results of such action.

Due to the unlike circumstances created by the unique nature of clinical trials, central offices may delegate certain aspects of the risk assessment of subrecipients, or trial sites, to the managing organization within the Institution. Due to the nature of the research being conducted, the most critical portions of the risk assessment will be those relating to the programmatic or scientific aspects of the project. Each managing organization within the Institution with the delegated responsibility of assessments and monitoring should maintain the appropriate records of their methods and practices for financial, programmatic and scientific assessments.

IV. Subrecipient Management/Roles and Responsibilities

Duke University’s management of the subrecipient includes: reviewing audits and recording financial performance as evidenced in invoicing practice; following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the subaward detected through audits, on-site reviews, and other means; and implementing additional measures to ensure compliance is effectively managed.

Principal Investigators have primary responsibility for:

Reviewing the award document and advising ORA/ORS of any required adjustments and/or changes;
Monitoring the programmatic and related fiscal progress of the subrecipient’s Statement of Work (SOW), and for advising ORA/ORS of problems or issues to be addressed with subrecipient performance;
Approving reports, invoices and related documentation submitted by the subrecipient during the project, either directly or via communication/collaboration with a local grant manager;
Ensuring a timely closeout of subrecipient activities which includes verification that appropriate progress has been made by the subrecipient (which may include review of a final formal report or other means of suitable verification), verification that all costs expended by the subrecipient as allowable, allocable and reasonable, and approval of final invoice costs and justifications as appropriate and within budget limitations.

Appropriate personnel in the Departments have responsibility for:

Reviewing the terms and conditions of the subaward for special restrictions and/or conditions;
Oversight and monitoring of subrecipient fiscal matters, including review and approval of invoices with escalation of questionable costs to the PI, ensuring timely closeout, and identifying performance issues requiring review with the PI and potential escalation to ORA or ORS throughout the conduct of the project;
Monitoring the activities of the subrecipient as necessary to assure that the subaward funds are used for authorized purposes in compliance with federal statutes, regulations, and terms and conditions of the subaward;
Reporting concerns and/or questions regarding financial aspects of subaward spending to the appropriate pre-award office.

The Office of Research Administration and Office of Research Support have responsibility for:

Reviewing debarment and/or suspension status of the potential subrecipient, including the entity’s eligibility to receive federal funds;
Issuing a subaward consistent with the compliance risk and for ensuring that appropriate terms and conditions are passed down to the subrecipient;
Providing sufficient information regarding terms and conditions of the subaward so as to enable effective management by the department.

The Office of Post Award Administration has responsibility for*:

Obtaining, evaluating and recording audit information from all subrecipients;
Recording fiscal performance of current subrecipients used for further review and compliance risk assessments;
Performing monthly desk reviews of a sample of subrecipient invoices to confirm supporting documentation, verify invoice accuracy, and monitor for subrecipient compliance with subaward terms and conditions.
Evaluating and documenting the risk level of the subrecipient using a prescribed table of risk elements;
Maintaining invoicing data, performing invoice reviews, managing payments, and financial closeout.

*Aspects that have been delegated to other owning organizations in the Institution will continue to be managed by those organizations

Central offices, identified as ORA, ORS and OPAA are also responsible for:

Responding to issues and/or concerns raised by the managing department in regards to performance and/or fiscal matters and responding to issues and/or concerns regarding problematic invoicing and/or audit findings. (See Special Conditions and Escalation Procedures).

Periodic monitoring of the pre and post-award activities related to subrecipient management to verify compliance with the current process and applicable federal regulations.

V. Special Conditions and Escalation Procedures

Duke University recognizes that research collaborations are essential to the conduct of meaningful research. Duke University reserves the right to decline to issue a subaward if it is determined that the subrecipient may not have the capacity to perform the work proposed or to manage Federal funds as per Federal regulations. Every effort will be made to ensure that the subrecipient management process does not impede research. Appeals to decisions made by the pre-award offices should be directed to with the Research Administration Continuous Improvement (RACI) Executive Committee, will discuss the assessment of institutional risk and make a final decision. Similarly, ORA, ORS, and OPAA may bring concerns regarding areas under their assigned responsibilities to the Associate Vice President and Research Financial Compliance Officer for escalation as warranted.

Duke University recognizes that research collaborations are essential to the conduct of meaningful research. Duke University reserves the right to decline to issue a subaward if it is determined that the subrecipient may not have the capacity to perform the work proposed or to manage Federal funds as per Federal regulations. Every effort will be made to ensure that the subrecipient management process does not impede research. Individuals wishing to appeal decisions made by the pre-award offices should direct their requests to the director of the applicable pre-award office, who will bring the issue to the Incident Response and Issue Resolution Committee for assessment and management. Similarly, ORA, ORS, and OPAA may bring concerns regarding areas under their assigned responsibilities to the Incident Response and Issue Resolution Committee for escalation as warranted.

VI. Federal Regulations

This GAP reflects the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200, otherwise referred to as the Uniform Guidance. The UG became effective as of December 26, 2014, and revised as of November 12, 2020, and all awards issued on or after this date must be managed in accordance with its provisions. It is important to verify the applicable regulations for an individual award, which may be found in the Award Notice issued by the funding agency.

These guidelines pertain to federally sponsored projects and must be used as guidance for all sponsors unless specifically addressed in a non-federal sponsor’s policies and/or procedures. This GAP supersedes previous GAP versions, Duke Policies, Guidelines, etc.

Note: This guidance is administrative in nature and is not a cost reimbursement policy. Failure to comply may or may not result in adjustments of charges to the award. Noncompliance with this policy does not mean this cost is unallowable from an external perspective. Any adjustments of charges will be as required under applicable federal cost reimbursement principles. If a cost is removed from an award for any reason, whether or not related to this guidance, the cost will generally be charged to departmental funds.