If your project requires collaboration with another organization, you may be required to issue a subaward. The first step in this process is to determine whether you have a subrecipient or contractor relationship.
Determination of Subrecipient Status
As a pass-through entity (PTE), the University of Hawai’i (UH) must make a case-by-case determination whether each agreement it makes for the disbursement of a prime award casts the party receiving the funds in the role of a “subrecipient” or a “contractor”. This determination shall be documented in the myGRANT proposal development module using the Form S-5 Subrecipient or Contractor (Vendor) Determination Checklist. When determining whether an entity is a subrecipient or a contractor it is critical to use your judgment in evaluating the substance of the relationship between UH and the entity.
The Office of Management and Budget (OMB) Uniform Administrative Requirements provide the following guidance at 2 CFR §200.331:
Subrecipient (UH Issued Subaward Agreement):
- Determines who is eligible to receive extramural assistance;
- Has its performance measured in relation to whether objectives of the sponsor’s program were met;
- Has responsibility for programmatic decision making;
- Is responsible for adhering to the sponsor’s applicable program requirements specified in the award; and
- Uses extramural funds to carry out the specified program, as opposed to providing goods or services for the benefit of UH.
Contractor (RCUH Services Agreement):
- Provides goods and services within normal business operations;
- Provides similar goods or services to many different purchasers;
- Normally operates in a competitive environment;
- Provides goods or services that are ancillary to the operations of the sponsor’s program; and
- Is not subject to the sponsor’s program compliance requirements as a result of a Services Agreement, though similar requirements may apply for other reason.
If additional assistance is required, please contact ORS Financial Compliance at firstname.lastname@example.org.
Note: Contractor agreements are subject to the full Facilities & Administrative (F&A) costs. The Modified Total Direct Cost (MTDC) exclusion for the amount over the first $25,000 applies only to subawards (object code 7172).
The following process should be followed to issue a UH subaward.
When an award from an extramural sponsor (“Prime Award”) is accepted by UH, the principal investigator (PI) and fiscal administrator (FA) will receive an award notice from ORS. If any subawards are indicated in the project proposal, ORS will include a link to the UH-Issued Subaward Checklist in the award notice. These checklists include the items necessary for ORS to generate and negotiate a new subaward.
To initiate the subaward, the PI should obtain all applicable items listed on the UH-Issued Subaward Checklist and all applicable items from the subrecipient. The FA should review information provided for completeness and accuracy. Refer to Subaward Initiation Process Flow and Subaward Responsibility Matrix for additional information. The subaward packet should be emailed to email@example.com. Once all necessary documents have been received, ORS will perform the risk assessment required by 2 CFR §200.332. ORS will also generate the subaward, then email a draft to the PI for review and approval, with a copy to the FA. It is imperative that any desired changes to the subaward are identified to ORS within five (5) business days of the date of the email. The subaward will then be sent to the subrecipient for review and execution. Substantive changes requested by the subrecipient will be sent to the PI (with copy to the FA) for further approval. A separate email should be sent for each subaward being initiated.
Once a subaward is fully executed, ORS will email an electronic copy to the PI, FA and subrecipient. If an original signed copy is required by the subrecipient, please notify ORS and the original signed copy will be made available for pick-up.
To check on the status of your subaward at any time, please see the Subaward Status Log.
Amendments to subawards may be initiated at any time by completing the Subaward Amendment Request form, then emailing the completed form and related documents to firstname.lastname@example.org. Amendments may include, but are not limited to, the issuance of incremental or supplemental funding, no-cost extensions, PI changes, deobligations and revisions to subrecipient name.
In addition, if UH accepts a modification for a Prime Award from which any subaward has been issued, the award notice to the PI and FA will include the Subaward Amendment Request form. If any amendments need to be made to subawards issued from this Prime Award, the completed Subaward Amendment Request form and related documents should be emailed to email@example.com.
Please note that in either of the above instances, a separate Subaward Amendment Request form and email should be sent for each subaward amendment.
Once the completed Subaward Amendment Request form and all necessary documents have been received, ORS will generate the amendment, then email a draft to the PI for review and approval, with a copy to the FA. It is imperative that any desired changes are identified to ORS within five (5) business days of the date of the email. The amendment will then be sent to the subrecipient for review and execution. Substantive changes requested by the subrecipient will be sent to the PI (with copy to the FA) for further approval. ORS will also follow up with the subrecipient if any compliance-related forms need to be updated.
Once a subaward amendment is fully executed, ORS will email an electronic copy to the PI, FA and subrecipient. If an original signed copy is required by the subrecipient, please notify ORS and the original signed copy will be made available for pick-up.
To check on the status of your subaward amendment at any time, please see the Subaward Status Log.
For additional information, please refer to the Project Lifecycle / Project Management / Process / Subaward tab.
Federal Contract Prime Awards
When the Prime Award is a federal contract (not a grant), an ORS Form S-3 (Sole Source Justification / Cost Price Reasonableness) must be also completed and forwarded to ORS with the Subaward Startup Checklist documents.
Additionally, if the subaward issued under the federal contract Prime Award is greater than $750,000, ORS will require a Certification of Current Cost or Pricing Data Form (FAR 15.406-2) from the subrecipient.
Under Hawai’i Revised Statutes §103-53, as a prerequisite to entering into subawards of $25,000 or more, subrecipients are required to provide proof of tax clearance from the Hawai’i Department of Taxation and the Internal Revenue Service to the effect that all tax returns due have been filed, and all taxes, interest, and penalties levied against the subrecipient have been paid.
The tax clearance requirement does not apply in the following situations:
- Subawards which are less than $25,000; or
- Subawards made to a government agency. “Government agencies” includes any government agency, whether domestic or foreign, including municipal, county, state, or federal. This would include public universities.
Since both the Hawai’i Department of Taxation and the Internal Revenue Service no longer provide written or hard copy compliance documents, registration with the Hawai’i Compliance Express is required to show proof of tax clearance. There is a nominal annual fee for the service. The “Certificate of Vendor Compliance” issued online through Hawai’i Compliance Express provides the registered provider’s current compliance status as of the issuance date. A certificate that reflects a “Compliant” status will be accepted by UH as proof of tax clearance.
Subrecipients should register with Hawai’i Compliance Express at https://vendors.eHawai’i.gov/hce/splash/welcome.html as soon as possible as the tax clearance process can take a long time. For help with registering, contact the Hawai’i Compliance Express through live chat technical support on its website or call (808) 695-4620.
PIs should advise potential subrecipients of the tax clearance requirement at the proposal phase so that subawards and payments are not delayed.
Tax clearances are valid for only six (6) months from the certificate date. ORS will require a current tax clearance from subrecipients before executing a subaward or amendment.
Encumbrance and Payment
Upon execution of the subaward, ORS will notify the PI and FA. The FA will then process the encumbrances and payments to subrecipients through the Research Corporation of the University of Hawai’i (RCUH).
In accordance with 2 CFR 200.332, as pass-through-entity (PTE), the University must monitor the activities of our subrecipients 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.
The Subaward Life Cycle Flowchart provides an overview of the University’s subaward process
Monitoring activities must include the following:
- Reviewing the financial and performance reports required by the University.
- Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means.
- Issuing a management decision for audit findings pertaining to the award provided to the subrecipient from the University.
- Based upon the level of risk posed by the subrecipient, the following monitoring tools may be useful for the University to ensure proper accountability and compliance with program requirements and achievement of performance goals:
- providing subrecipients with training and technical assistance on program-related matters; and
- performing on-site reviews of the subrecipient’s program operations;
- arranging for agreed-upon procedures engagements (See 2 CFR 200.425)
- Verify that every subrecipient is audited as required by 2 CFR Subpart F
- Consider whether the results of the subrecipient’s audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the University’s records
- Consider taking enforcement action against noncompliance subrecipients as described in 2 CFR 200.339 to 200.343
See also Subrecipient Monitoring Guide and AP 12.411 “Subrecipient Monitoring” for specific responsibilities and procedures. For additional information, please refer to the Project Lifecycle / Project Management / Process / Subaward tab.