Subcontracts 101
By Mitali
Ravindrakumar
USC
Close-out Process
Collaboration
between Parties
Perform
Subcontractor
Analysis
Subcontract
Monitoring
Negotiate Terms
/Accept
Award/Execute
Sponsor - Fund
Project/Subcontr
act
Overall Process:
Before consenting to a subcontract, the Sponsoring Agency
reviews the request and supporting data provided by the prime and
considers such factors as: technical need for services, compliance
with the prime contract's goals, adequacy of competition,
responsibility of the proposed subcontractor, proposed type and
terms and conditions of the subcontract, and adequacy and
reasonableness of cost or price analysis performed.
Prime contractors are responsible for planning, awarding, and
administering its subcontracts.
Subcontractor vs. Service Order
Independent Contractor: offers services to the general public on a consistent
basis for a specified amount of compensation for a specified result. Prime
contractor does not control the methods used to obtain the results
Consultant: an individual who provides professional or technical advice,
opinions, or services to the prime contractor for a fee.
Subcontractor: an individual or organization identified by a prime contractor
to perform a specific task as part of the overall research project.
Performing the Subcontractor Analysis:
Collaboration Agreements- proposed in the application and
included/approved in the award document.
Sole source - implies that there is only one person or company that can
provide the contractual services needed and that any attempt to obtain
bids would only result in one person or company being available to
meet the need.
Competition - Selections subject to the competitive evaluation process
(preaward): the technical capability and costs of proposed subcontract
teams are evaluated as a combined entity.
Consent- Requires sponsor approval (postaward) non-team
subcontracts are usually consented to by letter
Directed Subcontracting- sponsors are prohibited from directing or
assisting prime contractor in selecting subcontractors, or personnel to
be used on a subcontract.
Funding / Issuing Subcontracts:
Collect and update all required Certifications
(Debarment, Lobbying, etc.)
A-133 Audit Compliance
Confirm Rates, As part of cost analysis (labor,
F&A, Fringe, Stipend, etc.)
Ensure that contact has been established with
subcontractor’s Business Office
Negotiate Terms and Conditions:
FDP: use of accepted terms and conditions / approved forms and sponsorspecific attachments
Non-FDP: Use Institutional Subcontract template (if you have one) and /or
prime agreement’s terms and conditions.
Certificate of Current Pricing Data FAR Part 15 – cost determination
Terms in accordance with Public Law 87-563/ Truth in Negotiation-terms
TITLE to Equipment, Copyrights, Data Ownerships, Invoicing requirement
Flow down clauses or specific requirements from prime agreement.
Monitoring:
Collect Representations and Certifications
PI or designee performs Technical Review
Department of Contracts and Grants or other postaward unit performs
Administrative Review-Collect and review Invoices for payment
Disbursement Control issues checks and mail out payments
Any Modifications and Amendments are also processed as needed
based on technical direction from PI and terms of prime agreement.
Closeout:
Federal:
All federal contracts to say the following before close-out:
“The Subcontractor assures to the University that all expenses were incurred in full
compliance with Federal cost principles (i.e., OMB Circular A-110 and A-122 and its
own internal applicable audit regulations.
Disallowed cost if found during the retention period of subcontract will promptly
be refunded to the University.”
Collect final reports (i.e., technical, financial, invention reports and property report
as required by the Prime Sponsor
Subcontractor may be required to send Final Claim and Release Form to Contractor
Records Retention-closeout guidance taken from Federal cost principals. Additional
instructions, based on prime contract, should be included in the terms of the
Subcontract.