Sponsored programs are usually conducted by research teams within the physical boundaries of the University. But sometimes a portion of the statement of work may be performed by one or more other institutions or companies (third parties) who may have a particular expertise not available at Virginia Tech. When a portion of the statement of work on your funded project is performed by a third party, then most likely, the university will issue that third party a subaward.
Sponsor or Peer Reviewed
If the subcontractor is specified in the proposal and the collaboration is funded, it is not necessary to comply with the procurement requirements for competitive bidding or sole source justification since the sponsor or peer review process already approved the selection. Therefore, inclusion of a specific subcontractor in a proposal, and subsequent approval of that proposal as written, is an acceptable basis for sole source. If this is not the case, you must comply with the following procedures for selection.
Non-Sponsor or Non-Peer Reviewed
Normally, participation of a subcontractor has been fully disclosed and budgeted for in the University’s proposal submitted to the funding agency (sponsor). However, when a subcontractor was not identified in Virginia Tech’s proposal, prior to entering into a subcontract arrangement, approval from the sponsor will be required. In addition, it is the responsibility of the PI, along with the coordinated efforts of the Purchasing Department and OSP, to comply with procurement requirements in selecting a subcontractor. There are two primary methods of selecting a subcontractor: competitive bidding or sole source procurement:
- Competitive bidding requires the PI to solicit proposals from a number of sources and make a final selection from those responding based on technical merit and cost objectives. The final selection is normally the lowest bid from a technically qualified offeror.
- Sole source procurement may only be used when the nature of the program requires performance from a single entity because requisite services or expertise are not available from other sources. The PI is required to provide sole source justification identifying the need for the particular services and why the selected subcontractor is the only source available. Sole source selection is not justified simply by the fact that there has been ongoing collaboration between scientists. A sole source justification in these situations must be further justified with respect to the unavailability of the services or expertise from other sources.
Preparing the Subcontract at the Post Award Stage:
When OSP receives a fully executed award from the prime sponsor that includes a subcontractor, a “Request to Issue a Subcontract” form will be sent to the PI. The PI is responsible for completing the form and returning the form to OSP. The information on this form is necessary for OSP to ensure that the subcontract is properly written. OSP cannot start preparing the subcontract until this form is completed and returned.
OSP will check the list of debarred and suspended (excluded) parties (EPLS) on the web and conduct a Visual Compliance check (restricted parties or denied parties screening). Individuals on the list of EPLS are not permitted to receive Federal contracts or assistance. As a result, Virginia Tech will not be able to issue a subcontract to this individual/organization regardless of the type of award. By law, people and institutions in the U.S. are not allowed to deal with individuals/organizations on the restricted parties or denied parties list.
OSP is responsible for preparing and executing all subcontracts related to sponsored programs. A subcontract must incorporate all terms and conditions required by the prime grant or contract. A subcontractor is not authorized to being work until a subcontract has been fully executed by an authorized representative from Virginia Tech and the subcontracting organization.
The subcontracts will be issued as either cost reimbursement or firm fixed price based upon the scope of work.
- Cost reimbursement is the most common subcontract issued by Virginia Tech. A cost reimbursement subcontract is suitable when the work to be performed cannot be described in highly quantitative terms or when neither party to the subcontract can estimate its cost with confidence. A cost reimbursement subcontract establishes an estimate of total cost for the purpose of obligating funds and establishes a ceiling that the subcontractor may not exceed (except at its own risk) without the prior approval from the prime recipient and the sponsor. The subcontractor is reimbursed for actual costs as long as the costs were expended on goods and services that fall within the subcontract’s scope of work and are allowable costs.
- A firm fixed price subcontract is suitable when the services or goods can be adequately described and later measured in unambiguous terms. The subcontractor is awarded a set lump-sum payment for performance of a specified set of tasks or delivery of a certain number of products or services. The lump sum may not be adjusted, no matter what costs the subcontractor actually incurs. In short, the subcontractor is at risk to perform, and the recipient (Virginia Tech) is guaranteed a certain level of performance at no risk of spending more than budgeted.
Once the subcontract is prepared, the unsigned subcontract is sent to the subcontractor for review. The subcontractor may want to negotiate changes or request clarification of the terms and conditions; OSP will negotiate and coordinate those changes with legal counsel, department personnel and or the PI, where appropriate. Once negotiations are completed and the signed subcontract is received, OSP executes the agreement on behalf of Virginia Tech. OSP will send one fully executed copy to the subcontractor, the PI, and the Department’s Business Manager.
Preparing and negotiating the terms and conditions of a subcontract takes time and OSP will move out expeditiously. The length of time required to establish a subcontract will vary depending on how responsive individuals are to requests for information/data and the extent of negotiations required. However, it is important to remember that the final subcontract should always serve to facilitate the completion of the funded project within the legal and regulatory limitation imposed by all parties involved.
The responsibility for monitoring subcontractors is divided between the PI, along with his or her departmental administrator, and OSP.
A subaward is closed out when its period of performance comes to an end, regardless of whether Virginia Tech's research project is ending or continuing. When feasible, it is advisable for a subaward period of performance to be slightly shorter than Virginia Tech's, to allow sufficient time for collection and review of the subcontractor's final report, verification of subcontractor data, and incorporation of the subcontractor's research results into Virginia Tech's final technical report to the sponsor.
- Final Technical Reports – If required, the PI is responsible for obtaining a final technical report from their subcontractors and retaining a copy in their project file. The PI is encouraged to remind subcontractors of this need well in advance of the due date for such reports. OSP will incorporate appropriate language into the subaward agreement if the PI indicates that a final technical report is required when completing the Request to Issue a Subcontract.
- Final Invoice - In order for Virginia Tech to comply with its financial report requirements, subcontractors are required to submit a final invoice, clearly marked FINAL, to Virginia Tech no later than 60 days after the end of the subcontractor's period of performance, or such other date as may be specified in the subaward. In the event no invoice is received 60 days after the end of a subaward, Virginia Tech may treat the subcontractor's last invoice as the final invoice. Payment for subcontractor invoices submitted to Virginia Tech later than 60 days after the end of the subaward may not, at the discretion of the Director of Post Award, be paid.
- Other Closeout Reports And Documents – Once the subcontractor has submitted their final invoice, the post award administrator will send the PI a copy of the Certification of Completion of Performance form for completion. In addition, the post award administrator will send the subcontractor the Subaward Close Out form along with the Virginia Tech Inventory of Property form for completion, if applicable .
- The PI and department are responsible for assisting OSP in obtaining final closeout information, including invoices, from their subcontractors.