Subcontract Policies and Procedures

A. PURPOSE: To establish guidelines for the issuance, control and administration of subcontracts required under grants and contracts at the University of Virginia.

B. SCOPE: The statement applies to all sponsored program projects supported by Federal and Non-Federal agencies which require subcontracting to accomplish project goals.

C. DEFINITION: The term "subcontracting" in this statement is defined as formal contractual agreements with participating organizations for the procurement of research collaboration and/or technical services under sponsored program projects. It does not apply to the procurement of supplies and research equipment which is subject to State Procurement Policy Procedures.

D. FEDERAL REQUIREMENTS: Federal Procurement Regulations generally require prior approval for the subcontracting of any portion of a Federal grant or contract in excess of $25,000. Also, the Contractor must select Subcontractors on a competitive basis to the maximum extent possible without unduly compromising the objectives and requirements of the contract. The guiding factors in selecting Subcontractors are price, past dealings and reputation for high quality and timely work. In any event, the competitive basis utilized should be chosen for its value to the Contractor in accomplishing the objectives and meeting the requirements of the prime contract. A record of negotiations, inquiries, factors in decisions, etc., must be maintained for audit purposes.

E. PREAWARD SUBCONTRACTING PROCEDURES: Proposals which propose subcontracting for scientific collaboration and/or technical services should include the following:

1. A detailed description of the research and/or technical services to be provided.
   
2. A detailed cost estimate budget signed by an official authorized to bind the subcontractor.
   
3. A copy of the subcontractor's most recent indirect cost/fringe benefit rate negotiation agreement and taxpayer's identification number.
   
4. A copy of the subcontractor's most recent A-128 or A-133 financial audit and compliance report.
   
5. If the proposed subcontract is sole source in excess of $10,000 and to a non-governmental agency, it is subject to the requirements of the Virginia Procurement Act. The Principal Investigator should complete the Sole Source Procurement Form (Attachment A) and submit it to OSP for review and approval. If approved, OSP will forward it to Materials Management for review, approval, and posting for 10 days (see Attachment A).

F. POSTAWARD SUBCONTRACTING PROCEDURES:

1. If the proposal is funded and the proposed subcontracting approved by the sponsoring agency, the Office of Sponsored Programs should be contacted for assistance in drafting a subcontract document in accordance with sponsor requirements. The draft subcontract will then be forwarded to the Project Director for final approval and signature. After final approval is received, the subcontract is forwarded to the Subcontractor for execution by an authorized official. A draft subcontract with sample clauses is attached as Attachment B.
   
2. To insure control of the funds to be allocated to the subcontract, a separate University Account for the amount of the subcontract will be established. As billings for reimbursement are received from the Subcontractor, the OSP accountant will forward the billing to the Project Director for approval prior to payment. No subcontract payments are made by OSP without the approval of the University's Project Director and/or appropriate Departmental Research Administrator. The Project Director and/or Departmental Research Administrator is responsible for technical and fiscal monitoring and control.
   

G. CLOSEOUT:

1. Upon completion of the project and prior to final payment, the OSP Accountant will request status of the final technical report, final patent report, final property report and final billing by sending the subcontractor a copy of the University's SUBCONTRACT CLOSEOUT FORM (see Attachment C.)
   
2. Prior to final payment, the OSP Accountant will conduct a desk audit of the subcontractor's financial cost for the project. If there appear to be questionable cost and/or unusual circumstances, the Accountant will request audit assistance from the Cognizant Audit Agency through the cognizant Contract Administrative Office.