PPM 525
- What A Subcontract Is
- What A Subcontract Is Not
- Process Requirements
- Your Departments Responsibilities
- Purchasing Department Responsibilities
- How to Submit a High Value Purchase Requisition for a Subcontract
- What is in a Finished Subcontract Purchase Order
- Electronic Subcontract Change Order Request
- What a Subcontract
Is
A Subcontract is:
Form: A written purchase contract by which the University enters into an agreement to purchase goods and/or services from a source outside the University... Purpose: ...to implement or perform a portion of the scope of work; perform scholarly or professional instruction; or perform public service programs relating to sponsored research, scholarly or professional instruction of the prime contract or grant,... Prime Funding Source: ...funded under an extramurally sponsored contract, grant or cooperative agreement, and... Content: ...generally incorporating special terms and conditions flowed down from the prime. Subcontracts are subject to specific approval as to form by University General Counsel.
top of pageSubawards under Prime Awards
A prime award can be from a federal or a non-federal sponsor to UCSD. Since most prime awards are federal, UCSD generally uses the federal definition of “award”.
OMB Circular A-110 defines subaward as an award of financial assistance in the form of money, or property in lieu of money, made under a prime “award” by a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient. A-110 defines a prime “award” as follows: Award, means financial assistance that provides support or stimulation to accomplish a public purpose.
Awards include grants and other agreements in the form of money or property in lieu of money, by the Federal Government to an eligible recipient. The term does not include: technical assistance, which provides services instead of money; other assistance in the form of loans, loan guarantees, interest subsidies, or insurance; direct payments of any kind to individuals; and, contracts which are required to be entered into and administered under procurement laws and regulations.
- What a Subcontract
Is Not
- Providing the goods and services within normal business operations
- Providing similar goods or services to many different purchasers
- Operating in a competitive environment
- Program compliance requirements do not pertain to the goods or services provided
- Consulting Agreements - individuals or organizations provide professional or tech. advice (PPM 523-10.1)
- Independent Contractor Agreements - persons are engaged to render service for a specified result under UCSD control (PPM 523-10.2)
- Facility construction, maintenance
or repair Agreements - administered by Facilities Management
(PPM 525-1)
- Process Requirements
Because subcontracts are issued as High Value Purchase Orders at UCSD, the process must comply with certain procurement regulations applicable to the purchase of any goods and/or services. The two most important requirements which may impact the requesting department are the requirement to document whether or not there was adequate competition in selecting the subcontractor, and the requirement to document that the costs are reasonable.
Although the buyer in Purchasing who issues the subcontract is responsible to document compliance, requesting departments may be asked to provide information and backup, so it is helpful to understand these requirements.
Requirement for Competition General Rule:
“Competition” is required for any procurement (purchase) over $50,000, and may be required for certain procurements under $50,000. Competition means that the buyer must obtain bids or proposals from more than one potential vendor to be sure that the University get the best value for the money.Exception
Subcontracts are usually, but not always, an exception to this rule. The primary exception in which competition is not required are cases in which the produce or service is proprietary or unique, that is, only a single product or service will satisfy needs, all others unacceptable.Requirement
Requestors should be aware of the rules and exceptions for competition in procurement because the requestor may be asked to provide documentation that a subcontractor’s services are unique or that the services required are available only from a sole source. Before the subcontract is issued, the basis for noncompetitive procurement must be contained in the subaward purchasing file. The buyer can advise requestors what documentation will satisfy this requirement.
Requirement for Reasonableness of Cost General Rule
In buying goods or services for the University, the buyer must consider total value including needs of UCSD for quantity, quality, delivery and service. While price is not a determining factor in selecting a source to provide services to the University, it is an important factor, and the buyer is responsible to review the cost and prices to assure that the price paid does not exceed that which would be incurred by a prudent person in the conduct of a competitive business. This requirement applies whether or not the seller is a sole or single source.Requirement
Generally, the buyer will ask that the requesting department provide an itemized budget in the amount of the subcontract. This budget is then analyzed by the buyer, and on the basis of established criteria, the buyer documents a determination that a reasonable price was offered or negotiated. Although the prime sponsor may have approved the subcontractor’s budget, and the prime award may include an itemized budget from a subcontractor, UCSD will still be held responsible by federal auditors for making an independent determination of price reasonableness.
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- Your Department Responsibilities
Start the Process
The Principal Investigator (PI)’s department is responsible to begin the process of issuing a subcontract by submitting Purchase Order Request (POR) for new and continuing subcontracts. New PORs can be entered on line in WebIFIS. Change order requisitions must be via e-mail to the buyer, or on paper.
Provide Backup Documents
Each POR, whether for a new subcontract or a change order to an existing subcontract, should include a Statement of Work and budget for the subcontractor. The buyer will also need a copy of the prime award. Finally, if the Subcontractor not specifically named in the UCSD proposal or the prime award, the department may be asked to provide a sole source justification explaining why competition is not appropriate.
Other Responsibilities
If the project is complex and/or one prime award involves multiple subcontracts, consider meeting with the buyer to organize the process. Departments are also responsible to approve subcontractor’s invoices and arrange for payment, and to maintain and reconcile accounts. Departments should also advise Purchasing of any subcontract problems.
Return to top of pagePost-Award Responsibilities
The UCSD PI has authority and responsibility for all scientific and technical matters. The PI is responsible to monitor costs and performance, to review subcontractor’s invoices, authorization of payment. The PI is also responsible to obtain/review/ approve all written progress, technical and financial reports, to send patent/ new technology reports to Purchasing at closeout.
- Purchasing Department Responsibilities
Procurement Requirements
The buyer in Purchasing is responsible to assure adequate competition was obtained before the subcontract was issued, or to justify and document that the work was either unique or proprietary service, or a sole source selection. Purchasing must also determine the reasonableness of costs and perform evaluation of price and costs, even when the subcontractor is a sole source.
Write and Negotiate Subcontract
Purchasing is responsible to review the prime award and determine applicable cost principles and flow down terms and conditions, to draft the subcontract and to lead negotiations of any subcontract terms with subcontractors. The buyer in Purchasing who is authorized to issue the PO is the only University official with the authority to commit the assets of the University and to authorize contractual changes.
Issue Purchase Order and Subsequent Change Orders
Purchasing is responsible to issue authorized modifications (PO change orders), for example, to change cost or allocate funding in subsequent Budget Periods, to extend the time period or changes in the statement of work. All such contractual changes are made only after a request is submitted by the department. Purchasing is responsible to determine if modifications require prime agency approval, and to refer dept to OCGA to obtain required prior approval.
Other Responsibilities
Purchasing will meet with department representatives or other offices if complex project and/or multiple subcontracts are to be issued.
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- How to Submit a High Value Purchase Requisition
for a Subcontract
High Value Purchase Requisitions
Subcontracts are issued as High Value Purchase Orders at UCSD, so you request them the same way you request a High Value Purchase Order any commodity - by submitting a High Value Purchase Requisition through FinancialLink.
New purchase order subcontracts can be requisitioned via WebIFIS in FinancialLink.Requests for change orders may be e-mailed to the buyer.
Information Required
To complete a WebIFIS requisition for a subcontract:- Complete the Header Information page
- Complete the Item Information
as follows:
- Use Commodity code F0102
- Enter the appropriate Quantity, Ship to, and Price
- For Item description, click the drop-down menu on Do you want to: Select a Clause and choose REQL0001
- Click the Add Clause button. The clause will appear in the Item Description box.
- Fill in all the fields of the clause:
Prime Sponsor:
Prime Award Grant/Contract #:
UCSD PI:
Project title:
-
Project period:
Federal awards: CFDA# /Prime FDP IV Y/N
Subaward involves government owned equipment: Y/N
Subaward Budget period:
Subrecipient PI:
Budget period amount not to exceed: $
For prompt payment, send a copy of all invoices to:
-
Attention:
University of California, San Diego
Department: Mail Code:
9500 Gilman Drive
La Jolla, Ca 92093-
Phone:
In addition, mail (MC 0914) or fax (858 534 5803) the following documents to the buyer in Purchasing. Be sure to note the requisition number and buyer's name on the document:
- Copy of the complete prime notice of award
- Copy of the subcontractor’s statement of work
- Copy of Subcontractor's detailed budget
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- What is in a Finished
Subcontract Purchase Order
A subcontract usually consists of the following parts:
- IFIS Purchase Order
This is the “landscape” printed, IFIS-generated PO. The description includes basic subcontract data: Title, Subcontractor PI, period, amount, Prime Agency and Award number, UCSD PI, any other special information or terms, and a listing of the documents attached or “incorporated by reference”.
The PO document is printed by IFIS. The requesting department receives a copy of the purchase order. Purchasing receives the vendor or subcontractor copy, and mails it and it's attachments to the subcontractor.
While the PO will specify the documents attached to the subcontract, IFIS does not print the following attachments. Documents attached by Purchasing to a subcontract PO will be sent to departments upon request.
| There may be a fine line between
a PO subcontract to a subcontractor, and a "regular PO"
issued to buy goods or services from a vendor. In addition to the
definition of terms above, consider the following definition to
identify the type of recipient of the PO: |
| Who is a Vendor? A vendor is an entity responsible for providing generally required goods or services related to the administrative support of the prime award, as distinguished from a subcontractor. These goods or services may be for the prime recipient or subrecipient's own use or for the use of beneficiaries of the program. This term is defined here to distinguish subcontractors from vendors. Characteristics of a vendor include items such as: |
| Other Non-Subcontract Agreements: Certain other agreements which are not processed as subcontracts include: |
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For Purchasing-related questions, please call 534-3084, or send an email
Last updated : December 15, 2004 by Webster