International Subrecipients

Prior to Proposal Submission

• Scope of work: a clear and explicit scope of work (SOW) will reduce the risk of misinterpretation. The SOW should be developed by the MSU PI along with their sub-recipient counterpart.
• Budget and Budget Narrative
  • F&A/Indirect Cost Rate
    • The Uniform Guidance (2 CFR 200) allows subrecipients without a negotiated F&A rate to use a 10% de minimus rate for federally funded projects. However, if subrecipients use the de minimus rate on a project budget, they must continue to use it for all subsequent projects with MSU.
    • Sponsors may provide more specific guidance or further restrictions on subrecipient F&A rates (i.e. NIH allows up to a maximum 8% de minimus F&A rate). Specific restrictions should be reviewed in the agency specific guidelines, RFP, and/or award.
    • If the subrecipient does not have a negotiated F&A rate and chooses not to utilize the 10% de minimus rate, they may budget all costs as direct costs for federally funded projects. Keep in mind that cost principles (allowability, reasonableness, allocability, and consistent treatment) must apply.
  • Standard Financial Fees: international subrecipients may incur standard financial/banking fees, such as wire transfer fee, which should be considered when preparing their budget.
  • Additional Restrictions
    • Rate of pay justification may be requested for personnel included in subrecipient budgets. Pay should be reasonable and commensurate with the work being performed.
    • If the project will be federally funded, all flights must be compliant with the Fly America Act. This may result in additional costs that should be represented in the subrecipient’s budget.
    • There may be expenses, such as gifts for visitors, that a subrecipient believes are allowable due to customary behaviors, but would be unallowable per MSU or agency restrictions. Subrecipients should be aware of all potential restrictions when preparing their budget.

Prior to Subaward Execution

• Subrecipient Commitment Form
  • Subrecipients are expected to provide audit, such as a completed single audit, or other financial information in addition to the completed Subrecipient Commitment Form.
  • If the subrecipient does not have a DUNS number, please note that one will be required at the time of award for federal funded projects.
• Compliance Documentation
  • If applicable, the subrecipient must show evidence of animal or human subject protection approval. If they intend to be covered by MSU's compliance approval, additional steps must be taken (e.g. this must be clearly documented, reviewed by the IRB or IACUC, specific protocol provided, etc.). Some countries have in-country requirements that may cause significant delays, e.g., months to years. It is recommended to contact the Human Research Protection Program Office (irb@ora.msu.edu or 517-355-2180) or the Animal Care Program Office (iacuc@msu.edu or 517-432-8103) as soon as possible.
  • If applicable, the appropriate Conflict of Interest and Export Control documentation must be provided.

• Type of Subaward Agreement
  • Cost Reimbursable
    • Most international subawards at MSU will be issued as a cost reimbursable agreement, in which expenses must be incurred and then reimbursement requested.
    • Expenses incurred may be audited by MSU or MSU’s prime sponsor. Documentation must be kept on file by the subrecipient for all project expenses.
  • Fixed Payment Schedule
    • A fixed payment schedule sets payment amounts at set intervals, not based on deliverables. This is a type of cost reimbursable agreement, as at the end of the subaward, payments issued in excess of actual costs must be returned to MSU.
    • This type of subaward is rarely used, but may be required by some sponsors.
  • Fixed Price
    • Fixed price subawards pay based on a deliverable schedule and are issued by MSU on a limited basis.
    • The Uniform Guidance limits federally funded fixed price subawards to $150,000.
    • If deliverables are met, full payment is issued regardless of actual costs incurred.
    • For fixed price subawards, budgets are audited at the time subawards are being negotiated to establish reasonableness of deliverable amounts.
• Terms and Conditions
  • Terms and conditions from MSU’s prime award will be included in the subaward. MSU may elect to include additional terms and conditions based on the subrecipient.
  • At times, due to a language barrier or other factors, international subrecipents do not fully understand the subaward restrictions. This may result in a project delay, withholding of payment, or non-compliance situation which could negatively impact project success.
    It is recommended that the PI and department administrator conduct a meeting (in person, phone, skype, etc) with the subrecipient at the beginning of the project to communicate subaward expectations, ensuring that the subrecipient understands all restrictions. It may be beneficial for OSP/CGA to also participate in these meetings.
  • Cash Advances/Repayment Schedule: International subrecipients often need cash on hand in order to begin or continue project work due to their entity’s financial limitations and/or location. Advance payments are high risk for MSU, as expenses have not yet been incurred.
    • All advance requests must be based on need and justification may be requested by OSP/CGA and are typically incorporated into the subaward document. The most common advance amount represents three months operating expenses. It is uncommon for MSU to provide more than 25% of a total award amount to a subrecipient.
    • A repayment schedule details when supporting documentation must be submitted to MSU in order to reconcile an advance payment. Departments should work with subrecipients to develop a reasonable schedule that meets the needs of the subrecipient but also minimized university risk. It may be beneficial for subrecipients to maintain the advance balance until the end of the project so that project activities are not affected by lack of cash on hand.
• Required Annual Updates
  • Risk Assessment. Subrecipient risk level is established at the time of subaward and reassessed on an annual basis, based on the fiscal period end date of the most current audit/financial report or the date of assessment when there is no report available.
  • Annual debarment check. CGA uses Visual Compliance to check the debarment status of subrecipients on an annual basis.
• Payment Requirements
  • All required documentation such as invoices, PI certification, or receipts, if applicable, must be included on the KFS transaction.
    • Typically an invoice, in English and USD is required prior to payment for cost reimbursable and fixed price subawards. A standard sample subrecipient invoice template may be downloaded here, http://sites.nationalacademies.org/cs/groups/pgasite/documents/webpage/pga_167906.xlsx.
    • Additional documentation may be required based on MSU’s risk assessment of the subrecipient. High risk subrecipients on cost reimbursable subawards must provide supporting documentation for all expenses for which payment is being requested. Low risk subrecipients on cost reimbursable subawards often only need to provide a certified invoice at the time payment is requested.
  • There are two financial object codes (6593: Subcontract Payments <= $25,000; 6594: Subcontract Payments > $25,000) that can be used for payments on subaward invoices, dependent on the total that has been already paid on the subaward to date.
  • MSU departments are encouraged to provide international subrecipients with an invoice/financial statement template to ensure that all required information is submitted on the reimbursement request.
• Other
  • Subawards will be issued by MSU in English. Subrecipients may need the subaward translated during negotiation and execution.
    Translations services are available at an additional cost by MSU, as well as by outside services.
  • An ECCORW form may be required specifically for international subrecipients.

The Office of Sponsored Programs (OSP) drafts and executes subaward documents compliant with prime award terms and conditions for agencies that do not participate with the Federal Demonstration Partnership (FDP); this includes the majority of international subawards. For the period September 2015 through September 2016, the average total processing time¹ to complete international subawards is about 31.5 calendar days with an average of 9 days in OSP, i.e. time that OSP spends on activities to complete the subaward request. Other processing time logged out of OSP could be with the subawardee, the department/unit, the PI, or with other central offices, e.g. Office of Research Regulatory Support, Office of Export Controls and Trade Sanctions, MSU Technologies, etc. OSP staff regularly follow up on activities that are logged out of OSP. You may see the status of a subaward request by viewing the Negotiation Module in KC (Kuali Coeus - Research Administration System). Note that international subaward processing times may vary. Some things to consider are level of risk of the subawardee, time of year, volume of work within OSP and other central offices, etc. Contact your OSP representative if you have any questions.

For more details on OSP subaward processing time, please go here.

¹Total Processing Time begins with OSP receipt of all required documents, i.e. the "full package" through the receipt of the fully executed document from the subawardee with limited exceptions, i.e., less than 3% tracked based on first contact received.

• Required Annual Updates
  • Risk Assessment. Subrecipient risk level is established at the time of subaward and reassessed on an annual basis, based on the fiscal period end date of the most current audit/financial report or the date of assessment when there is no report available. Risk level is stored in CGA’s Account Explorer, in addition to the expiration date of the assessment.
  • Annual debarment check. CGA uses Visual Compliance to check the debarment status of subrecipients on an annual basis. The search results are stored in CGA’s Account Explorer, in addition to the expiration date of the search.
• Subrecipient Payment Processing
  • Subrecipients must be set up as vendors in KFS prior to payment by the department. Please contact accounting for assistance.
  • All subaward payments should be routed in KFS as a Disbursement Voucher, Payment Reason Type Q.
  • There are two financial object codes that can be used for payments on subaward invoices, dependent on the total that has been paid on the subaward to date.
    • 6593: Subcontract Payments <= $25,000
    • 6594: Subcontract Payments > $25,000
  • All required documentation such as invoices, PI certification, or receipts, if applicable, must be included on the KFS transaction.