Appendix L to Part 1138 - Terms and Conditions for SUB Article XII, “Fixed-Amount Subawards”
2:1.2.8.6.18.12.64.3.67 : Appendix L
Appendix L to Part 1138 - Terms and Conditions for SUB Article XII,
“Fixed-Amount Subawards”
Unless modified as provided in § 1138.5 or 1138.1205, a DoD
Component's general terms and conditions must use the following
wording for SUB Article XII.
SUB Article XII. Fixed-Amount Subawards. (DECEMBER 2014)
Section A. Limitations on use.
1. You may not use a fixed-amount subaward:
a. If the total value over the life of the subaward will exceed
the simplified acquisition threshold.
b. Unless the project or program scope is specific, with
definite outcomes, and you are able to establish a reasonable
estimate of the actual costs of accomplishing those outcomes.
c. If you will predetermine a set amount or percentage of cost
sharing or matching that the subrecipient must provide under the
subaward.
d. If the subrecipient will acquire any real property or
equipment under the subaward.
2. For fixed-amount subawards not prohibited by paragraph 1 of
this section and except as provided in Section B of this article,
you must obtain our prior approval before making a fixed-amount
type of subaward.
a. If Section B of FMS Article IV requires you to obtain our
prior approval before you make any subaward, and you do not
identify the subaward as a fixed-amount subaward when you obtain
that approval, then you must subsequently request separate approval
before awarding it as a fixed-amount type of subaward.
b. If a subaward is identified as a fixed-amount type of
subaward in the budget you submit for our approval, then our
approval of the budget is the required prior approval.
Section B. Fixed-amount subawards that do not require prior
approval. You are not required to obtain our prior approval
before using a fixed-amount type of subaward if:
1. The subaward is to either:
a. A foreign public entity; or
b. An organizational unit of a foreign organization, if that
unit does not have a place of business in the United States,
regardless of whether another organizational unit of that foreign
organization has one.
2. You determine that the portion of the project or program
under this award which the subrecipient will be carrying out under
the subaward has one or more specific outcomes with the following
characteristics:
a. You can define the outcomes well enough to specify them at
the time you make the subaward. Note that:
i. Outcomes are distinct from inputs needed to achieve the
outcomes, such as amounts or percentages of time that subrecipient
employees or other participants will spend on the project or
program.
ii. The inherently unpredictable nature of basic or applied
research makes it rarely, if ever, possible to define specific
research outcomes in advance, which makes fixed-amount subawards
inappropriate for research. Note that technical performance reports
serve to document research outcomes but are not themselves
outcomes, notwithstanding the definition of “performance goals” in
OMB guidance at 2 CFR 200.76.
b. The accomplishment of each outcome will be observable and
verifiable by you when it occurs, so that you will not need to rely
solely on the subrecipient's assurance of that accomplishment.
c. The subrecipient associates its estimated costs with outcomes
in the proposal it submits to you, and you are confident that the
costs of accomplishment of the outcomes will equal or exceed the
subaward amount. This requires either that you have a high degree
of confidence:
i. In your estimate of the costs associated with accomplishing
the well-defined and observable outcomes, based on the prospective
subrecipient's proposal (and using the applicable cost principles
in FMS Article III as a guide); or
ii. That those costs will be within a finite range, rather than
a specific amount, so that you may provide an amount of funding
under the subaward that does not exceed the lower end of the range,
with the provision that the subrecipient agrees to provide any
balance above that amount that ultimately is needed to accomplish
the outcomes. Your subaward then would include a term or condition
to reflect the subrecipient's agreement to provide that balance
(which would be in an amount to be post-determined, when the
outcomes are accomplished). Note that this is distinct from a
situation in which you predetermine a set amount or percentage of
cost sharing or matching that the subrecipient must provide under
its subaward, a situation in which paragraph A.1.c of this article
prohibits use of a fixed-amount subaward.
3. a. The subaward is based on a fixed rate per unit of outcome
(or “unit cost”) and you have both the confidence:
i. That is described in paragraph B.2.c of this article in the
estimated costs associated with each unit of outcome; and
ii. In the subrecipient's guarantee that it can accomplish at
least the number of units of outcome on which your total subaward
amount will be based (i.e., the product of the unit cost and
the number of units of outcome the subrecipient guarantees to
accomplish).
b. Note, however, that not every fixed rate subaward is also a
fixed-amount subaward. If you have confidence in the unit cost but
not also in the subrecipient's ability to guarantee the number of
units of outcome that it will accomplish, then you should set a
not-to-exceed award amount based on the number of units desired and
reduce the subaward amount at the end if the subrecipient
accomplishes fewer than that number. Examples of activities for
which it may be appropriate to award this type of fixed rate
subaward that is not a fixed-amount subaward include:
i. A clinical trial for which the unit cost is the cost of
treating each participant. The not-to-exceed amount would be based
on the number of participants the subrecipient planned to recruit
and the final award on the number who actually participated,
documentation for which would be subject to audit.
ii. Labor costs for performance of a portion of the project or
program under this award by a for-profit entity that treats its
indirect cost rate as proprietary information. The unit cost in
that case may be “loaded” labor rates for the entity's employees
that include indirect costs. The final award amount would depend on
the number of labor hours the entity's employees expended under the
subaward, documentation for which may be audited without exposing
proprietary details associated with the actual costs.
Section C. Informational content of fixed-amount
subawards. You must include in each fixed-amount subaward the
informational content, other than the indirect cost rate, that is
described in SUB Article III of this award.
Section D. Terms and conditions addressing administrative
requirements.
1. General. This section:
a. Specifies the minimum set of terms and conditions (in lieu of
the more extensive set specified in SUB Articles IV through X for
cost-type subawards) addressing administrative requirements that
you must include in each fixed-amount subaward:
i. To an entity other than a foreign organization, as
applicable; and
ii. To the maximum extent practicable, to a foreign
organization.
b. Does not preclude the inclusion of other requirements that
you need in order to meet your responsibilities under this award
for performance of the project or program and compliance with
applicable administrative and national policy requirements.
2. Financial and program management requirements.
a. Financial management system standards. For a subaward
to other than a for-profit entity, your subaward must require the
subrecipient to include the information specified in paragraph B.1
of FMS Article I in its financial management system, for the
purposes of the non-Federal audits required by paragraph 2.d of
this section.
b. Payments. Your payments must be based on
accomplishment of the outcomes and associated costs that you used
to establish the award amount, rather than on subrecipient
expenditures for project or program purposes. Milestone payments
before the end of the subaward's period of performance may be
appropriate if there are outcomes that the subrecipient will
accomplish at different times during that period.
c. Revision of budget and program plans. If our prior
approval was required under paragraph A.2 of this article for use
of a fixed-amount type of subaward, then you must:
i. Request our prior approval for any change in scope or
objective of the subaward; and
ii. Include a requirement in the subaward for the subrecipient
to request that approval through you.
d. Non-Federal audits. You must include the requirement
for non-Federal audits described in Section F of SUB Article IV.
The audits are intended to focus on compliance with the performance
requirements in the subaward terms and conditions and not to review
actual costs as they would for a cost-type subaward.
3. Property requirements.
a. Federally owned property. If the subrecipient will be
accountable for federally owned property, you must include the
property management system, use, and disposition requirements
described in Sections C and F of SUB Article V that are applicable
to federally owned property.
b. Intangible property. You must include the applicable
intangible property requirements described in Section G of SUB
Article V.
4. Reporting requirements. You must include requirements
for reporting that you need in order to meet your responsibilities
under this award for reporting to us.
5. Other administrative requirements.
a. Integrity-related information. You must include the
substance of the provision in Section C of OAR Article I in any
subaward you make under this award. The provision must require the
subrecipient's disclosure of any evidence directly to the Inspector
General, DoD.
b. Records retention and access.
i. You must include the requirements for records retention and
access in paragraph A.3 and Sections B and F of OAR Article II, as
applicable, if the subaward is to an institution of higher
education, nonprofit organization, State, local government, or
Indian tribe. You may not impose any other records retention or
access requirements on the subrecipient.
ii. You must include the corresponding requirements of 32 CFR
34.42 if the subaward is to a for-profit entity.
c. Remedies and termination. You must include:
i. The requirements concerning remedies and termination that are
described in paragraphs D.1 and 2 of SUB Article VIII;
ii. Provisions addressing any hearing and appeal rights the
subrecipient has, as described in Section E of SUB Article VIII;
and
iii. Terms and conditions addressing adjustment of the amount of
the subaward if it is terminated before the subrecipient
accomplishes all of the specified outcomes.
d. Continuing responsibilities. You must include
requirements concerning continuing responsibilities for audits and
records retention and access that are described in paragraphs B.1
and 3 of OAR Article VII.
e. Collection of amounts due. You should consider
including requirements concerning collection of amounts due, as
described in Section F of SUB Article VIII.
Section E. National policy requirements for fixed-amount
subawards. You must include in the terms and conditions of each
fixed-amount subaward the national policy requirements that SUB
Article IX of this award specifies, as applicable.
Section F. Subrecipient monitoring and other post-award
administration. You must carry out the subrecipient monitoring
and post-award administration actions specified in SUB Article X,
as applicable.
Section G. Fixed-amount subawards at lower tiers.
1. Authority.
a. If Section B of this article authorizes you to use a
fixed-amount type of subaward without our prior approval in some
situations, a cost-type subaward that you make may authorize the
subrecipient to use fixed-amount subawards at the next lower tier
in those same situations without our prior approval.
b. If you wish to allow a subrecipient of a cost-type subaward
to use fixed-amount subawards at the next tier in other situations
(i.e., situations in which this article requires you to
obtain our prior approval before using a fixed-amount type of
subaward), your subaward terms and conditions must require the
subrecipient to submit a request through you to obtain our prior
approval for use of that type of subaward.
2. Subaward requirements. If your subrecipient is
authorized to use lower-tier fixed-amount subawards, as described
in paragraphs 1.a and b of this section, your subaward's terms and
conditions must:
a. Require the subrecipient, before it makes any lower-tier
fixed-amount subaward, to:
i. Ensure that the lower-tier transaction is a subaward, rather
than a procurement, by making the determination that SUB Article I
of this award requires you to make for your subawards.
ii. Conduct the pre-award risk assessment of its intended
subrecipient that Section B of SUB Article II of this award
requires you to make for your subawards.
b. Include the requirements specified in Sections A through F of
this article.