When funds awarded to the University for the conduct of a sponsored project are to be paid to an organization outside of the University, the arrangement should be treated as a subcontract if the funds are to be paid to a university or other non-profit entity. In some cases, subcontracts can be issued to for-profit businesses, but only when they clearly meet all the criteria below:
- The subcontractor's key person is acting as a collaborator or co-investigator and contributing to a significant portion of the scholarly/scientific conduct of the project as described in a statement of work for the subcontractor.
- Performance of the subcontractor's portion of the project must be of such a unique nature that it requires discretion and expertise available from only one source.
- Subcontractor does not provide similar services to others as their primary business.
- Verification by the University's Principal Investigator of the subcontractor's performance is required before payment is made.
If any of the above criteria do not apply, the funds should be paid through a purchase order.
Questions on whether funds should be paid through a subcontract or purchase order should be referred to the Sponsored Programs Office for a determination of the correct classification.
The Procedure for obtaining a subcontract is outlined below:
Gina LeMay in the Sponsored Operations Office will prepare and negotiate subcontracts. To initiate the process, please provide the following information (some to be included in the actual subcontract document; the balance required by State and Federal regulations).
- Official name of the subcontractor organization and the address of their contracts/grants office.
- Specific statement of work describing the services and deliverables to be provided by the Subcontractor.
- Detailed budget that has been approved by the subcontractor's business office (if cost-sharing was proposed by the subcontractor, include the details and amounts).
- Period of performance for the subcontract. This will be the period for which funding will be legally committed, rather than the potential total period of the subcontract.
- Subcontractor's key personnel (at a minimum this would include the Principal Investigator for the subcontractor).
- Explanation of why and how the proposed subcontractor was selected, including whether alternative bids were obtained. This documentation is required even in situations where the collaborating institution was specified in the original proposal.
- A statement from the Principal Investigator indicating that he/she has reviewed the budget from the subcontractor and considers the costs to be reasonable. Comments should cover labor rates, level of effort, overhead rates, supplies/equipment to be purchased, etc.
After the subcontract is established Accounts Payable will forward invoices submitted by the subcontractor to the Principal Investigator for authorization prior to payment. It is important that the Principal Investigator check to determine that the work has been done satisfactorily before authorizing payment.