Subawards are used only when a collaborator will perform part of the research through intellectual input and co-authoring papers describing research results. If a collaborator is providing a routing service (such as analyzing samples), that service is not a subaward, but must be budgeted as a consultant or professional service.
Subawards or subcontracts are typically part of large multi-institutional proposals per the subrecipient commitment form. Please provide the following information from each collaborating entity:
Letter of collaboration, signed by an official of the institution, describing the work to be performed, the requested funding level and any cost share.
Detailed budget: Prepare the collaborator's budget in the same format required by the sponsor, including appropriate signatures.
Fringe benefit/F and A agreement: This is not required if the collaborating agency is another university. A private entity, however, must provide a rate agreement or documentation to support the rate used.
Scope of work: This may be incorporated into the project narrative or included as a separate section, as long as the collaborator's responsibilities are clearly identified.
Subaward, Consultant, and Services
Sponsored projects include activities requiring funds be paid to an organization outside of the University. In general, these relationships fall into three categories: subrecipient, consultant, or vendor.
Determining the appropriate relationship is important at the proposal stage as it affects your proposal budgeting process and how that third party will be paid. Once the relationship has been determined, the activity should be correctly classified in the project budget.
What is a Subaward?
A subaward is an agreement between the University and another organization (usually another university or non-profit organization) that is issued if a subrecipient relationship exists. A subrecipient:
- is responsible for administrative and programmatic decision making relative to the subrecipient’s portion of work and contributes to the scholarly/scientific conduct (i.e. provides intellectual input and co-authoring papers describing research results) of the project as described in the statement of work for the prime award.
- has responsibility to meet all applicable agency regulations and compliance requirements (e.g. IRB, IACUC, IP rights, Federal regulations, etc.).
- is responsible for services that are complex and require a scope of work and budget, billing requirements, and a deliverable schedule.
- has responsibility for the end results of the research effort.
- generally does not provide similar services to others as their primary business.
If circumstances are different than described above, the funds should generally be paid through a purchase order (for consulting or services). Use the Checklist to Determine Subrecipient or Contractor/Vendor Classification to assist in this determination.
What Information is Necessary during Proposal Preparation for a Subaward?
Generally, most of the information needed to compile a subaward is gathered during proposal preparation when the potential subrecipient completes a Subrecipient Commitment Form. Please provide this form to your potential subrecipient for completion, allowing ample time to meet internal deadlines. This form must be submitted to the Sponsored Programs or Innovation and Commercialization Office for review and approval before it becomes part of your proposal package. Some of the information is used to compile the actual subaward, and some is required by State and Federal regulations, and includes:
- subrecipient’s authorized official’s signature,
- official name of the subrecipient organization,
- subrecipient's principal investigator,
- specific statement of work describing the work and deliverables to be performed by subrecipient,
- subrecipient’s total funds requested,
- subrecipient’s period of performance,
- detailed budget and justification,
- certifications of items such as facilities and administrative rates, fringe benefit rates, human and animal subjects, conflict of interest, and debarment and suspension,
- cost sharing/matching, and
- audit status per Federal regulations.
Issuing a Subaward—Processed by the Sponsored Programs Office
The Sponsored Programs Office is authorized to prepare, offer, and negotiate subawards on behalf of the University. The process is initiated after Michigan Tech is awarded the prime funds and the third party organization is then paid as a flow through on the project via a subaward.
During preparation of the subaward, the Sponsored Programs Office may request the following additional information from the University’s Principal Investigator:
- Explanation of why and how the proposed subrecipient was selected, including whether alternative bids were obtained. This documentation may be required even in situations where the collaborating institution was specified in the original proposal.
Once the subaward is established, invoices submitted by the subrecipient will be forwarded to the Principal Investigator for review and authorization prior to payment. It is important the Principal Investigator review each invoice carefully as they must attest (as part of their written approval of payment) the charges appear reasonable and that progress to date is satisfactory and within the scope of the approved statement of work.
What is a Consultant?—Approval from Human Resources may be needed
A consultant (considered an independent contractor) may provide advisory services related to a sponsored project. The consultant:
- is not responsible for the overall outcome of the sponsored project.
- is not responsible for conducting the sponsored project.
- is not responsible for reporting technical progress to the prime.
- is not responsible for defining the sponsored project’s scope of work; the University defines the scope and the consultant determines how to accomplish the work.
- is responsible for providing its own work area, tools, materials, and supplies to accomplish its work.
If the proposal contains a named consultant, an Independent Contractor Questionnaire must be completed by the Principal Investigator and submitted to Human Resources during proposal preparation.
Please allow ample processing time to meet internal deadlines. Prior to proposal submission, it will be reviewed by Human Resources who will determine whether the consultant is approved as an independent contractor.
Issuing a Consultant Agreement—Processed by Purchasing
To pay a consultant, Human Resources must first approve the contractor status (using the Independent Contractor Questionnaire). Then an agreement must be executed between the contractor and University. The Purchasing Office is authorized to approve consulting agreements (using the Independent Contractor Agreements form) on behalf of the University.
What are Services?—Processed by Purchasing
A vendor provides services the sponsored project requires within normal business operations and operates in a competitive environment providing similar services to a variety of customers. If the following characteristics exist, the organization should be paid as a vendor for its services.
The vendor organization:
- provides a routine service (equipment fabrication or repair, data processing, routine analytical testing, etc.).
- provides the services as part of its normal business operations.
- does not make program decisions or take actions that impact a sponsored project’s overall success or failure.
- is not subject to the monitoring or reporting requirements of the prime award.
- operates in a competitive environment.
- provides services of a repetitive nature.
- provides the services in support of the prime award recipient’s project (rather than the organization’s own project).
- assumes the risk if performance is more costly or time consuming than expected.
Vendors can be paid using multiple University processes. For more information, see the Purchase Type Decision Process.