Defining Subawards

Rice as Subawardee (Sub-in)

In this scenario, Rice is the recipient of funding, either from the prime awardee, or from another institution in a contracting tier above it. The budget associated with a sub-in is intended to be spent at Rice. In scenarios such as this one, Rice manages the award in line with the terms and conditions of the subcontract agreement between Rice and the flow-through funder. Rice often must give account of invoice detail for programmatic reasons. This kind of circumstance should be managed using Invoice Detail exports from SPFF as a data source.

Rice as Pass Through Entity (Sub-out)

In this scenario, Rice is the pass-through-entity. Rice is receiving money from either the funder, or from an institution in a contracting tier above it. The money is not budgeted to be spent on Rice research activity and is instead intended to pass-through Rice en-route to a subrecipient. To enable the conditions to support such an arrangement, Rice must first contract with the recipient to apply terms and conditions to which both Rice and the sub-recipient must agree to and countersign. This tool enables the financial monitoring of such sub-out activity.

When Rice is the pass-through-entity,  the first $25,000 of the subaward is an F&A-eligible cost. This means that when a subaward agreement is more than $25,000, the corresponding PO is set up with two lines. The first of which being where the subaward costs 'under $25k' are recorded and received, and the second being where those costs 'over $25k' are recorded and received. It is correct practice to ensure that the 'under $25k' Purchase Order line is utilized fully before using the 'over $25k line' 

Contracting Tiers

First Tier

The first-tier entity receives funding directly from the funder and is referred to as a prime awardee. In a grant, the funder may be referred to as a donor and the awardee as prime recipient. In a contract, the funder may be referred to as a buyer and the awardee the prime contractor. The prime has a direct relationship with the funding entity hence, first tier.

Second Tier

If the prime recipient or contractor requires external inputs to accomplish the work required by the funder, the prime may, if allowable per the terms of the grant (as a recipient) or the contract (as a contractor), engage another entity to perform the designated work. This makes the prime a pass-through entity, as funds are passing through it to another entity.

The second-tier entity that receives funding from the prime is referred to as a subawardee. The prime will determine the contracting vehicle (e.g., grant or contract) which in turn will indicate whether the subawardee is a subrecipient receiving a subagreement or subcontractor receiving a subcontract.

If the prime employs a grant (i.e., subagreement), the subrecipient should expect a greater level of technical oversight. If the prime offers a contract (i.e., subcontract), the subcontractor should expect a limited level of technical oversight.

The subawardee's relationship to the original source of funding is one step removed hence, second tier. These entities do not have direct relationships with the funding entities. 

Third Tier

If a subawardee requires external inputs to accomplish the work required by the prime, the subawardee may, if allowable per the terms of the grant agreement (as a subrecipient) or contract (as a subcontractor), engage another entity to perform the work.

The third-tier entity that receives funding from the subawardee is also referred to as a third-tier subawardee. The subawardee will determine the contracting vehicle (e.g. grant agreement or contract), which in turn will indicate whether the third-tier subawardee is a subrecipient that receives a subagreement or subcontractor that receives a subcontract.

If the subawardee employs a grant (i.e., subagreement), the third-tier subawardee should expect a greater level of technical oversight. If the subawardee offers a contract (i.e., subcontract), the third-tier subawardee should expect a limited level of technical oversight.

The subawardee will follow its internal policies to the extent allowable by the funders and flow down all funder and prime provisions from its subagreement or subcontract from the prime awardee. The relationship to the original source of funding for the new subawardee is two steps removed hence, third tier. Since the prime does not have a direct relationship with the third-tier subawardee, generally, third-tier subawards carry greater risk for the prime.

What is the difference between a subaward vs other forms of contracted service provision?

Subaward payments are covered via a legal contract between the flow-through-entity and the subrecipient containing terms and conditions that maintain the umbrella terms and conditions in the contract between the funder and the flow-through-entity. 

The contract with the subrecipient contains a specified intention of contribution from the subrecipient known as a 'Scope of Work', whose fulfillment is connected to the research plan indicated in the proposal to the funder. The work being carried out by a subawardee institution is led by an individual at that institution, whose responsibility it becomes to ensure that the money is spent at that institution in compliance with the scope of work stated in the contract (and any other compliance obligations that might apply). 

The individuals involved via a subawardee contract are involved in the collection of research data, experimental and theoretical work, and/or the analysis or interpretation of results. The activity being performed by a subawardee institution therefore generally extends beyond the scope of a standardized service provision. Even highly technical or analytic processes offered as a standardized commercial service should be addressed via a simple supplier-issued Purchase Order, or a Research Service Agreement instead of a Subcontract. If in doubt, reach out to Rice's subcontracts team to ask for case-by-case clarification.

What do Subawardees need to provide for a proposal where Rice is Prime?

Subawards are treated as an expense, a budget item that is listed, and subawardees need to write in the technical portion of the proposal what aims they will work on and why. Often biosketches for the subawardee PI will need to be included, as well as any relevant information for the project, such as protocols to be used. They will need to include a letter of intent and budget justification in the proposal as well. This is essentially a mini proposal within a proposal.

• Scope of Work (provided to or by the Rice lead PI and incorporated into the proposal)

• Budget (signed off by appropriate authority at subawardee institution)

• Biosketches (as per funder/call guidelines)

• Protocols (as needed relative to research type proposed)

• Letter of Intent (Rice template that includes first year and full year budget intended for the subaward must be countersigned. 

If the subawardee is not well known to Rice then also...

Contract Types

Cost Reimbursement

A cost reimbursable (CR) contract provides payment of allowable incurred costs to the extent (e.g., total cost or ceiling) prescribed in the contract. This payment type also lends itself well to multi-year grants for which quick start-up is needed, but the scope of work for later years is not fully defined. 

Fixed Firm Price

A fixed firm price (FFP) contract provides payment that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. Accountability is primarily based on performance and results. Payment is based on funder acceptance of the designated outputs.

Terms and Conditions

The terms and conditions and subsequent donor rules and regulations in a grant agreement or contract will be determined by the funding entity and contracting tier. The governing document for project implementation will be the fully signed grant agreement or contract, which will detail these requirements

Rice Policy Issuing and Monitoring Subawards and Subcontracts | Policies | Rice University