How a Subaward Can Supplement Your Research Activities

Funding News Edition: March 03, 2021
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Did you know that you can use a subaward to augment your own expertise and improve the efficiency of your research? If subawards fall outside your comfort zone, read this overview to supplement your knowledge.

What Is It?

A subaward is a collaborative arrangement between a grantee institution and another organization in support of the grantee’s research project. The subawardee performs research activities on behalf of the grantee.

To be clear, this article is a discussion of policy for grants, not contracts.

Subawards are legal agreements. Your institution must draw up a physical document or consortium agreement that both organizations sign. 

Funds from the grantee organization must flow directly from the grantee to the subawardee, meaning a subawardee cannot create its own subaward with a third party—a “third tier” subaward—using funds from the grantee. Think of subawards like the spokes of a wheel with the grantee in the center—a grant may have a number of subawards, but they must all be directly connected to the grantee.

As the grantee and principal investigator, you must perform a substantive role in conducting the planned research. You cannot merely serve as a conduit of funds to one or more subawardees.

When To Use a Subaward

Primary grantee organizations use subawards to collaborate with one or more other organizations to carry out grant-supported research.

Consider the following examples:

You need Professor Washington’s expertise and assistance to develop unique antigens for your project in her laboratory at State University. She will send these unique antigens to you for the next step in your research project. In this case, you would use a subaward agreement rather than a fee-for-service because Professor Washington is performing a portion of the programmatic or scientific activity of the research. The arrangement would be directly between your institution and State University.

Next, suppose statistics is not your forte and you need help interpreting the data you generate. Your institution could write a subaward to have another organization analyze the results. The agreement might stipulate that the subawardee’s services are required in only the final two years of the grant.

A subaward is not always the optimal solution; often using a fee-for-service or a consultant would make more sense. If you need Outside Company to manufacture 200 mosquito traps for your project, you should use a fee-for-service because the purchase is of a specific product. This cost would usually be listed under “Other” in your application budget.

Now suppose you want to pay Dr. Lincoln, an expert in your field, to advise your project on a limited basis. Given the limited purpose—he will not be performing any research activities—you should treat Dr. Lincoln as a consultant and plan a one-time or annual sum in your budget proposal.

Finally, imagine you are a subawardee on another investigator’s NIAID grant. You have your own subaward budget under the grant and you want to arrange for Private College to carry out a research task using money from your subaward's budget. Under NIAID policy, this is not allowed. While you can have a fee-for-service for a specific purchase on a subaward, a third tier subaward removes the grantee’s ability to oversee and control the grant activities.

Application and Budget Information

Grantees must establish a subaward with any outside organization that performs research activities paid for using funds from the NIAID award.

When you apply, describe any arrangements in the Consortium/Contractual Arrangements attachment of the PHS 398 Research Plan Form. State the roles of the people and organizations involved and list every research performance site.

Your application should include letters from each of your subawardees describing their willingness to participate and their role in your project. We recommend that you send your subawardees a sample letter that they can sign and return.

Include biosketches of any key personnel from your subawardee in the Research and Related Senior/Key Person Profile section.

Complete the R&R Subaward Budget Attachment(s) Form or, if you are applying with a modular budget, the PHS 398 Modular Budget Form. The budget period numbers and dates should be the same in all the R&R Subaward Budget Forms, where inactive periods are indicated by listing effort as 0.01 calendar months. You’ll need to provide a Data Universal Numbering System (DUNS) number for each subaward in your budget section.

The subawardees’ facilities and administrative (F&A) funds, formerly known as indirect costs, are not included as part of the direct cost calculation when determining if your application can use the modular format (direct costs of less than $250,000 annually), is a big grant (direct costs of $500,000 or more annually), or is within the direct cost limit for a given funding opportunity announcement (FOA). Note that all foreign organizations must use a nonmodular budget, regardless of budget size.

Modular grant applications must include an estimate of total subaward costs (direct and F&A costs) for each year, rounded to the nearest $1,000. Nonmodular grant applications must include detailed budgets for each subawardee.

Check each FOA for additional instructions. For example, you may be instructed to calculate subaward F&A costs as direct costs on your grant application. Be especially mindful when responding to requests for applications.

Since subaward agreements are between institutions, your institution is responsible for negotiating an F&A rate. For foreign institutions, the F&A rate is currently limited to eight percent. For-profit entities must have an established F&A rate set with the Indirect Cost Branch of the Division of Financial Advisory Services.

Authorized organizational officials, take note: Your institution must report information to the Federal Funding Accountability and Transparency Act Subaward Reporting System for subawards worth more than $25,000 over the course of the grant. Your institution is exempt from this requirement if it is a federal agency or has less than $300,000 in gross income for the previous tax year.

After Award—NIAID’s Involvement 

Generally speaking, NIAID’s involvement in a subaward is minimal.

After your grant has been awarded, you can still establish a new subaward. You need prior approval from NIAID to do so in only two situations:

  • The subawardee is a foreign organization.
  • The terms of the subaward would constitute a change in scope.

Otherwise, a grantee can establish a new subaward during the award period without prior approval. No additional funds will be awarded. You will still need to follow the budget guidelines listed above.

NIAID does not participate in establishing the terms of the subaward, nor are we responsible for enforcing adherence to those terms. The grantee and subawardee are responsible for solving disagreements. The signed agreement is paramount—it should be the source for resolving conflicts. Be sure to define expectations clearly and include a mechanism for settling disputes when you write a subaward agreement.

Do not rely on your program officer and grants management specialist to communicate with your subawardee directly. NIAID staff are responsible for communicating through the primary grantee only. 

Grantee Responsibilities

The grantee organization is directly accountable to NIAID for the performance of the project, appropriate expenditure of grant funds by all parties, and all other obligations specified in the terms of award. Likewise, the grantee organization is responsible for ensuring that the subawardee has filed assurances and approvals appropriate to research it is conducting (e.g., PHS animal welfare assurance and Institutional Animal Care and Use Committee approval if working with live, vertebrate animals).

Here are a few more management responsibilities that you should be prepared to handle, since NIAID will not work with the subawardee directly:

  • Finding a budget solution if the subawardee wants more money to carry out its part of the project
  • Answering questions from the subawardee about human subjects or animal research
  • Reporting possible financial conflicts of interest to NIH involving, say, the subawardee and a fee-for-service provider on the subaward
  • Resolving performance issues with the subawardee

If you have questions about your current award, ask your grants management specialist, who’s listed in the Commons. For help with subawards on an application, reach out to the grants management contact listed in the FOA.

Related Resources

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