It is possible to spend before the anticipated award start date if the sponsor authorizes it in writing. Check the terms and conditions of the specific award for restrictions on preaward spending.
- Most federal sponsors allow preaward spending for grants 90 calendar days prior to the anticipated award start date.
- Other sponsors limit the dollar amount or do not allow pre-award spending.
- It is rare for contracts to include language allowing pre-award spending. Special language must be negotiated.
If the sponsor authorizes pre-award spending, you can open an early PTA. If the research involves human or animal subjects or stem cells, a protocol must be submitted before an early PTA can be opened. Although you can receive an early PTA, certification is required that protocols have been filed for review and that no expenses involving those activities will be incurred until the final protocol approval is granted.
The sponsor is not obligated to fund the pre-award costs if the project is not funded, and the sponsor's authorization of pre-award spending does not guarantee that the PI will receive the award. If the award does not materialize, the PI must cover for the costs from his or her unrestricted funds.
In addition, if the start date of the project is delayed beyond the 90 day period, the award will not cover the costs if they were incurred outside the 90 day period.
Preaward Spending Risk Example 1: How the Guarantee Account Works
An award is expected in two months and a graduate student is working in this area now and needs to be funded. What should you do? If the sponsor authorized preaward spending, request an early PTA. This will require the PI to identify an unrestricted PTA to guarantee payment of the expenses, in case the sponsored project is not awarded.
Do not charge the student to another sponsored project, and then transfer costs when the benefiting award is accepted.
The student’s effort should not be charged to a project which does not benefit from that effort. Such a charge is both unallowable and unallocable, and cannot be approved, even if you intend to transfer the charges later.
Preaward Spending Risk Example 2: Delayed Project Start Date
Anticipated award start date of March 1 is ascertained through communication with the sponsor.
The sponsor authorized pre-award spending in within 90 days prior to award start date, that would be January 1. You can open an early PTA, and begin spending.
The sponsor then delays the start date to April 1. Now the pre-award spending the PI incurred in the month of January is outside the 90 day limit. The PI is obligated to cover those costs with unrestricted funds.
An early PTA allows you to open up a PTA prior to receipt of an award or while an award is being negotiated. This allows you to begin charging expenses to the project at the PIs risk.
When you request an early PTA, the PI must identify a guarantee PTA with unrestricted funds to cover the costs in the event that the award does not materialize.
Once the award is received, an early PTA becomes the project PTA. The project is already setup in SeRA. An early PTA can be requested in the SeRA system. If human, animal subjects or stem cells are involved, certification is required that protocols have been filed for review and that no expenses involving those activities will be incurred until the final protocol approval is granted.
What Not to Do
Do not charge early expenses to an unrestricted PTA when spending in advance of a fully executed award because it is very difficult to separate costs that benefit a sponsored project from other costs in an unrestricted PTA.
You would have to transfer the early expenses to the proper PTA once the award is executed, and provide careful documentation of how they benefit the project. Additionally, depending on how the expenses are incurred, the costs could be considered unallowable. The CAS (Cost Accounting Standards) language states:
The costs of any work project not contractually authorized, whether or not related to performance of a proposed or existing contract, shall be accounted for, to the extent appropriate, in a manner which permits ready separation from the costs of authorized work projects.
Do not use another sponsored PTA to fund expenses that you intend to move later. The expenses would be considered both unallowable and unallocable.