Research Policy Handbook


Proposing a Subaward

Now in Policy Details

Establishes requirements for proposing a subaward.

1. Determining the Need for a Subaward

The PI is responsible for determining the need for a subaward on a sponsored project, and for the initial determination that a subaward relationship is appropriate. PIs may be assisted by their departmental administrators in making these determinations.

2. Selection of a Subrecipient

The PI must select a subrecipient based upon his/her assessment of the potential subrecipient’s ability to perform the Statement of Work successfully. This includes an analysis of the subrecipient's past performance, technical resources, financial viability, and an assessment of the reasonableness of the subrecipient’s proposed costs in light of the work to be performed.

In rare instances, a PI may recognize the need for outside involvement on a project but is either unable to identify the best subrecipient by the time of proposal submission, or is unable to acquire all of the required paperwork from that subrecipient prior to proposal submission. In these instances, proposals may be submitted with a subrecipient "To Be Named."  PIs may be asked by their institutional representative to provide documentation of the basis for their subaward cost estimate for the work being performed. PIs will also be responsible for managing any budgetary shortfalls that may result from their inability to accurately predict a subrecipient's costs. Subrecipients should not be asked to reduce their F&A recovery or to otherwise cost-share because of Stanford's failure to include appropriate costs in our proposal. All subaward paperwork listed in Section 4 below must be completed at the time the subrecipient is identified.

3. Required Elements to Include in a Subaward Proposal

Stanford requires the following documents in order for each named subrecipient to be included as part of Stanford’s proposal to the sponsor. Proposals will not be endorsed by Stanford’s institutional officials until these elements are on file.

  1. Subrecipient's SOW, including a clear description of the work to be performed, the proposed timelines, and deliverables.

  2. Subrecipient's Budget and Budget Justification, including the subrecipient's direct and indirect costs, calculated using the subrecipient's approved F&A and fringe benefit rates, and verifying any committed cost sharing.

  3. An OSR Subrecipient Commitment Form (OSR Form 33), completed and signed by the subrecipient's institutional official.

  4. A Sole Source Justification and Cost/Price Analysis (OSR Form 45), ONLY IF the funding mechanism is known to be a federal contract at the time of proposal

  5. Any additional elements that may be required by Stanford's sponsor for inclusion in the proposal.

Subrecipient proposal elements are expected to conform to the sponsor requirements for Stanford's prime proposal and should be in the format required by the sponsor.

Exceptions to the requirements outlined above should be rare, and must be approved by the director (or designee) of the research administration office endorsing the proposal. In these cases, documentation must be maintained as to why an exception was granted and what follow-up action was taken to ensure that the proposal was retroactively brought into compliance in a timely manner (not more than two weeks after the proposal has been submitted).

If appropriate and acceptable documentation is not provided in a timely manner, Stanford may withdraw the proposal from sponsor consideration. Copies of approved exceptions should be furnished to the Associate Vice President for OSR at least quarterly.

4. Special Circumstances

If any portion of the subrecipient's proposed SOW is to be performed at Stanford University or using Stanford University resources, the PI must notify OSR in advance of submission so appropriate measures can be taken.  The Director of Cost and Management Analysis within Research Financial Compliance & Services will need to be consulted regarding coding of space used by a subrecipient. These measures typically include: (a) payment by the subrecipient of fair and reasonable compensation to Stanford for such use and (b) the subrecipient's agreement to comply with Stanford's policies on inventions, patents and licensing, and copyrights.

5. Applying Facilities & Administrative (Indirect Cost) Rates to Subawards

There are two types of Facilities & Administrative (F&A) costs on subawards: those earned by the Subrecipient, and those earned by Stanford.

A Subrecipient is expected to apply its own federally-negotiated F&A rates and bases when preparing its subaward budget, unless a lower rate or base has been agreed to by the Subrecipient's institutional official (e.g., to meet cost-sharing requirements, or to meet a sponsor's F&A rate limitation.) If a Subrecipient does not have an approved F&A rate, it must either have its proposed indirect cost rate approved by Stanford  or elect not to recover indirect costs.  This function is performed by OSR working directly with the proposed subrecipient and its audit firm and/or CPA. This review is best done before a proposal is submitted to a sponsor, but must be completed before Stanford can issue a subaward. For subawards issued under federal  funding, in accordance with OMB Uniform Guidance, Section 200.414, subrecipients who do not have a federally-negotiated F&A rate may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC). Stanford applies the OMB Uniform Guidance "life-of-the-award" policy with respect to its subawards and will use the approved F&A rates authorized at the time of issuance of the subaward.

When Stanford's prime award uses an F&A rate that is based on an MTDC base, Stanford will recover its own F&A on the first $25,000 of each subaward on a project. This recovery is calculated on the life of the subaward. When Stanford's prime award uses a total direct cost rate, Stanford will recover its own F&A on the full cost of a subaward.

Stanford's "life-of-the-award" policy applies to subawards under a research project. That means that the terms of the Subrecipient's F&A rate agreement in effect when the subaward is issued will govern F&A charges throughout the performance of the subaward. The period of performance on a subaward will not exceed Stanford's competitive segment on its award. When a renewal subaward is issued under a Stanford award that uses an MTDC base for calculating F&A, Stanford will recover its F&A on the first $25,000 of the renewal subaward.

Any exceptions that impact Stanford's recovery of F&A must be approved through the Indirect Cost Waiver process.