The Rushed Subaward Under a Federal Prime
You are the research administrator for a university prime award with a federal sponsor. A program officer at the sponsor verbally urges the PI to issue a $185,000 subaward to a collaborator at a small company so work can begin in 10 days. The subawardee has never received federal funds and has no negotiated indirect cost rate. The PI submits a one-page justification and a budget with a 68% indirect rate, saying the sponsor 'approved it on the phone.' The subaward scope overlaps with work already budgeted under a consultant line. The sponsor's terms flow down 2 CFR 200 requirements and require prior written approval for subawards not in the approved application. Your office has a 15-business-day subaward processing standard and a mandatory risk assessment for new subrecipients.
1. What should you do before any subaward is issued, and how do you handle the sponsor's verbal approval?
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Do not issue the subaward on the strength of a phone call. First, confirm in writing whether the subaward was included in the approved application or requires prior written approval; a verbal statement from a program officer is not the sponsoring agency's written authorization. Send an email summarizing the conversation and requesting written confirmation from the grants officer, not just the program officer.
Second, resolve the scope overlap with the consultant line. Duplicate or overlapping effort is an allowability and audit risk; the PI must document distinct deliverables or remove the duplication.
Third, the 68% indirect rate is unsupported. Without a negotiated rate, the subrecipient must either accept the de minimis rate if eligible or provide a cost basis. The prime cannot simply apply its own rate to a subrecipient.
Finally, complete the mandatory risk assessment before issuance, and communicate that the 10-day start date is not achievable under the 15-day standard unless the sponsor grants an exception. Document every step.
2. The PI argues the work is urgent and asks you to backdate the subaward to the start of the project. How do you respond, and what alternatives exist?
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Backdating a subaward to cover costs already incurred creates a false record and is not permissible. The correct approach is to determine whether a pre-award cost authorization is available. Some sponsors allow pre-award costs at the recipient's risk; others require written approval. If the prime's terms permit it, document a pre-award cost approval that is explicit, time-limited, and contingent on the subaward being executed.
Alternatives include: (1) having the collaborator perform limited work under a short-term agreement only if the sponsor's terms allow it and the risk is accepted in writing by an authorized official; (2) requesting an expedited review from the sponsor with a written justification; or (3) sequencing the work so the subawardee starts after execution while the PI advances non-dependent tasks.
Explain to the PI that backdating exposes both institutions to disallowance and potential false claims liability, and that a documented pre-award authorization protects the project. Put the decision and rationale in writing.