Oregon State University receives grants and contracts for research, scholarship, and creative activities from a variety of public and private sources. Many of the sources of funding have specific guidance as to how to process a portion of that money to other organizations and whether that processing is as a subaward or procurement. The distinctions between subawards and procurements are guided by the Federal Acquisition Regulations, OMB Uniform Guidance 2 CFR Part 200, and OSU policy. These distinctions include the purpose of the distribution of funds to a subrecipient and the necessity to flow-down the terms and conditions of the award from the organization initially receiving the funds.
A procurement process generally is used when OSU buys goods or services for the benefit of the project. In this instance, the activity is a procurement, and the entity receiving the funds is a vendor.
The subaward process is used when OSU passes-through a portion of the sponsored award to another entity for the purpose of programmatic effort on the project. All of the terms and conditions that are part of the primary award must be included in the subaward document. Acceptance of these terms by an authorized signatory of the receiving entity is required. The entity receiving the funds is a subrecipient.
When preparing your proposal budgets, we offer the following guidance to be considered in classifying whether an activity is a procurement or a subaward.
Determining a Subaward
Does the entity receiving a portion of the funds from you:
- Have their programmatic involvement identified as a separate scope of work, with separate budget and organization approval?
- Have their performance measured against whether the objectives of the project are met?
- Have responsibility for programmatic decision-making?
- Have responsibility for adherence to applicable program compliance requirements?
- Use the sponsored funds to carry out a program of their organization as compared to providing goods or services for a program at OSU?
- Have responsibility for assisting in completion of a project deliverable and/or technical report?
- Have the right to publish project results or serve as a co-author?
- Have the option to develop patentable technology?
If your answers to these questions are "Yes," this activity should be classified as a subaward.
Determining a Procurement
Does the vendor/entity receiving a portion of the funds from you:
- Provide the goods and services your project requires within their normal business operations?
- Provide similar goods or services to many different purchasers? (this includes fabrication of new goods, consultants, editors, etc.)
- Operate in a competitive environment? (a for-profit organization or an entity/ university providing a testing service)
- Not subject to terms and conditions/compliance of the sponsoring agency?
- Not involved in the programmatic work of the project, including project deliverable or technical report?
If your answers to these questions are "Yes," this activity should be classified as a procurement from a vendor.
Applying the Classification to Your Proposal Budget
Once you have determined whether the funds should be classified as a subaward or a vendor procurement, the activity should be correctly categorized in your proposal budget.
- Subawards are listed as contractual agreements in the proposal and itemized in your budget. Subaward documents required by the subrecipient at the proposal stage include: a detailed budget and statement-of-work from the subrecipient organization, a copy or link to their indirect cost rate agreement, and a signature from the authorizing official of that organization. OSU’s indirect cost rate is calculated on the first $25,000 of each subaward. See additional information regarding Subawards.
- Vendor procurements are listed as supplies, equipment, or services as appropriate. An example would be "lab testing services"; "vessel rental"; "fabrication of xxx equipment." OSU’s indirect cost rate is calculated on the total amount itemized in your budget.
Incorrect processing of sponsored funds distributed to outside entities can lead to having our procurement and contracting system disapproved, more frequent audits, or in the worst case scenario, loss of an award.
Questions
If while preparing a sponsored project proposal you need assistance in understanding how to classify a portion of your budget going to another organization, please contact the Office for Sponsored Research and Award Administration (OSRAA) at [email protected] or (541) 737-4933.
If you anticipate a procurement from a vendor and you have questions on how to request a procurement action, please contact Procurement, Contracts and Materials Management (PCMM) at (541) 737-4261.