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Subawards are issued as cost reimbursable or fixed price. Most subawards are issued as cost reimbursable agreements.

A cost reimbursable agreement is based on actual project expenditures incurred during the period of performance, up to an agreed amount. A fixed price agreement is based on deliverables, milestones, or defined fixed payment schedule.

The type of subaward that SPA will issue is based on several factors, including:

Cost Reimbursable

• The prime award to Â鶹¾«Æ· is cost reimbursable (Most federal awards are cost reimbursable)
• The subrecipient is a domestic entity
• The subrecipient assessment level is low risk

Fixed Price

• The prime award to Â鶹¾«Æ· is fixed price (Very few sponsored awards are fixed price)
• The subrecipient is a foreign entity
• The subrecipient assessment level is high

When Might a Subrecipient be Classified as High Risk?

Each subrecipient is assessed for risk before SPA issues a subaward agreement.  Reasons for a high risk designation include, but are not limited to:

• Foreign entities that are governed by laws, regulations, and financial systems that do not align with U.S. law
• Domestic entities with significant audit findings without a defined corrective action plan
• Subrecipients without an external audit, internal control policies, or a sound financial system
• Subrecipients where Â鶹¾«Æ· will have limited visibility into their operations

Sponsor approval is required to issue a fixed price subaward agreement, and such agreements cannot exceed the (including amendments).  

How Would We Obtain Sponsor Approval for a Fixed Price Subaward?

The decision to issue a fixed price subaward should be determined during pre-award so that the need for a fixed price agreement can be clearly explained in the proposal’s budget justification.

The following language is recommended in the budget justification: “Â鶹¾«Æ· anticipates the issuance of a fixed price subaward to [Name the subrecipient here] documented in this proposal and is requesting prior agency approval. This Subrecipient meets the criteria described in and if this proposal is awarded, Â鶹¾«Æ· will consider this subaward approved.”

If the agency approves the proposal and budget justification as written, no additional agency approval is necessary. 

If the need for a fixed price agreement was not addressed in the proposal, the SPA Award Acceptance team will work with the PI to obtain prior agency approval before issuing the subaward.