Subcontracts, Subgrants, Consortium Agreements and Other Subagreements

Criteria

When funds awarded to the University for the conduct of a sponsored project are to be paid to an organization outside of the University, the arrangement should be treated as a subcontract if all the following criteria apply:

1. The funds are to be paid to a university or other non-profit entity rather than to a for-profit business or individual and are not considered "pass-through" funds from the sponsor. In rare instances, subcontracts can be issued to for-profit businesses, but only when they clearly meet all the criteria below.

2. The subcontractor's key person is acting as a collaborator or co-investigator and contributing to a significant portion of the scholarly/scientific conduct of the project as described in a statement of work for the subcontractor.

3. Performance of the subcontractor's portion of the project must be of such a unique nature that it requires discretion and expertise available from only one source.

4. Subcontractor does not provide similar services to others as their primary business.

5. Verification by the University's Principal Investigator of the subcontractor's performance is required before payment is made.

Questions on whether funds should be paid through a subcontract or purchase order should be referred to the Office of Contract Administration for a determination by the Managers of Contract Administration and Purchasing on the correct classification.

Procedures

Our office will assist you in the preparation and negotiating of subcontracts. To initiate the process, please provide the following information (some to be included in the actual subcontract document; the balance required by State and Federal regulations).

1. Name, campus address and phone number for the University of Michigan Principal Investigator and contact person in the department.
2. Official name of the subcontractor, type of organization (for-profit, non-profit, foreign, etc.), size (small or large business, etc.), and the address of their contracts office.
3. Specific statement of work describing the services and deliverables to be provided by the Subcontractor.
4. Detailed budget that has been approved by the subcontractor's business office (if cost-sharing was proposed by the subcontractor, include the details and amounts).
5. Period of performance for the subcontract. This will be the period for which funding will be legally committed, rather than the potential total period of the subcontract.
6. Subcontractor's key personnel (at a minimum this would include the Principal Investigator for the subcontractor).
7. Copy of the prime contract/grant received from the sponsor, which approves the subcontract arrangement, copy of the PAN from DRDA and the University project grant number assigned to the project.
8. Explanation of why and how the proposed subcontractor was selected, including whether alternative bids were obtained. This documentation is required even in situations where the collaborating institution was specified in the original proposal.
9. A statement regarding potential conflict of interest (e.g. P.I. employed or has a financial interest in the Subcontractor, Subcontractor key personnel employed/appointed at the UM, with or without compensation).
10. A statement from the Principal Investigator indicating that he/she has reviewed the budget from the subcontractor and considers the costs to be reasonable. Comments should cover labor rates, level of effort, overhead rates, supplies/equipment to be purchased, etc.
11. If the project is funded under a Federal Contract, then the additional information and signatures outlined in the Cost/Price Analysis documents below also need to be provided. The worksheet does not apply to projects funded under Federal Grants, Cooperative Agreements, or non-Federal projects.

    You will need to download and print this worksheet (your choice of formats):
    [Sub request form with Cost/Price Analysis.doc ] or [Sub request form with Cost/Price Analysis.pdf] )

After the subcontract is established the Office of Contract Administration will issue a sub project/grant number for the subcontract. Contract Administration will forward invoices submitted by the subcontractor to the Principal Investigator for authorization prior to payment. It is important that the Principal Investigator check to determine that the work has been done satisfactorily before authorizing payment.

Last reviewed: 04/2005 cost analysis documents updated