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External Subcontracting Under Sponsored Awards and Contracts

Procedure: 8-18

Effective: August 18, 2006

Owner: Office of Sponsored Programs

Latest Revision: January 24, 2011

Procedure Steps | Scope | Policy | Responsibility | Distribution | Ownership


The purpose of this procedure is to assist University principal investigators and departmental administrators in the preparation and administration of subcontracts issued under sponsored programs.

All Sponsored Awards received by the University that include collaborative sponsored research services from a third party(usually another academic institution) in support of the technical goals and outcomes of the award are required to have a subcontract document prepared to formalize the collaborative relationship between the University and the third party. All such subcontract documents are issued and negotiated by the Office of Sponsored Programs (OSP). This procedure does not cover subcontracts that the University of Virginia receives from other institutions, nor does it cover procurement activities under Sponsored Awards for the purchase of goods and services.


Facilities and Administrative Costs (F & A) – F & A costs (also known as “indirect costs”) are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. The University's F&A costs are consistent with the definitions of specific F&A cost categories in Circular A-21, Section F.

The University of Virginia charges F & A on the first $25,000 of each subcontract under any award or contract which allows F & A, and for each competitive cycle of the award or contract. If the prime award allows F & A to be calculated on "total direct costs (TDC)" then UVA's portion of the F & A on the subcontract shall be on the entire cost of the subcontract.

SP -30 (Subcontract/Subaward Request Form) – Form used when requesting a new subcontract or a modification to an existing subcontract under a sponsored award. Form available at

Sponsor – An external funding source that enters into an agreement with the University to support research, instruction, public service or other sponsored activities. Sponsors include for-profit organizations, foundations and other not-for-profit organizations, other universities, and federal, state and local governments.

Sponsored Award – The grant, contract or cooperative agreement document processed by the Sponsor and accepted by the University that provides financial assistance and the terms and conditions under which the sponsored activity occurs.

Statement of Work – The Statement of Work outline the procedures and methods, which will used by the subcontractor to accomplish the goals of the subcontract.

Subcontract – The document issued by the University that formalizes a collaborative research relationship with a third party to perform substantive sponsored project services under a Sponsored Award made to the University. Can also be called a Subaward.

Subcontractor – The third party performing substantive sponsored project services under a Subcontract.

System References

  • SP30 – Subcontract Request Form
  • Sole Source Justification


RES-009, “Compliance With Sponsor Requirements”


Office of Sponsored Programs

OSP is responsible for the issuance, negotiation, acceptance and certain compliance monitoring aspects of all external Subcontracts and modifications including financial reports, performance reports, audit reports, site monitoring reviews and timely resolution of audit findings

School/Departmental Administrators

The Department is responsible for timely submission to OSP of proposal and post-award paperwork pertaining to Subcontract issuance, modification, processing invoices and closeout

The Principal Investigator

The Principal Investigator is responsible for authorizing issuance of subcontracts and modifications under his or her Sponsored Awards. Further, the PI is responsible for monitoring technical progress of the Subcontractor, reviewing Subcontractor invoices for appropriateness and allowability of charges, and approving such invoices for payment.


  • Office of Sponsored Programs Contract and Grant Administrators
  • Research Administrators
  • Fiscal Technicians
  • Principal Investigators


The Assistant Vice President for Research Administration in the Office of Sponsored Programs is responsible for ensuring that this procedure is necessary, reflects actual practice, and supports University policy.

Procedure Steps

Preaward Phase

The Principal Investigator

  • The PI will initiate the collaboration by receiving a proposal from the subcontractor and including this documentation in the Proposal to be submitted to the Sponsor.

School/Departmental Administrators

  • The School/Departmental administrator shall assist the PI in compiling the following subcontractor information in the proposal.
    • Proposal Face Page or equivalent endorsed by an authorized official
    • Biosketch for all Key Personnel
    • OSP Sole Source Justification form for all subcontracts in excess of $10,000 to non-governmental entities that are not named in UVA’s proposal to the sponsor. For further information see Financial and Administrative Procedures Manual procedure 8-9B
    • Detailed Budget Pages & justification –including letter of commitment when cost sharing is required.
    • Statement of Work

Note on budget preparation: The full proposal budget must include F & A for UVA on the first $25,000 on each subcontract that is proposed. This is to be charged once during each competitive renewal cycle. (Exception: When F & A is awarded by the sponsor as TDC – see definition above)

Office of Sponsored Programs

  • OSP and The School of Medicine’s Office of Grants and Contracts, will review and approve all proposals for submission to Sponsor.
  • When establishing proposed subcontracts with organizations for the first time when those entities are not subject to A-133 audit, or when establishing subcontracts with organizations that have a history of A-133 audit findings, OSP may interview subcontractor officials to determine what financial controls are in place to ensure proper expenditure of Subcontract funds. Interviews shall obtain information pertaining to Subcontractor’s environment, systems and controls sufficient to identify the level and methods of monitoring required. The decision to conduct a priori interviews will be made by Director of Grants and Contracts or his/her designee. The interviews, whether conducted orally or by written correspondence, will be reduced to writing and the documentation placed in the subcontract file.

Performance Phase

The Principal Investigator

  • To initiate the issuance of a subcontract upon receipt of an award or an award modification, the PI reviews and signs an SP-30 authorizing the establishment of a new subcontract or an amendment to an existing subcontract.(See II. Performance Phase-School/Departmental Administrators)
  • The PI maintains contact with the subcontractor and is in receipt of all required reports on a timely basis.
  • The PI assesses the Subcontractor’s technical progress and required reports and if sufficient approves subcontractor invoices for payment.

School/Departmental Administrators

  • SP-30 FORM An SP-30 Form is prepared when a new subcontract or a modification to an existing subcontract is required. For a new subcontract or subaward complete Sections A.1, B, C and D. For a modification to an existing subcontract or subaward, complete sections A.2, B, C and D. It is necessary to complete all sections and provide all required attachments noted in Sections A.1 and B.
  • The SP-30 must be signed by the PI and routed through the proper channels to OSP.

Office of Sponsored Programs

  • OSP will issue all subcontracts and modifications to existing subcontracts at the request of the PI via the SP-30. Upon receipt of all required documents a subcontract will be drafted, routed for signatures and then sent to the Subcontractor for final execution.
  • No subcontract shall be issued until the applicable subcontractor human and animal research protocol approvals have been received. If the requested subcontract is to a foreign institution which will be using animals, these additional requirements apply:
  • Upon receipt of the SP-30 for a new subcontract/subaward, OSP will establish in the Integrated System, a new project with the requested budget (including UVA F & A on the first $25,000 of the subcontract if applicable). This project will remain on “Hold” until the subcontract is fully executed.
  • Subcontract budgets for modifications to existing subcontracts will be transferred out of the designated master project to the subcontract project upon receipt of the fully executed subcontract amendment.
  • Copies of the final documents will be distributed to the PI and the Department after the funding has been released in the Integrated System.
  • OSP will receive all Subcontractor invoices and Financial Reports for initial review and will forward invoices to the appropriate departmental contact for further processing. (See Section III below).
  • In the event PI notifies OSP of subcontractor nonperformance, OSP may at the direction of the PI: (a) provide subcontractor with written notice of nonperformance and provide opportunity to cure deficiencies (b) terminate subcontract for non-performance consistent with the terms of the agreement (c.) take other action as appropriate and consistent with sponsor requirements.
  • OSP will obtain a copy of the subcontractors’ A-133 certification for each fiscal year in which the subcontractor participated and maintain specific files for A-133 monitoring. Special emphasis will be placed on monitoring institutions that receive more than $500,000 a year in federal funds from University of Virginia. The A-133 certification will be reviewed for material findings by the OSP Subcontract Administrator, logged in the Subcontracts Issued spreadsheet and filed. Should relevant material findings be noted, the OSP Director of Research Administration Outreach and Compliance will be notified for further investigation. If a subsequent audit of Subcontractor is required, OSP in conjunction with Internal Audit will ensure that reports and documents required of the Subcontractor are submitted and will follow up with Subcontractor on any related issues that arise from the audit.
  • OSP shall follow up on delinquent A-133 certifications. The yearly cycle shall be November and March. If three requests go unanswered the delinquent institutions will be forwarded to the Director of Research Administration Outreach and Compliance for further action.

Processing Invoices

The subcontractor is responsible for generating all invoices and maintaining proper documentation to substantiate charges. Invoices should state the subcontract number and list line item detail of expenditures for the current billing period as well as the to-date cumulative total. The invoices should be mailed to the Office of Sponsored Programs as specified in the subcontract document.

Office of Sponsored Programs

  • OSP receives subcontractor invoice and enters it into an OSP tracking system. OSP sends invoice to the department for review, approval and payment, along with a transmittal letter stating that payment of the invoice confirms adequate technical performance on the part subcontractor.

Principal Investigator

  • The PI reviews the invoice to confirm that the Subcontractor is performing according to the agreed upon scope of work and approved budget. The PI confirms that the expenditures fall within the project period and budget as stated in the Subcontract, and that expenditures are reasonable and allowable according to progress. After the PI has approved the invoice by signature, the departmental administrator will process the payment.

Department/School Administrator

  • Based on the approval of the Principal Investigator the departmental/school administrator should process the invoice for payment using the correct award-project number. After the invoice is paid it will be filed with the award financial documentation in the department.
  • Subcontractor payments may only be paid from an appropriately designated subcontract project in the integrated system. There are only two expenditure types that can be used. (Charges using any other expenditure type are not allowed and must be transferred off the subcontract.):
  • Svcs, Subcontracts, Spon Prgm – to be used on the first $25,000.00 of expenses if applicable
  • Svcs, Subcontracts, OSP no F & A – typically used after the first $25,000.00 of expenditures

Example of the Invoice Payment Process:

  • UVA awards a subcontract in the amount of $60,000 and budgets UVA F & A based on the first $25,000 of the subcontract. Over the life of the project the subcontractor bills UVA 3 times. The following expenditure types should be used when processing payments:
  • Amt. Expenditure Type
  • Inv. No. 1-$20,000 $20,000 Svcs, Subcontracts, Spon Prgm (will burden F&A)
  • Inv. No. 2-$20,000 $ 5,000 Svcs, Subcontracts, Spon Prgm (will burden F&A)
  • $15,000 Svcs, Subcontracts, OSP no F & A
  • FINAL 3-$20,000 $20,000 Svcs, Subcontracts, OSP no F & A

Closeout Process

Office of Sponsored Programs

  • After the close of a subcontract, OSP will send an email to the Departmental Administrator with a copy to the PI, requesting confirmation that the subcontractor performance was adequate and all required technical reports have been received.
  • OSP shall ensure that the Subcontractor submits final reports, A-133 certifications and the final invoice.
  • OSP may, per the terms of the subcontract agreement, withhold final payment to the subcontractor, pending receipt of all reports required at closeout including any outstanding A-133 certification letters.
  • OSP will work with the department to reconcile all subcontract accounts with the Subcontractor’s final financial report.

School/Departmental Administrators

  • The Department will ensure the receipt of all reports required for close-out.
  • The Department will confirm by e-mail to OSP that all deliverables have been received.
  • The Department will work with the award accountant to reconcile all subcontract accounts with the Subcontractor’s final financial report.

The Principal Investigator

  • Upon acceptance of all required deliverables, PI will approve final payment to the Subcontractor.

End of Activity