Subaward

A subaward is the funding instrument — not the organization, not the oversight activity — by which a pass-through entity transfers part of a prime award‘s funding and a defined, substantive scope of research work to a subrecipient. A subrecipient carries out programmatic work under its own principal investigator and budget and is judged, at least in part, against the subaward’s own performance measures — unlike a contractor, which simply provides goods or services within a market relationship. 2 CFR 200.331 sets out the factors used to make that subrecipient-vs-contractor determination when the answer isn’t obvious from the relationship’s substance.

Four related terms, four vantage points

These describe the same relationship from different angles, and are deliberately kept as separate entries rather than merged, because a research office uses each one to answer a different question: subaward is the instrument itself (what was agreed, and its terms); prime award is the original funding relationship between the sponsor and the lead recipient that the subaward flows from; pass-through entity is the organizational role of the recipient passing funds onward; subrecipient monitoring is the ongoing oversight practice — risk assessment, financial review, audit follow-up — the pass-through entity is responsible for once the subaward is in place.

MTDC treatment

Under 2 CFR 200.1, up to the first $50,000 of each subaward is included in the prime recipient’s Modified Total Direct Cost base; the portion of a subaward above $50,000 is excluded from MTDC, meaning the prime’s negotiated indirect-cost rate does not apply to that excess. This is the single most common source of a subaward budget error — applying F&A to the full subaward amount rather than just the first $50,000.

What a subaward agreement typically contains

Scope of work, budget and payment terms, key personnel, reporting and deliverable requirements, and the "flow-down" terms the prime award itself imposes (e.g., data-sharing, publication, or reporting obligations that must pass through to the subrecipient). The Federal Demonstration Partnership (FDP) maintains standard subaward templates widely used across US research institutions to speed negotiation between frequent collaborators. See Subaward Agreement Negotiation: How It Works for how these terms actually get worked out between the parties.

References

• 2 CFR 200.1 (MTDC definition, $50,000 subaward exclusion); 2 CFR 200.331-200.333 (subaward requirements, risk assessment, monitoring); Federal Demonstration Partnership subaward templates.

When this last changed, and how you find out next time

The $50,000 MTDC exclusion above is current as of October 1, 2024. It is not permanent: OMB revised 2 CFR 200 on April 22, 2024, published in the Federal Register at 89 FR 30046, raising the threshold from $25,000 to $50,000 for awards issued on or after that effective date.

OMB publishes every change to the Uniform Guidance in the Federal Register, and the Federal Register is one of the sources Regulatory Radar checks every day — so 2 CFR 200 is one of the few subjects where CASRAI reads the primary publication venue itself rather than waiting for somebody’s summary. It does not watch the NIH Guide, and it does not watch private accreditors.

Ask CASRAI what 2 CFR 200 currently requires for the $50,000 MTDC exclusion and the subrecipient-versus-contractor determination — it answers from an indexed corpus it re-checks daily and cites the passage it used, so you can open the source and check it. Two questions a day are free while you are signed out, no account and no card. Regulatory Radar is $29 a month for 150 a day, a subscriber dashboard, API keys and MCP access. Everything CASRAI publishes, including this page, stays free to read.

Frequently asked questions

How much of a subaward counts toward the prime recipient’s MTDC base?

Only the first $50,000 of each subaward (raised from $25,000, effective for awards issued on or after October 1, 2024). The portion above $50,000 is excluded, so the prime’s negotiated indirect-cost rate does not apply to that excess.

What is the most common subaward budgeting mistake this MTDC rule causes?

Applying F&A to the full subaward amount rather than just the first $50,000 — the single most common source of a subaward budget error.

How is a subrecipient different from a contractor on the same federal award?

A subrecipient carries out programmatic work under its own principal investigator and budget and is judged, at least in part, against the subaward’s own performance measures. A contractor simply provides goods or services within a market relationship. 2 CFR 200.331 sets out the factors used to make that determination when it is not obvious from the relationship’s substance.

Who is responsible for monitoring a subrecipient once the subaward is in place?

The pass-through entity — the organization passing funds onward — is responsible for subrecipient monitoring: risk assessment, financial review, and audit follow-up for the life of the subaward.

Does the Federal Demonstration Partnership provide standard subaward agreement templates?

Yes. The FDP maintains standard subaward templates widely used across U.S. research institutions to speed negotiation between frequent collaborators.