Research and Sponsored Programs

Office of the Vice Chancellor for Research

Outgoing Subawards

Page Updated: June 25th, 2025

What is an outgoing subaward?

The OMB Uniform Guidance (2 CFR 200) defines a subaward as "an award provided by a pass-through entity to a subrecipient for the subrecipient to contribute to the goals and objectives of the project by carrying out part of a Federal award received by the pass-through entity."

A subrecipient means the legal entity that receives the subaward and is accountable to the recipient for the use of the funds provided. A subaward may be provided through any form of legal agreement, including an agreement that UW-Madison considers a contract.

For the purposes of this webpage, the terms "subaward", "subcontract" and "subagreement" are used interchangeably.

Subrecipient Selection Process

The Principal Investigator (PI) is in the best position to select the subrecipient that will be included in the proposal. The selection is based on the potential subrecipient's technical experience and the ability to perform the portion of the scope of work being proposed to the Sponsor.

Proper attention should be paid to the relationship. There are many ways to work with third parties. An outline of the factors in the determination of the relationship are listed below.

RSP does not issue agreements for all third party relationships. The information below serves as a guide to determining the appropriate relationship/agreement. There is also a Service Agreement Website, which will assist campus users in finding the right starting place for fulfilling their external service needs.

Subaward v. Vendor v. Consultant v. Re-Grant

Subaward	Vendor	Consultant	Re-Grant
Intellectually significant portion of programmatic effort	Goods and Services provided within normal business operations	Service provided within normal business operation	When the UW is charged with dispensing awarded funds to various grantees
Responsible for programmatic decision making	No programmatic decision making	Provides an expert opinion	A panel/committee is formed to issue an RFP and select grantees from the proposals received
Work performed by the subrecipient's personnel, using their personnel at their facilities	Operates in a competitive environment	No programmatic decision making, but uses knowledge and expertise in field	The grantees are selected by panel to perform a project of their own design and direction.
Responsible for same regulatory and compliance requirements as prime recipient	Fee for Service	No stake in outcome of project

* RSP issues agreements for Subaward and Re-grant relationships. Vendor and consulting agreements (typically ASSAs) are issued by Purchasing Services.

** Need further assistance in making the appropriate determination? Use this checklist or check out the Service Agreement Website.

Shared Grants

A Shared Grant is essentially a "subaward" or "re-grant" to another UW System institution. The Shared Grant Transfer of Extramural Funds applies only when the transfer of funds is related to joint participation by two or more UW Institutions in completing the scope of work of an extramural project (subaward) or if the other UW institution has submitted a proposal to an RFP issued by UW-Madison (re-grant).

A Shared Grant relationship may be determined at the time the formal grant proposal is submitted or subsequent to the award being issued. In either instance, both institutions should have knowledge of the transaction.

When UW-Madison is subbing to another UW-System school, that subaward will be excluded from the F&A base calculated for UW-Madison. The UW-System School that is receiving the subaward may include F&A at the sponsor approved rate.

NIH Updates for Outgoing Subawards

NIH Prior Approval Requirement Change and Impact on Regrants

Effective under NOT-OD-26-062, NIH is implementing a significant change to the prior approval process for domestic subawards that will directly affect regrants issued under NIH-funded awards.

Going forward, any regrant recipient that was not specifically identified and approved in the original proposal will require a formal prior approval request to be submitted through eRA Commons before a request can be initiated in the Subaward Portal.

This represents a substantial change to prior NIH regrant practices. Historically, UW—Madison NIH-funded regrants were not required to obtain prior approval for those downstream regrant recipients. Under the new policy, NIH must now review and approve regrant recipients in advance through an eRA Commons prior approval request before regrant awards may be issued. This change applies only to regrant programs sponsored under UW—Madison NIH awards where downstream entities are selected after the initial award has been made. Regrants funded by non-NIH sponsors are not subject to this new NIH prior approval requirement.

Once NIH prior approval has been received, please attach the approval notice in the Subaward Portal when submitting the subaward or regrant request.

NIH Indirect Cost Limitation for Subrecipients

Per NIH Notice NOT-OD-26-072, domestic subrecipients that do not have a federally negotiated indirect cost rate agreement (NICRA) are limited to a de minimis indirect cost rate of 10% of Modified Total Direct Costs (MTDC) on NIH-funded awards. This limitation applies unless the subrecipient is eligible for and has obtained a federally negotiated rate agreement.