Fixed Price Subawards

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 NIU 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 NIU 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 NIU will have limited visibility into their operations

Sponsor approval is required to issue a fixed price subaward agreement, and such agreements cannot exceed the Federal Simplified Acquisition Threshold (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: “NIU 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 Subpart C- 200.201(b) and if this proposal is awarded, NIU 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.