Under limited circumstances, Principal Investigators (PIs) may request authorization to spend funds in support of a sponsored project in advance of receiving a notice of an award from a sponsor.
Federally-Funded Projects:
Uniform Guidance provides for the allowability of pre-award costs. Some agencies may require approval and documentation before any pre-award spending occurs. The PI/PD is encouraged to contact the Office of Sponsored Programs for clarification. If pre-award costs are allowed by the sponsor, appropriate expenses can be charged to the designated cost center during the pre-award period.
Generally, the PI/PD may incur pre-award costs 90 calendar days prior to award, or more than 90 calendar days with the prior approval of the Federal awarding agency, subject to sponsor guidelines and terms of specific award. The Federal awarding agency is under no obligation to reimburse such costs if for any reason the University does not receive an award or if the award is delayed or is less than anticipated and inadequate to cover such costs.
Non-Federally-Funded Projects:
The same need for pre-award spending may arise on non-Federally-funded projects. The Office of Sponsored Programs will work with each PI/PD in determining the non-Federal sponsors guidelines on pre-award costs.
Pre-Award Spending - Risks, Liabilities and Limitations
The risks, liabilities and limitations associated with pre-award spending must be carefully considered prior to requesting authorization to spend funds in advance of receiving the award.
Risks: Whenever the Institution authorizes pre-award spending, the PI/PI is risking monetary loss. It is the responsibility of the PI/PI to ensure other funding is available to cover the risk of a delayed start date, costs disallowed by the sponsor or failure of the sponsor to make an award as anticipated. The responsibility lies on the PI/PD to ensure appropriate steps have been taken to ensure minimal risk.
Liabilities: Special care must be exercised in assessing the impact of pre-award spending on the legal obligations of the Institution prior to requesting or approving. The Institution must consider the impact of not having a fully executed grant agreement. It is important to note, SPA requires notification from the Sponsor in the form of an email, JIT or other documentation that supports the likely hood the agreement will be funded.
Limitations: A sponsor's policies, the terms and conditions of the anticipated award determine whether or not pre-award spending or pre-award activities are allowable. Restrictions differ depending on the funding agency and the type of award anticipated (i.e., grant, cooperative agreement, or contract).