Purpose

This guide outlines the circumstances and administrative steps required when Pre-Award spending is necessary for an award. It outlines the steps to be taken by the Principal Investigator / Project Director (PI/PD), Department Business Administrator (DBA) and the Office of Contracts and Grants (OCG) when there is a need to incur expenditures prior to the official award start date. The awarding agency is under no obligation to reimburse Pre-Award costs if for any reason the University does not receive an award, if the award is delayed or if the award is less than anticipated and inadequate to cover such costs.

Scope

When allowed, Pre-Award costs can be incurred for expenditures up to 90 days prior to the award start date. In order to grant approval for Pre-Award spending the following criteria should be met:

1. The cost is necessary for efficient and timely performance of the scope of work
2. The cost is considered allowable under the potential award if incurred after the award start date 
3. The sponsor allows Pre-Award spending either as: 
   • Prior Approval waived from a federal agency that is a FDP member providing an award under expanded authority which allows the university to review and grant approval 
   • Prior Approval granted in the written terms and conditions of the award 
   • Prior Approval requested and obtained in writing from the sponsor 
4. Acknowledgement that expenditures that precede the award are solely at the financial risk of the unit requesting these expenditures (i.e., PI/PD's primary department or college)

Regulatory Requirement

Federal awards and federal flow-through awards are governed by the Uniform Guidance, which indicates that Pre-Award costs are allowed with the prior approval of the Federal awarding agency.  Under Federal Demonstration Partnership (FDP) programs, some of the federal agencies listed on the FDP website have waived prior approval for some awards. Language in Notice of Awards (NOA) indicating expanded authority, allow the university to know if this waiver can be applied.

Grants awarded by the State of Texas are governed by the Uniform Grant Management Standards  which indicates that prior approval or documentation showing evidence for consent is needed prior to incurring specific costs including Pre-Award expenses.

For all other awards, Pre-Award spending is governed by the sponsor’s terms and conditions and for certain awards, prior approval will be waived and approved by the university, unless specifically forbidden by the sponsor in the written terms and conditions. 

Pre-Award Cost Procedure