Subrecipient Funding Mechanisms

Fixed Price

Fixed price (also known as firm-fixed price, firm-price or fee-for-service contract) is an agreement where the contractor pays a firm price for the agreed-upon work, regardless of the ultimate cost to complete the project. The level of financial risk for the university is higher than that of a cost reimbursable contract because payments are typically received upon receipt of deliverables. Fixed price subrecipient agreements must be pre-approved and cannot exceed $150,000. Fixed Price agreements are typically used in more service-related work.

It is important that fixed price agreements have a detailed deliverable schedule with payments tied to multiple milestones and/or checkpoints.

Cost Reimbursable

Cost reimbursable agreements provide for payment of allowable incurred costs, to the extent these costs are prescribed in the contract. These agreements establish an estimate of total costs for obligating funds and establishing a ceiling that the subrecipient may not exceed (except at its own risk) without the approval of the contracting officer.

A Cost reimbursable agreement should have a very detailed scope of work and budget justification to ensure ease of monitoring throughout the invoice approval process.

Advance Payment

Advance payment agreements are cost-reimbursable agreements in nature that provide an up-front advance payment that will be reconciled with financial reports. Once an up-front payment is reconciled, GW will then receive invoices for actual costs incurred by the subrecipient. .

Advance payments are charged to the departmental or school funds initially and later reconciled against the grant or contract funds, crediting back the department or school. 

Annual Risk Assessment of Subrecipients

The university assesses, among other factors, the subrecipient's financial status and internal controls based on documentation from the entity and other independent sources to determine whether to proceed with the subrecipient agreement.

An annual risk assessment is required for every subrecipient. The risk assessment will include evaluating the subrecipient’s audit or audited financial information and the scope of work and project budget. GW’s Grants and Contracts Accounting Services will review this information and assign a risk level to the subrecipient. Previous experiences of a GW principal investigator/department with a subrecipient may also be used to help assess risk.

Based on the initial or annual assessment, terms and conditions are established within the subaward agreement to mitigate any perceived risk and monitor activities of the subrecipient.