If a non-University organization, such as another institution, is conducting a part of the programmatic aspects of the project, a subcontract or subgrant agreement must be prepared. The key elements of a subcontract include:

• a subcontractor is responsible for a portion of the workscope,
• the arrangement is collaborative,
• the arrangement is generally time-intensive.

Since the subcontractor will be making significant and independent decisions, a formal agreement is necessary to outline the terms and conditions the subcontractor must follow. The prime award's terms and conditions will also apply to the subcontract.
 
PIs need to include subcontract budgetary information with their proposals. When grant administrators review the proposal, they look for several things:

• the proposal must have a detailed budget that reflects institutional endorsement from the subcontractor
• the proposal must have a statement of intent signed by subcontract's principal investigator / institution along with University of Minnesota counterparts
• the need for the subcontract must be justified in the budget justification
• the totals from the subcontract budget must match the totals in the University of Minnesota composite proposal budget
• the subcontract budget must conform to the proposedsponsor's rules and regulations (e.g., for most sponsors, alcohol cannot be in the budget)
• the proposal budget should include indirect costs from the subcontract. Note: if the sponsor requires indirect costs and it is not included in the proposal budget, indirect costs will come out of the project's direct costs. It is preferred that the subcontractor include a copy of their federally negotiated rate agreement which will be retained in University of Minnesota files.

Once the award notice arrives from the sponsor, grant administrators need several items to prepare the subcontract agreement:

• a statement of work
• performance period dates if different than prime award dates
• technical reports / deliverable, if required
• confirmation that the budget in the file is correct or, if different, a revised budget
• a complete address and contact person for the subcontract
• a list of key personnel involved in the work