Pre-Award accounts can sometimes be established before the fully executed award arrives.
Here are some important facts to keep in mind:
- Pre-award spending under these accounts can be risky.
- If the pre-award account is established but the award is not granted, any pre-award expenditures become the responsibility of the PI’s department or college.
Some standard federal awards contain a clause allowing 90-day pre-award costs, but other awards not containing this assurance should be “handled with care.”
If the award meets the following criteria, the risk is minimized:
- The award is imminent.
- The PI or College Research Office has something in writing from the sponsor that the award is forthcoming.
- The pre-award spending is necessary for the effective and economical conduct of the project for reasons such as:
- Payroll deadline is approaching
- Need to order specialized equipment and supplies
- Pricing quote for required equipment is expiring
- The nature of the research is time sensitive – e.g., plant growing season
If negotiations fail or unforeseen circumstances occur, the expected award may not be granted. If so, all expenditures incurred become the responsibility of the PI’s department or college.
The Official Award Date is Later Than Expected
The pre-award account is effective June 1st, for example, but the final start date is actually July 1st. In this situation, the June expenditures are not allowed.