Impact on Project Budget

The determination of whether the business entity is a subrecipient or a vendor may have an impact on the budget.

For example, if it is determined that a subaward arrangement is appropriate and that the business entity has systems and internal controls in place for managing and administrating the research to be funded through MIT, then the budget would reflect that the first $25,000 is subject to overhead (420600) and the remainder amount is not subject to overhead (420620).

Conversely, if it is determined that a subaward arrangement is not appropriate or if the business entity does not have systems and internal controls in place for managing and administrating the research to be funded through MIT, then MIT may need to treat the organization as a vendor (e.g. through a consulting contract), which would mean the entire amount of the entity’s budget would be subject to full overhead.

Proposed Subrecipient

If the subrecipient review and evaluation determines that the subrecipient does not have systems and processes in place to sufficiently manage the subaward, this may present a challenge that the MIT PI may not be positioned to overcome. As a result of this situation, MIT may not have the funding and resources to designate the subrecipient as a procurement vendor (i.e.: work for hire subject to full MIT overhead) and MIT may have to seek alternatives, including termination of the subaward.