Pre-award Spending

Pre-award expenditures (aka pre-award costs) are costs incurred prior to the effective date of an award. For federal awards, pre-award expenditures are allowed only with the written approval of the Federal awarding agency. Under Uniform Guidance (2 CFR § 200.458), federal agencies are authorized to waive prior written approvals, and some federal and non-federal programs exercise this right.

When pre-award spending is authorized, a project may incur expenditures prior to the effective award date. All pre-award expenditures must be allowable, allocable, and reasonable in accordance with the principles of 2 CFR 200 and typically can be incurred 90 days prior to the start date of the award. Consult program/award guidance regarding pre-award spending time period and authorization.

Rather than charging pre-award expenditures to a department or college account, it is a recommended practice to request an Advance Start via the At-Risk Advance Spending Request form so that a new 53 account can be established. When a non-53 account is used for pre-award spending, the result is the need for a cost transfer (for non-payroll charges) or PPDA (for payroll expenditures) to transfer charges to the appropriate 53 account, increasing the number of cost transfers that need to occur and the Institution’s audit risk.

At-Risk Accounts

The Office of Sponsored Programs recently rolled out a new version of the “At-Risk Spending Request” tool for establishing a sponsored research account prior to the receipt of an award or institutional acceptance of an award. An advance account may be needed:

• When a sponsor permits pre-award costs and there is a justified need to begin the project prior to the anticipated start date of the award, or
• When a funding notice is delayed and there is an appropriate justification to begin the project at the anticipated start date of the award.

Prior to submitting an At-Risk Advance Spending Request, a risk-benefit analysis should be conducted to weigh the risk incurring expenses prior to award receipt or acceptance with the impacts on meeting project objectives. When it comes to flexibility, it is often the case that non-federal awards and federal contracts carry greater risk in comparison with federal research assistance mechanisms.

In the event that a project is not funded or accepted, the requesting Unit assumes full responsibility for expenses charged to an Advance account. Additionally, if the start date of an award is later than the start date on the at-risk account and pre-award expenditures are not allowed, then the unit responsible for administering the award is responsible for the expenditures during the unfunded period. (When a sponsor issues an award date later than expected, OSP may be able to submit a request to the sponsor for greater than the 90-day approval. Contact your SRA.)

Scenarios

1. “My Grants Manager says that my proposal is being funded and I can anticipate my award notice within the next month. Can I start hiring my team?” – Eager PI

In this scenario, the PI anticipates funding for a new agreement, but CSU has not received the award and the effective award date is unknown. Understandably, the PI is eager to start hiring grant-funded personnel. Rather than requesting an advance account, consider adding a disclaimer to the position description for grant-funded personnel that the position is contingent upon funding.

2. “Our award agreement was signed in September and the 53 account has been established. We noticed, however, that the effective start date is not until January 1. Can we book airfare now for the PI to travel to the project site end of January before travel costs increase?” – Department Administrator

Because the award is already established, there is no need to submit an “At-Risk Advance Spending Request”. Allowability of pre-award spending should, however, be verified. If you are unsure if an established 53 allows for pre-award spending, contact your SRA.

3. “I’d like to order the equipment for my project, which is set to begin in three weeks, though CSU is still negotiating the terms and conditions of the award. Is it okay to order the equipment?” – Anxious PI

Prior to requesting an At-Risk Advance Spending Account, verify allowability of pre-award spending and allowability of the equipment purchase. In the event that the University cannot accept the award, the cost of the equipment (or its return) will be subsumed by the administrative Unit.

Conclusions and Resources

The decision to incur costs prior to receiving an award or approved continuation funding is one that should not be taken lightly. When there is an appropriate reason to begin a project in advance of an anticipated award start date or to continue spending on an account before receipt of a fully executed modification, the At-Risk Advance Spending Request tool can be used to either request a new project account or provide a rationale for spending on an existing account. 

At-Risk Advance Spending Request – https://www.research.colostate.edu/osp/wp-content/uploads/sites/21/2021/11/At-Risk-Spending_Updated-Nov2021.pdf