Indirect Costs (IDC) on the Transfer of Existing Subagreements Procedural Statement
| Functional Area: | Research Administration |
| Related Policy: | Indirect Cost Recovery Policy |
| Effective Date: | March 9, 2017 |
| Approved by: | Alexa Van Dalsem, Assistant Vice Chancellor of the Office of Contracts and Grants |
| Responsible Office: | Office of Contracts and Grants |
| Procedural Statement Contact: | J Butler, Assistant Director, Subcontracts |
| Last Reviewed/Updated: | February 6, 2026 |
I. PROCEDURAL STATEMENT
This document is intended to provide guidance on the charging of indirect costs when an existing outgoing subagreement is changed during the life of a project.
II. DEFINITIONS
“Subagreement” is a generic term used for a Subaward or Subcontract.
A subaward is defined in the as:
An award provided by a pass-through entity to a subrecipient for the subrecipient to contribute to the goals and objectives of the project by carrying out part of a Federal award received by a pass-through entity. It does not include payments to a contractor, beneficiary, or participant. A subaward may be provided through any form of legal agreement consistent with criteria in 200.331, including an agreement that the pass-through entity considers a contract.
A subcontract is an award provided by the prime sponsor to a subcontractor for the subcontractor to carry out part of the work on an award received by the prime sponsor, for which the principal purpose of the award is to acquire property, services, or collaboration on the design and conduct of research and creative work for the direct benefit or use of the sponsor.
Shortened form of the words “Subrecipient”, “Subaward,” or “Subcontractor”
Indirect costs are defined in 2 CFR 200.1 as: those costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. It may be necessary to establish multiple pools of indirect costs to facilitate equitable distribution of indirect expenses to the cost objectives served. Indirect cost pools must be distributed to benefitted cost objectives on a basis that will produce an equitable result in consideration of relative benefits derived. For Institutions of Higher Education (IHE), the term “facilities and administrative (F&A) cost” is often used to refer to indirect costs.
Modified total direct costs are defined in 2 CFR 200.1 as:all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes capital equipment, capital expenditures, charges for patient care, rental costs for offsite facilities, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs.
Prior to the October 1, 2024 2 CFR 200 update, in the definition of MTDC, up to the first $25,000 of each subagreement was included in the MTDC base.
IDC base rate classification in which all cost categories are assessed IDC, including tuition remission, fixed assets, student aid, and all subagreement costs.
III. PROCEDURES
A. Indirect Cost Base and Subagreement Costs
Section 2 CFR 200.1 Modified Total Direct Cost (MTDC) of the Uniform Guidance determines that the first $50,000 of a subaward is subject to indirect costs (IDC) when the MTDC base type is applicable to a project. 鶹ѰBoulder adopted this new threshold for all subagreements when the university’s negotiated rate agreement’s MTDC definition was updated for this new threshold in December 2025 and for new awards proposed under the new rate agreement (see Application of Indirect Costs (F&A) on Sponsored Projects, section III.C. Fixed Rates for the Life of the Sponsored Award).
If the IDC rate on 鶹ѰBoulder’s budget is based on Total Direct Costs (TDC), IDC will be charged on the full amount of the sub; the $50,000 cap on subagreement costs does not apply.
B. Federal Awards – Subagreement Moves to New Institution
When an existing subagreement moves to a new institution, a new subaward is issued by 鶹ѰBoulder to the recipient. Because these are considered new subagreements, IDC is charged on each subagreement according to the definition of MTDC in the applicable 鶹ѰBoulder negotiated rate agreement and on the full amount of the subagreement for IDC calculations based on TDC.
The applicable 鶹ѰBoulder negotiated rate agreement is determined according to Application of Indirect Costs (F&A) on Sponsored Projects, section III.C. Fixed Rates for the Life of the Sponsored Award.
C. Federal Awards – Supplemental Proposal and Award
In cases where a supplemental proposal provides funding for additional scope of work and is related to the parent proposal as a child proposal in infoEd, the original subagreement is modified and no additional IDC is assessed for the subrecipient.
D. Non-Federal Awards
Section 2 CFR 200.403(c) of the Uniform Guidance requires that 鶹ѰBoulder apply our policies and procedures uniformly to both federally -funded and other activities of the university. Therefore, 鶹ѰBoulder’s Cost Principles Policy and related guidelines, including this procedural statement, are also applicable to non-Federal awards.
IV. FREQUENTLY ASKED QUESTIONS
Answer: Two examples of when a subagreement might be reissued to a new institution include:
1. If the sub PI transfers to a new institution and will continue the work at the new institution; or
2. The inability of an existing sub to complete the scope of work and the subagreement moves to an institution that is able to complete the scope of work.
Answer:A supplemental proposal is a request to the sponsor for additional funds for an ongoing project during the previously approved performance period. Supplemental proposals may result from increased costs, modifications in design, or a desire to add closely related components to the ongoing project. In infoEd, supplemental proposals are related to the original proposal as a child proposal.
Answer:The subaward to University B is a new subaward, even though it is continuing the work started at University A. A new agreement must be written, negotiated and signed, and new documentation must be collected. The new subaward requires the same amount of administrative resources as the initial subaward to University A, so IDC must be charged in order to recover these costs. It is important to understand that subawards are issued to the institution, not to the PI.
The same reasoning applies when a subagreement PI changes institutions, will continue the scope of work, and a new subagreement is issued to their new institution.
Answer:If the Co-PI is going to stay on the project and has a portion of the statement of work that they are responsible for, then it would require permission from the sponsor to add a subagreement. Once approval is given, a new subagreement would be issued to the Co-PI’s new institution. We would charge IDC as this is a new sub.
V. RESOURCES
VI. HISTORY
| Changes | Date | Approved By |
| Adopted | 03/09/2017 | Denitta Ward |
| Revised to new format, updates to 2 CFR 200 references, added procedural statement contact | 11/23/2020 | No substantial changes |
| Editing and rewording, addition of definitions for “Subagreement” and “Sub,” replacing “subaward” with “subagreement” throughout, clarification of when to apply IDC to a sub on a supplemental proposal or award, addition of sections to “Procedures” and Resources | 6/9/2023 | Gary Henry |
| Revised based on updates to Uniform Guidance | 11/15/2024 | Alexa Van Dalsem |
| Revised based on adoption of Uniform Guidance changes | 2/6/2026 | Alexa Van Dalsem |