Yes, it is permissible providing that the circumstances warrant it. We have occasionally been the lead institution and had both second and third tier subcontracts. The specific instances that come to mind involved
substantial work in foreign countries where it was in everyone's best interest for a foreign institution (second tier) to be the coordinator of third tier subcontracts with other agencies in that country. This made sense both
from a programmatic standpoint and  in some cases for legal requirements.

I'm not sure if it is still the case but a few years ago some of the countries that made up the former Soviet Union had laws that treated grant funds as taxable. In these cases we had to use  an agency that was approved both by the US government and the foreign government in order to transfer the funds without having a government tax of 25% or more placed on the payments. These were not indirect costs but taxes that would have been taken directly by the government. The second tier subcontractor had a security status with the foreign countries that allowed for work and information to flow much more freely than it would have without their involvement.

We've also had subcontracts with universities and social services agencies in India where the Indian site was in a far better position to monitor and oversee the work done at third tier subcontractors in that country.

In all cases, these relationships were disclosed to and approved by NIH prior to our entering into them.

Paul Hudobenko, CRA
University of Connecticut Health Center
xxxxxx@adp.uchc.edu

________________________________________
From: Research Administration List [xxxxxx@hrinet.org] On Behalf Of Kris Wolff [xxxxxx@FORDHAM.EDU]
Sent: Thursday, January 20, 2011 4:53 PM
To: xxxxxx@hrinet.org
Subject: Re: [RESADM-L] Question on Subcontracting

We’re currently a third tier subcontractor on an NIH grant – went to a hospital as the prime, who subcontracted to a med school, who subcontracted to us.  But keep this in mind: while the med school’s indirect costs were not counted into the hospital’s direct costs (as usual), surprisingly, OUR indirect costs WERE counted into the med school’s direct cost.  This put us over the $500K direct cost limit without prior authorization, and we had to redo our budget.

-------------------------------------------------------
Kris Wolff
718-817-4086

From: Research Administration List [mailto:xxxxxx@hrinet.org] On Behalf Of Joelina Peck
Sent: Thursday, January 20, 2011 3:59 PM
To: xxxxxx@hrinet.org
Subject: [RESADM-L] Question on Subcontracting

Hi All,

Is it allowable to budget a third tier subcontract on a NIH proposal?    I’m thinking this is not allowable and that the lead institution should subcontract to both institutions.  However, I’m not able to find any policy or federal regulation that specifically says this is not allowable?  I might not be looking in the right places. If anyone can lead me to this  information  I would greatly appreciate it!

Example:  Lead Institution plans to subcontract to Institution A, and then A Institution plans to subcontract to Institution B.

Thanks,

Joelina Peck, CRA
Manager, Sponsored Research
Sanford-Burnham Medical Research Institute
10901 North Torrey Pines Road
La Jolla, CA  92037
T: 858.795.5404
C: 858.926.8791
F: 858.646.3189
E: xxxxxx@sanfordburnham.org

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 via our web site at http://www.hrinet.org (click on "Listserv Lists")
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