Subrecipient vs Vendor Determination
Determining whether a proposed collaboration should be classified as a subrecipient, or vendor can be challenging. The determination is based primarily on the type of work proposed, not solely on the type of entity (i.e.: university, business entity, nonprofit entity).
It is important that the correct determination is made early in the process of preparing a proposal application, as overhead treatment and monitoring requirements for these types of arrangements vary and will impact the grant budget and, in some cases, the grant narrative.
The information provided below will assist you in determining the appropriate classification.
Not all of these characteristics will be present in every case. According to the Uniform Guidance, judgment should be used in each individual case in determining whether an entity is a subrecipient or a vendor.
It is the responsibility of the principal investigator to determine whether the price is competitive and reasonable for both subrecipients and vendors. The cost is not relevant in determining whether the relationship is that of subrecipient or vendor.
Under the Uniform Guidance (2 CFR 200.92), subaward means an award provided by a pass-through entity to a subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal Program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract.
Note: This definition is applied to all sponsored projects awarded from Federal and Non-Federal sponsors.
Typical Subrecipient characteristics are below.
- Collaborates on design or development
- Substantive programmatic work, with significant portion of overall project
- Exercises considerable discretionary judgement and controls methods and results of their portion of the project
- Responsible for programmatic decision making and design, identified by a separate scope of work, budget and institutional approval for such work.
- Must comply with prime award terms and compliance requirements (IRB, IACUC, Budget restrictions, IP, etc.)
- Contributes to the scholarly/scientific conduct of the project as described in the statement of work for the prime award
- Measured against meeting the project objectives
- Retains intellectual property produced by subaward personnel;
- would be considered as a co-author of publications resulting from the work performed under the prime award
- Typically, an individual is identified as a PI/Co-PI on the project
- Performs work that involves human subjects or animal studies
Subrecipients should have a detailed scope of work and a budget that specifies salary, fringe, supplies, and other direct costs, as well as appropriate F&A costs consistent with the subrecipient’s indirect cost rate. These documents should be collected from the subrecipient organization well before UNT’s internal deadline for the proposal submission so they can be appropriately incorporated into UNT’s proposal/budget. Subaward budgets get entered individually into the GRAMS budget. UNT’s budget will assess Indirect Costs on the first $25,000 of each subaward.
Terms and conditions from a prime award are typically imposed on the subrecipient to the same degree that they are imposed on UNT as the prime recipient.
A vendor is used for obtaining goods and/or services needed for carrying out a project.
Typical characteristics of a vendor are below.
- Provides similar goods/services to others and provided within normal business operations
- Does not participate in project design/development
- Operates in a competitive environment
- Fee for Service
- No Joint authorship of publications
- Not subject to monitoring or reporting requirements of the prime award
- Not subject to sponsor compliance regulations
- An individual may or may not be identified
- Provides a routine service with no analysis or discretionary judgement (e.g., equipment fabrication or repair, data processing, performing routine testing services, etc.)
Vendors and Service Provider costs should be included as an Other cost in the Other Direct Costs section of your budget. Indirect Costs are assessed on the full cost of the service.
Consultants/Professional services agreements
Consultants are typically individuals but may be a commercial entity (i.e.: consulting firm) and hired to provide technical expertise in support of a sponsored project.
Typical characteristics of a vendor are below.
- Expert advice, review, or services.
- No stake in outcome of project
- Consultant fee based on hourly or daily rate.
- Deliverables may be intermittent throughout the project
- Not subject to compliance requirements of the Prime Contract
- Not a UNT System employee within the last 12 months.
- Is not responsible for overall outcome of project
- If individual has an institutional appointment, services they provide are not typically using their university resources.
- Consultant determines how to accomplish the work
Consultant costs should be included in the Other Direct Cost section of your budget. Indirect Costs are assessed on the full cost of the fee.
Note: Some sponsors may require letters from consultants be included with your proposal application that specify the rate of pay, services to be performed and/or total estimated cost.