Making the Determination: Subrecipient vs. Contractor
In research, it’s important to distinguish between a subrecipient (or subawardee) and a contractor since there are different rules and regulations that govern the relationship between the pass-through entity, which is the university issuing the subaward, and third-party entities.
Recipients of federal funding are required to comply with 2 CFR 200, also referred to as the Uniform Guidance, which details the classification and requirements for subrecipients and the University’s responsibilities in managing subawards. Additionally, federal funding agencies, such as the National Science Foundation, have specific policies and guidelines regarding the use of subrecipients and contractors on projects they fund. It is critical to note that requirements for reporting and managing the work of subrecipients and contractors is significantly different, and failure to comply with these requirements can result in penalties or the loss of funding.
Defining the Entities
In the research context, a subrecipient is an organization that receives funding from a pass-through entity (FSU) to carry out a specific portion of the project. The subrecipient performs activities that are unique to the project with minimal supervision by FSU’s PI, and often they are considered a co-PI or partner in the project.
Conversely, a contractor is a third-party entity that provides a service or good routinely offered to the general public and therefore is not unique to the project. Typically, the entity is for-profit and not subject to federal compliance requirements.
The primary difference between a subrecipient and a contractor is the level of control the pass-through entity has over the work being performed. In the case of a subrecipient, the pass-through entity usually retains significant control over the project and the subrecipient’s work. However, a contractor has more autonomy in how they carry out their work.
Example of Subrecipient and Contractor
A simplified example of a subrecipient to consider is a collaboration between two universities. Suppose FSU subcontracts a portion of the scope of work on a federal award with another university with a botanical garden to study the effects of climate change on plant life. The co-PI at the other university will be provided with a budget to conduct their work and share progress reports with the FSU PI, who retains oversight of the programmatic objectives and financial matters for the work performed.
Alternatively, the university may hire a contractor to furnish equipment and technical support for the research project. For instance, this company might build custom sensors to collect data on plant growth for many entities.
In comparison, the contractor has more autonomy than the subrecipient in carrying out their work, as long as they deliver the requested equipment and services to the university on time at the mutually agreed upon price.
The Importance of the Determination
The level of control the pass-through entity has over the work being performed by a subrecipient or contractor can also affect the intellectual property rights and publication rights associated with the research project. FSU has a mission devoted to teaching, service, and research, and the University must protect the intellectual property and publication rights of researchers as well as graduate students conducting work on projects. Other considerations include the purchase of equipment and which entity retains title to the equipment at the conclusion of the project.
These issues need to be addressed in any agreements or contracts with the subrecipient or contractor to ensure that everyone involved understands their rights and obligations. Therefore, it is essential to clearly define the relationship between the pass-through entity and any third-party entities involved in the research project. FSU must ensure compliance with all applicable laws, regulations, policies, and terms and conditions of the prime award.
Help in Making the Determination
SRA has developed a Subrecipient vs. Contractor Determination form, which is required at the prime proposal stage. Answers to the questions contained within this form help the University document the considerations necessary for making a proper determination. Additionally, your SRA Grants Officer or FSURF Sponsored Project Analyst can provide guidance to assist the PI in making an accurate decision.
