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Collaborating on a sponsored project can be a fascinating and fulfilling way to incorporate another perspective into your work or accomplish tasks that fall outside your area of expertise. However, it must be done correctly to avoid administrative confusion or audit risk later in the project. 

There are two main types of collaborators: “subrecipients” and “contractors.” These two categories are budgeted for differently, reported on differently, and have contrasting levels of input on the project. 

What is a Subrecipient?

A subrecipient (also called a “subawardee”) is an institutional collaborator on a grant that provides programmatic direction on the project, significantly helping to shape the methodology or interpret the results. The subrecipient’s objective is to contribute to the aims of the grant in an open-ended way, rather than providing one specific good or service. They are subject to more rigorous scrutiny and have different budgeting and reporting requirements than contractors do. The researcher applying for federal funding will decide in the proposal stage if they want to add a subrecipient onto the project. When the sponsor awards the grant, that researcher’s institution is placed in charge of distributing a portion of those funds to the agreed-upon subrecipient via a “subaward agreement.” 

Let’s take an example. You’re a faculty member at ��Ʒ���˸������� University with a specialization in neuroscience, and you’re applying for an NSF grant to study the effects of different kinds of music on brain activity. You have a colleague at Vanderbilt University who has a particular niche in music psychology–she has robust experience in different instrumentations and music theory and has applied these concepts to behavioral studies. You have experience working with EEGs and other relevant equipment, as well as comprehensive knowledge of the brain. She would bring unique insights to the table about the kinds of music that could be compelling to measure. In this way, you would both significantly contribute to the design and direction of your project. Which party becomes the “lead institution” and which becomes the “subrecipient” is up for debate. Since you are the more experienced investigator and ��Ʒ���˸������� University has the relevant equipment to conduct the study on campus, you mutually agree that Montclair will be the lead institution. You apply to NSF with the clear intention of adding Vanderbilt University as a subrecipient to your project, and when the funds are awarded, ��Ʒ���˸������� University will distribute the agreed-upon amount to Vanderbilt.

In this case, NSF is the sponsor, awarding funds to ��Ʒ���˸������� University (the recipient). Vanderbilt would be considered the subrecipient. From Vanderbilt’s perspective, ��Ʒ���˸������� University would be considered a “lead institution” or “pass-through entity,” since the funds are being distributed to them from NSF through �ѴDzԳٳ���������.��

What is a Contractor?

A contractor (also referred to as a “vendor” or “supplier”) is an individual or entity that provides a good or service to the grant recipient. They operate in a competitive environment, meaning that there are multiple options for potential suppliers. Most often, the contractor provides this deliverable to many different clients as a part of their business. The contract is made out to an individual or a business entity, unlike subaward agreements, which are generally awarded to institutions. Their services are delivered through a contract with the recipient, and they are not bound by the same regulations as subrecipients.

Let’s again turn to the example above. Vanderbilt University has entered into a subaward agreement with ��Ʒ���˸������� University to complete this research project. You’ve collaborated with the PI at Vanderbilt to design a study where you will measure participants’ brain activity through an EEG in response to live music versus recorded music. The music you’re using is a famous string quartet piece, but you need people to play it. There are many instrumentalists in your area who would be willing to do it (competitive environment), and most are career musicians (they have provided this service before and do so for their business). You’re requesting specific deliverables: a recording of the piece and a live performance of the piece to 3 groups of participants over the course of a week. You are budgeting a flat fee to pay them. They are not shaping the direction of the project, just providing a service. For these reasons, they are contractors. 

Who Decides?

Sometimes, this distinction becomes blurred. Ultimately, Uniform Guidance gives the power to the pass-through entity, or the lead institution, to decide. Tools like this Subrecipient vs. Contractor Determination Checklist can help guide the decision-making process. 

There are significant ramifications involved in this decision. It’s not difficult to release a contractor, but there is no such thing as simply “firing” a subrecipient institution. They are granted additional protections because they are operating under Uniform Guidance and the terms and conditions of the award, just like the lead institution. This means that the relationship you have with your subrecipient is critical. 

From the start, it’s important to conduct a “risk assessment” on the potential subrecipient to inform how to proceed moving forward. If the subrecipient has prior experience with similar subawards, is audited regularly with no findings, and has long-tenured administrators and systems, they will likely be considered a “low-risk” entity, meaning that they have a low likelihood of misusing the funds or disobeying federal or agency regulations. An institution like this may not need any additional “subrecipient monitoring plans.” 

For a medium-risk or high-risk entity, OSP may implement a plan to help ensure that the institution is spending funds on allowable purchases, keeping careful track of their expenses, and obeying all other compliance requirements. This plan may involve having the subrecipient submit invoices and expense reports more frequently to OSP (monthly instead of quarterly, for instance) or turning in financial and programmatic reports early for a comprehensive review. This gives ��Ʒ���˸������� University an opportunity to ensure that expenses are being recorded properly and that the subrecipient is operating fully in alignment with award terms and conditions. Contractors come and go, but subrecipients are here to stay. Picking the right one can add layers of depth and intrigue to your project, but they must be chosen with thought and care.

By: Samantha Tassillo