Subcontractors vs. Consultants (Vendors) - How to Tell Them Apart
Characteristics of a Subcontractor
Subcontractor - According to OMB Circular A-110: Legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided.
- Synonymous with subawardee, subgrantee, etc.
- Subcontractor's goods or services are specifically tailored in response to the project, not provided commercially
- Subcontractor's program/project director is generally a collaborator; may even be designated as a Co-Investigator in the proposal
- Subcontractor is part of the development and execution of the work performed by prime/grantee
- Makes programmatic decisions
- Has performance measured against the goals/objectives of the project
Characteristics of a Consultant (Vendor)
Consultant - Categorized as a vendor-type relationship. An individual or company retained to provide professional advice or services on a project for a fee.
- Provides the goods or services within normal business operations
- Provides similar goods or services to many different purchasers
- Operates in a competitive environment
- Are subject to open-bid requirements or requires sole source documentation
- Provides goods or services that are ancillary to the operation of the research project; and
- Are generally not subject to monitoring or reporting requirements of the prime award
- A company or an individual who is clearly a bona fide consultant (expert advisor) who pursues this line of business for him/herself
- Are paid for their time at a daily or hourly fixed rate
- A consultant is considered a "work for hire" thus all intellectual property and copyrightable information is generally assigned to the prime/grantee recipient (i.e. American University)
Why is it important to distinguish between a Subcontractor and a Consultant (Vendor)?
- Allowability of subcontractor generally requires prior approval of the sponsor
- Inclusion of a subcontractor effects the calculation of F&A costs
- Federal subrecipient monitoring requirements are applicable to subcontractors/subawardees
For questions regarding how to distinguish between a subcontractor and consultant (vendor), please contact the Office of Sponsored Programs.