Subaward, Consultant, or Vendor Guidance
UTC Guidelines
Differentiating Subaward, Vendor, and Consultant Relationships in Sponsored Programs
Overview
Implementing sponsored projects may require the engagement of outside entities to perform portions of the approved work or provide goods/services in support of the proposed activity. Determining the proper relationship with these external entities is critical to ensure that UTC is adhering to federal and sponsor accounting requirements and compliance guidelines. Misclassification can lead to serious and costly audit findings and result in non-compliance with sponsor terms & conditions.
The prime awardee institution has the responsibility to determine how to classify external entities participating on a sponsored program. When UTC is the prime awardee, consult with ORSP to determine the correct classification. When UTC is asked to participate in a supporting role to another prime awardee, consult with ORSP to ensure that UTC’s participation is properly classified.
- Subaward
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A subaward is appropriate when UTC is engaging another institution or organization to perform a substantive, intellectually significant portion of programmatic effort on the award. Subawardees perform work at their facilities, using their own personnel, and are responsible for programmatic decision-making, including decisions related to the design, development, and conduct of research and reporting. Subawardees’ performance is measured against meeting the project objectives. Subawardees must adhere to the same regulatory and compliance requirements as the prime awardee. They are also entitled to F&A recoveries, with the prime awardee’s F&A recoveries limited to a certain threshold on subaward costs.
Examples of Subaward Relationships
- As part of a National Institutes of Health award, the project team must include a biostatistician specializing in cancer research. UTC does not have a faculty member on campus with the credentials to assist, so UTC will add a faculty member from another institution to the research team who will serve as a Co-PI. This faculty member will have her performance measured against meeting the program objectives, has decision-making authority on the project, and will be listed as a co-author on published articles resulting from the research.
- As part of a Department of Education award, UTC will use an external project evaluator to assess the success of the proposed educational intervention. The evaluator, a faculty member at a nearby university, will be heavily involved in the experimental design and implementation of the proposed intervention. She will be using her institution’s resources (office space, computer, etc.) to conduct the work and will be assisted by a graduate student from her lab who will also be paid from the grant. Funding for the evaluation activities will flow through her institution and include Facilities & Administrative costs.
- As part of a Department of Energy award, UTC will collaborate with a faculty member from the Chemistry Department at a partnering institution. This faculty member will be listed as Senior Personnel, will use their laboratory and instrumentation to perform experiments, will assist UTC with hosting workshops for local teachers, and will provide a portion of her time as cost-share to meeting the matching requirements set forth by the sponsor.
- Consultant
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A consultant arrangement is appropriate when UTC is engaging an individual who will provide limited, temporary, or highly specialized expertise for a set fee. A consultant has no say in programmatic decision making; has no stake in or responsibility for the outcome of the project; and is not responsible for the design, development, or reporting of the project activity. Consultants have an established fee schedule or rate of compensation for services they routinely offer. Consultants may be contracted to provide certain deliverables, but they are not responsible for the progress or overall outcome of the project. Consultants typically are paid via an hourly rate or flat fee. They receive no F&A recoveries; instead, the prime awardee receives F&A recoveries based on the full amount of consultant costs. Consultants are not expected to create any intellectual property or publications related to the project activity.
Examples of Consultant Relationships
- As part of an award from the Health Resources & Services Administration, UTC will engage an individual with expertise in patient-centered healthcare to offer a workshop to faculty, staff, and students. The grant will cover the costs of travel and a consultant fee. The individual has the means to develop and plan the workshop independently and is not responsible for project outcomes.
- As part of a Department of Education award, UTC will use an external project evaluator to analyze project outcome data and assess the success of the project. The evaluator will advise on data collection but will not make decisions regarding the design or conduct of the project activities. The evaluator is employed at a regional university, but she will NOT be using her institution’s resources (office space, computer, etc.) to conduct the work. She will use her own personal laptop and will be paid as an individual rather than through her institution.
- As part of a Department of Transportation award, UTC will utilize an engineer employed by the city of Chattanooga. The engineer will serve in an advisory role, provide guidance to the project team, and review safety protocols to ensure compliance with state and national standards. He has specialized knowledge and expertise in this area but is not responsible for ensuring project deliverables are met, is not expected to generate intellectual property, and will not be listed as a co-author on published works.
- Vendor
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A vendor arrangement is appropriate when UTC is engaging with an external entity that supplies goods or products, based on a set fee schedule, as part of its typical business practice. Vendor arrangements are only appropriate when the goods or services being procured are ancillary to the operation of the sponsored program. Vendors exercise no programmatic decision making and are not subject to sponsor compliance regulations. Vendors’ performance is measured solely on the production of deliverable goods or services, not on project objectives. Vendors have no potential for intellectual property and no publication rights.
Examples of Vendor Relationships
- As part of an Environmental Protection Agency award, UTC will send water samples to a lab that routinely tests water samples and has an established fee structure.
- As part of a National Science Foundation award, UTC will enter into a rental agreement for lodging for a team of researchers doing fieldwork in a remote location.
- As part of a Department of Justice award, UTC will hire a national firm to run a series of focus groups and interviews throughout the first year of the project.
University of Tennessee Policy
For additional information and detail on differentiating between subawardee, consultant, or vendor relationships, see UT Fiscal Policy FI0230: Subaward Origination and Monitoring. This document, adapted from Exhibit 1 to the Policy, may also be helpful:
Determination Guide for Agreements with External Entities/Individuals | ||
Subaward (aka subrecipient/subcontract) |
Contractor/Vendor | External Consultant |
Below is a range of characteristics that may aid in distinguishing among the types of external entities/individuals that perform work for the University. The Defining Characteristic should be given the most weight in the decision-making process. The Other Characteristics can lend further support to the decision. Not all of the other characteristics will be present or identifiable in any given situation. | ||
DEFINING CHARACTERISTIC | ||
An entity that has agreed to work in collaboration with the UTC PI to perform a substantive portion of the programmatic effort on a sponsored project | An individual or entity that supplies products or services to the University | An individual or entity whose expertise is required to perform University project; Services are temporary and special or highly technical |
OTHER CHARACTERISTICS | ||
Has authority to make administrative and programmatic decisions and control the method and results of the work Uses funds to carry out a program rather than provide a good or service Has responsibility for a portion of the end results of the overall research/sponsored project effort |
Does not make program decisions or take actions that impact a program’s overall success or failure Is not responsible for results of the overall project |
Does not develop the objectives of the project May provide recommendations but is not responsible for designing, developing, or reporting results or progress of the overall project |
Has performance measured against meeting the project objectives | Goods and services provided by the contractor/vendor are ancillary to the program | Is not responsible for the overall outcome of the project
Is not essential to the shape, direction, and completion of the project |
Has responsibility to meet all applicable sponsored requirements | Sponsor compliance regulations are not incorporated into agreement | Sponsor compliance regulations are not incorporated into agreement |
The entity’s PI works collaboratively with the UT PI at the entity’s location | UT specifies the goods or services it requires in support of the project | UT defines scope of work; Consultant determines how to accomplish the service being provided |
Services are complex and require a scope of work, budget, billing requirements, and a deliverable schedule (reports, etc.) in the proposal application The entity’s scope of work may represent an intellectually significant portion of the programmatic decision making May need animal and/or human subjects approvals for its independent portion of the work |
Description of the services is limited to the work performed by this company or individual May provide similar goods or services to different organizations as part of their normal business operations May compete with comparable entities to provide the same goods and/or services |
May provide similar services to other organizations Generally does not use university resources; Provides their own expertise, work area, tools, materials and supplies |
The entity’s work results may involve intellectual property and/or may lead to publications Should be listed as a co-author |
Typically no potential for patentable or copyrightable technology to be created through project from activities of the entity or individual Will not be considered a co-author |
Usually “work for hire”; intellectual property, if any, belongs to University Will not be considered a co-author |
The entity’s personnel are designated senior/key personnel in the proposal; may be a Co-PI, Co-Investigator, or other key personnel | Specific individuals providing goods and services may not be identified in the proposal or contract | Generally does not serve as senior personnel, e.g., Co-Investigator, Principal Investigator |
Typically is reimbursed for costs similar to those in UT’s proposal budget, e.g. time committed by Subaward PI, other research/program personnel, or students; fringe benefits; research/project-specific supplies and equipment, travel; F&As | Goods and services are billed according to the vendor’s established rates |
Receives a fee for their services, not a salary Payment is based upon completion of specific work, rather than time worked (although hourly payment may be specified) |