Procedure Library

Determine Subrecipient or Contractor (Vendor)

Purpose

To ensure compliance with federal regulations requiring accurate classification of entities receiving funds under awards made to the University. 

Applicability

Principal Investigators (PIs) and administrators developing sponsored project budgets or managing award funds.

Federal regulations (2 CFR 200.331)  require case-by-case assessment to determine whether a third party performing project activities should be classified as a subrecipient or a contractor/vendor. These instructions apply to all sponsored projects, regardless of funding source. 

Instructions

Make the Determination Early
During proposal development - or when potential subrecipients or contractors are identified - PIs must make an accurate classification. 

• Proper classification ensures correct budgeting, application of F&A costs, and timely processing.
• Misclassification may delay subaward issuance or cause significant budget errors.
• Use reasonable judgment and document the rationale especially when the classification may be ambiguous.

Review the Party's Role
Before initiating a subaward or service agreement request, evaluate the entity's scope of work and responsibilities to determine whether they will serve as a subrecipient, contractor, or consultant

Classification should be based on the substance of the work performed, not on the entity's organizational type or the terminology used in the proposal or budget.

If classification remains unclear after review, consult your OSP Officer for guidance before budget submission or agreement initiation.

Restricted Party Screening
Before engaging any foreign subrecipient or collaborator, the University must ensure the entity or individual is not listed on any federal restricted, denied, debarred, or sanctioned party list. See Restricted Party Screening on when to engage OSP for screening.

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Subrecipients

A subrecipient carries out a substantive portion of the project. A subaward is appropriate when the third party:

1. Has performance measured against achievement of federal program objectives;
2. Makes programmatic decisions;
3. Must comply with federal requirements passed down from the prime award; and/or
4. Uses federal funds to conduct program activities that serve a broader public purpose - not simply providing goods or services to the University.

The third party's PI should also:

1. Commit defined, measurable effort to the project;
2. Use substantial resources from their own institution;
3. Include indirect costs as part of their project budget; and
4. Contribute substantially to the research, potentially generating new data, publications, and/or inventions.

If the third party's role aligns with subrecipient characteristics:

• The University serves as the Pass-Through Entity (PTE) when issuing a subaward and is responsible for monitoring the subrecipient as required under 2 CFR 200.332.
• Subrecipients are subject to monitoring requirements such as risk assessments, invoice review, and performance verification. See Role of PI in Subrecipient Monitoring
• OSP will issue a subaward after receiving the prime award and submission of a subaward request through eAward (subaward out transaction).
  • Please note that fixed-amount subawards must be specifically approved by the sponsor and follow the requirements in 2 CFR 200.332.

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Contractors (Vendors)
A contractor provides goods or services for the University's own use. Characteristics of a contractor (procurement) relationship include:

• Work performed as part of their normal business operations;
• Provision of similar goods or services to a wide range of customers;
• Operation in a competitive commercial marketplace;
• Work that is ancillary to the federal program;
• No requirement to comply with federal program terms (except where required for unrelated reasons).

If classified as a contractor, the University will issue a fee-for-service/purchased services agreement or an independent contractor services agreement.

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Fee-for-Service

Fee-for-Service work typically involves performing predefined tasks, routine processes, or producing products that meet specific technical requirements. 

Fee-for-service providers do not make programmatic decisions and do not conduct work expected to contribute to scientific innovation.

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Consultants

Consultants provide specialized expertise, advice, or professional services and are external  to the University.

Examples Include:

• Individuals providing expert advice or presentations (e.g., faculty from another institution);
• Companies offering specialized services for a fee;
• Individuals committing effort at an hourly or daily rate;
• Faculty at other institutions performing services outside their institutional role, time, and resources.

Important:

How the prime award describes the consultant's role determines whether consulting is appropriate. If institutional resources, effort commitments, or similar expectations are referenced, a consulting agreement cannot be used. 

Individuals with University of Utah appointments may not serve as consultants on University awards.

An individual should not simultaneously act as both consultant and employee of the subrecipient or contractor entity on the same project. This prevents conflict of interest and compensation issues.

If the entity is classified as a consultant/vendor, refer to Budget for Consultants.

 

Related Policies and Procedures

• Accounts Payable vendor search
• Research Handbook > Award Management > Role of PI in Subrecipient Monitoring
• Grant Life Cycle >Develop Your Proposal > Obtain Subrecipient Documentation
• Research Handbook > Budget Development > Major Budget Categories > Consultants