What Is a Subagreement?

According to OMB Uniform Requirements (2 CFR 200), a subaward is defined as "an award of financial assistance in the form of money, or property in lieu of money, made under an award by a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient." A subrecipient means the legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided.

Pre-Award Stage

By making a proper determination at the proposal stage, the appropriate relationship can be established from the start. Relationships that are incorrectly identified at the proposal stage could have post-award financial impacts (i.e. indirect costs charged on the first $25k of the subaward vs. the full amount of vendor costs).

Subrecipients vs. Vendors

Under a subaward, a subrecipient generally performs tasks that are considered substantive programmatic work and is responsible for programmatic decision making. 

Definition of “substantive programmatic work”

1.  A subaward is an appropriate procurement mechanism when the collaboration is substantive programmatic work which is beyond mere analytical work-for-hire normally conducted by a routine service provider.

2.  The collaboration is substantial enough that the collaborating individual or organization will participate in preparation of results, publications, presentations or other collaborative participation beyond routine analytical work.

3.  The collaborator will maintain control of the work to be performed under the subcontract.

Definition of “programmatic decision making”

Does the subrecipient have responsibility for programmatic decision making? 

Example – If GIT provides funds to an entity to conduct an independent research project, the agreement would be characteristic of a subaward, because the subrecipient would be responsible for designing the research and determining how to carry out that research.  The subrecipient's research areas must be consistent with the scope of work that the prime sponsor approved for GIT.

In contrast, a Contractor/Vendor relationship is appropriate when the work being performed involves the procurement of goods or services from an organization which provides the goods and services to many different purchasers as part of its normal business operations within a competitive environment Not subject to the same compliance requirements as a subcontractor (if the source is a Federal award).

Subagreements under Federal Contracts (Not Grants)

In order to establish a subrecipient relationship under federal contracts, the Federal Acquisition Regulation (FAR 35.009) states that "it is important that the contractor not subcontract technical or scientific work without the contracting officer's advance knowledge." The FAR goes on to state that "during the negotiation of a cost-reimbursement R&D contract, the contracting officer shall obtain complete information concerning the contractor's plans for subcontracting any portion of the experimental, research, or development effort." If a subrecipient relationship is not approved as part of a proposal submitted to the agency, sponsor approval may be required before a subcontract can be established.

What Is a Consultant?

A consultant is considered "work for hire," and therefore all intellectual property and copyrightable information is assigned to GTRC. Prior to engaging any individual for services as an independent contractor, an assessment based on IRS guidelines must be made and documented, and the department’s human resources representative must approve the decision. For more information on this process, please visit OHR's website

Consultant agreements are issued to either a company or to an individual who is clearly a bona fide consultant (expert advisor) who pursues this line of business for him/herself. Consultants are paid for their time at the fixed daily (or hourly) rate of compensation specified in an agreement. Consulting effort is usually limited to the term, and the pay line is usually determined by a rate per day that includes travel, expenses, and any other overhead. Consultants set their own hours, use their own equipment and materials, choose their work methods, and are responsible for paying taxes on their earnings as consultants. They will receive Tax Form 1099 from Georgia Tech. 

Preparing the Statement of Work (SOW)

The SOW is a document that lists and describes all essential and technical requirements for the effort to be performed, including standards to be used to determine whether the requirements have been met. This document may include the following items where appropriate:

  • Objective or purpose
  • Period of performance
  • A list of detailed work requirements
  • Workload requirements
  • Personnel requirements
  • Resources (if any) to be furnished to the subcontractor
  • Reporting requirement and/or other deliverables
Sole Source Justification

It is necessary to include documentation that you have obtained quotes from alternative vendors or completed a Sole Source Justification form. The PI is required to provide information of the technical competence of the sole source selection.

Next Steps

Once an award is made, you will need to request a subaward via the OSP Subagreement System. For more information, visit our Requesting a Subaward page. 


If you have any questions about subrecipient determinations or the subaward process, please contact OSP