Subawards Versus Contracts: Implications for Federally Sponsored Research

Institutions engaged in federally sponsored biomedical research routinely enter into agreements with other organizations in order to achieve their project's programmatic objectives. These agreements can range from complex scientific collaborations with a peer institution to the routine acquisition of necessary goods or services. Although the purposes of these agreements vary, in each instance, federal funds entrusted to the grantee are passed through to a lower-tier organization – "subawards" and "contracts." The mere designation, however, of an agreement as one or the other vehicle is not dispositive. Moreover, the compliance obligations for both the grantee and the lower tier organization differ depending on the nature of the agreement used to transfer the federal funds. This article addresses some of the primary compliance issues associated with the designation of an agreement as a subaward or a contract and then provides some guidance on how to distinguish between the two.

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