The Difference Between a Subcontract and a Contract for Professional Services

1. The Difference Between a Subcontract and a Contract for Professional Services

2. Definitions: • Consultants & Professional Services • Contractual agreement • Short-term • Expert advice • Specialized services

3. Definitions: • Sub-award (Subcontract) • Contractual agreement that includes terms and conditions of the prime award that makes the sub-awardee responsible for a portion of work scope • Time intensive (usually coincides with some or all of the budget periods)

4. How a distinction is made: • It is not expected that all characteristics of a subcontract or professional service will be present. • Good judgment should be used in determining whether a sub-award/contract or CPS should be used. • The substance of the relationship is more important than the form of the agreement.

5. Why a distinction is needed: • Sub-award/contracts maybe subject to OMB A128/A133 auditing and monitoring if prime-funding source is from a Federal Agency. • Sub-award/contract usually flows down the terms and conditions of the prime award. • CPS vendor is not subject to the proceeding regulations or terms and conditions.

6. Sub-award/contract Traits • Performance measured against whether the objectives of the sponsored program are met (carrying out a portion of the programmatic effort of the project). • Responsible for programmatic decision making relative to the subrecipient's portion of the work.

7. Sub-award/contract Traits • Must adhere to sponsored compliance requirements (IRB, IACUC, rebudgeting restrictions, publication, IP rights). • Uses the sponsored funds to carry out a program of the organization as compared to providing goods or services.

8. CPS Traits • Provides goods/services within normal business operations. • Provides similar goods/services to many different purchasers. • Operates in a competitive environment. • Provides goods or services that are ancillary to operation of sponsored program.

9. CPS Traits • Is not subject to compliance requirements of the prime sponsor. • Pay particular attention to testing, processing, computer programming, editing, etc. functions that are outsourced. A CPS probably should be used. • Services provided by an individual or sole proprietor.

10. CPS/Sub Traits • There may be unusual circumstances or exceptions to the above listed characteristics. • If you are still unsure of the distinction when reviewing these characteristics, please contact the Grant Administrator in SPA that handles your project for additional guidance.

11. Proposal Budget: • Consultant & Professional services • included in the sponsored project budget • examples: • Advisory/oversight board members • software programmers • Editors • other technical experts • Costs include: • Fees • expenses such as travel • justification of need for consultant is necessary

12. Proposal Budget: • Sub-award/subcontract • included in sponsored project budget • provided by sub-recipient with PI statement of intent • sub-recipient’s institutional approval • sub-award/subcontract budget consists of: • direct costs • F&A (indirect) costs (approved rates) • prime award budget applies F&A on first $25,000 of project period • justify use of the sub-awardee or subcontractor in the "research plan"

13. Negotiation and Execution: • Consulting/Professional Services: • Use electronic Contract for Professional Services form (two parts) • Internal Info/approval process via FN • Contract signed by vendor, authorized signer & Purchasing (if applicable) • Sub-award/subcontract: • PI provides workscope/budget/info • SPA negotiates and executes • Specific agreement that includes terms & conditions of the prime award

14. QUESTIONS?