Subcontracts vs. Consultants

Subcontract, Fee for Service (Vendor), and Consultant Information:

When a portion of the project will be completed by someone outside the University, it is either as a subcontract, a fee for services (vendor) or on a consultant basis.

Subcontract vs. Vendor Subcontract Vendor
  Completes work promised and analyzes results found Performs services only (no analysis or discretionary judgment) such as lab testing, report printing, etc. that are part of regular business operations and are available to many different purchasers or customers
F&A (Indirect Costs) F&A costs apply only to the first $25,000 of the subaward regardless of the time it takes to reach the $25,000 figure F&A costs apply to entire figure and these fees are considered 'other direct costs' on the budget
  Investigator is identified Person conducting work is not necessarily identified
Technology Transfer Potential for patentable or copyrightable technology to be created through project; entity has right to protect technology No potential for patentable or copyrightable technology to be created through project
Publications Publication of results expected; investigator to author, or be co-author  
Cost Sharing May be providing cost sharing or matching funds Fixed cost sharing or matching funds involved

Subcontract vs. consultant:

Subcontracted work is generally conducted at another institution or company, and usually has a budget for salary/fringes, supplies, etc. The sponsor requirements/terms and conditions have to be passed down to the subcontract via written agreements. Compliance also has to be monitored. A consulting agreement is generally to an individual who is not using any institutional or organizational facilities and is acting as a direct agent. He/She usually bills by the hour, by invoice, and is paid directly


Consultants are experts outside the University hired to perform a service on the project for a short period of time. Mercer faculty or other institutional staff should not be listed as paid consultants on a Mercer project. OMB Circular A-21 limits consultant or 'extra-compensation' for an institution's own employees.(

The general rule is that extra compensation may not be paid unless it can be proved that such expertise is outside the individual's normal discipline and that agency approval is explicitly granted for such compensation. Therefore, institutional employees are rarely listed as paid consultants on a proposal submitted by their own institution. Also, federal funds may not be used to pay federal employees for consulting



For each subgrant/subcontract included in a proposal, a clear description of the work to be performed and a separate budget signed by an authorized representative of the organization receiving the subaward is to be provided to the Grants and Contracts Office before the proposal is institutionally approved and forwarded to the sponsor. Submitting a proposal without a firm commitment from the subcontractor places the University at risk because if the proposal is awarded, the subcontracting organization may be unable to perform the work at the proposed price. It is best to obtain a firm quote/budget plus a statement of the work to be performed from the subrecipient before the proposal is submitted. Also, any terms or conditions from the sponsor flow down to the subcontract.

Note: The subaward total budget includes both direct and F&A costs of the subawardee in the single line item on the prime institution's proposal budget. The 'sub' must obtain approvals from his/her institution/firm before submission. Documentation of this approval must be included with the routed proposal.