Vendor vs. Subaward: What’s the difference?


Vendor Agreements can be used to pay for a good or service that is secondary to the project. These goods or services should be provided to other individuals (not specialized) by an individual or entity that operates in a competitive environment (other individuals or entities provide the same or similar goods or services) with no chance of copyright or intellectual property. Examples of vendor agreements include: catering, purchase of supplies, lab tests, etc.…


Subawards are issued when the person or entity is collaborating with the PI and their work represents an intellectually significant and clearly separable portion of the overall project. Subawardees usually have an identified PI, authority to make administrative and programmatic decisions, and they usually have control over the methods and results of the work. If there is co-authorship or intellectual property, or IRB or IACUC Is required, then a Subaward is probably necessary. The terms and conditions of the prime award flow down to a Subaward.


Independent Contractor Agreements fall in between. These agreements are typically made with an individual or entity that provides expertise that is required to perform the project, but NOT an intellectually significant element. They are usually temporary and highly specialized, and not responsible for the overall outcome of the project. The scope of work has been defined by the PI, although the independent contractor often has discretion regarding how they will accomplish the work. As of 1/1/2020, any new Independent Contractor Agreements must satisfy the requirements of California’s AB5, which are:

A) The contractor is free from the control and direction of the hiring entity, both under contract and in fact

B) The contractor is performing work that is outside the usual course of business of the hiring entity (Sponsored Programs Foundation)

C) The contractor is currently engaged in an independently established trade, occupation or business of the same nature as the work being performed under the agreement


If your project will include issuing an agreement such as a Subcontract or Independent Contractor Agreement, contact the Pre-Award Office before entering into any agreements.


How to Determine if the Person or Entity is an Independent Contractor