Office of Sponsored Projects

Subrecipient vs. Vendor

U.S. Office of Management and Budget (OMB) Circular A-133 requires awarding entities to determine whether an arrangement resulting from a particular award the awarding entity makes to another organization creates a subrecipient or vendor relationship between the awarding entity and that organization. The OMB defines the terms “vendor” and “subrecipient” and provides guidance for distinguishing between the two relationships. The information below expands on the guidance provided by OMB Circular A-133.

Subrecipient/

Subcontractor

An entity that expends awards received from a pass-through entity to carry out a project. As defined by OMB Circular A-133, a subrecipient relationship exists when funding from a pass-through entity is provided to perform a portion of the scope of work or objectives of the pass-through entity’s award agreement with the awarding agency. A pass-through entity is an entity that provides an award to a subrecipient to carry out a project.

Subrecipients/subcontractors generally:

  • Determine who is eligible to receive financial assistance, and which specific type of federal assistance is to be distributed.
  • Have its performance measured against whether it meets the objectives of the project.
  • Have responsibility for programmatic decision making.
  • Have responsibility for adherence to applicable program requirements.

Subrecipients use funds to carry out a project of the organization as compared to providing goods or services for a project of the awarding entity.

Vendor

A vendor is generally a dealer, distributor or other seller that provides, for example, supplies, expendable materials, or data processing services in support of the project activities. A vendor provides generally acquired goods or services related to the support of the prime award.

Vendors generally:

  • Provide goods and services within normal business operations.
  • Provide similar goods or services to many different entities.
  • Operate in a competitive environment.
  • Provide goods and services that are ancillary to the operation of the project.

A Vendor is not subject to compliance requirements of the project.

For more information on the distinction between subcontractors and vendors, see this guide from the Texas Workforce Commission, or use this checklist to help make a determination about the status of a lower-tier award recipient.