What is the difference between a subaward and a contract?

If an outside entity will “carry out part of the project or program,” the agreement between the recipient and the outside entity is a “subaward.” If, instead, a recipient agrees to provide funds to an outside entity, and, in exchange, the outside entity will provide the recipient with goods or services ancillary to the award, rather than “carry out part of the project or program,” the agreement is a “procurement contract (or procurement transaction).”

Examples of subawards:

• A recipient receives grant funds to provide a suite of services (e.g., substance abuse treatment, victim services, training, peer recovery support) and agrees to pay award funds to an outside entity to provide some of these services.
• A recipient receives grant funds to develop (or improve) a particular product (e.g., training materials, a curriculum, a resource guide, a new technology) and agrees to pay award funds to an outside entity to develop or improve one of the products.
• A recipient receives grant funds to conduct research or analysis and enters into an agreement to pay award funds to an outside entity to conduct part of the research or analysis.

Examples of contracts:

If a recipient is purchasing or leasing an item from an outside entity that makes the identical (or virtually identical) item widely available to others (e.g., to the mass market), the purchase or lease of the item by the recipient is considered to be a “procurement contract under an award.”

Some examples of items that frequently fall into this category:

• Office equipment for use by recipient employees (e.g., laptops, printers/copiers)
• Office supplies for use by recipient employees (e.g., paper, toner)
• Software licenses for widely available programs such as Microsoft Office or Adobe Acrobat
• Purchase of a license needed to include copyrighted material in training materials to be produced and distributed in connection with an award
• Cell phones for use by recipient employees
• Body-worn cameras for law enforcement officers employed by the recipient