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Their services directly benefit the public. Subrecipients are paid through subaward agreements. Contractors provide goods and services for awardees own use (e.g., information technology services, auditing, and janitorial services). Contractors are paid through procurement contracts.
Generally, contracts are appropriate when the grantee needs a specific set of goods or services to accomplish the goals and objectives of the grant. Generally, subgrants are appropriate when the grantee requires ongoing support to accomplish the goals and objectives of the grant.
The main difference lies in who isemploying the person. If a worker is employed by a company directly, they are an independent contractor. If the worker is hired to perform a specific task for a general contractor, they are a subcontractor.
In other words, a subrecipient performs substantive work on an award project. A contractor, in contrast, does not seek to accomplish a public benefit, and does not perform substantive work on the Page 2 2 project. It is merely a vendor providing goods or services to directly benefit the recipient.
A contractor may provide services to clients in a program after eligibilty has been determined by the recipient. If the entity has authority to make decisions regarding the delivery of service, operations, or types of assistance provided within the terms of the agreement, it is typically a subrecipient.
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