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Subawards, Hybrid Agreements and Purchase Orders

Subawards, subcontracts, hybrid agreements and purchase orders are all different kinds of agreements that may be needed in the course of a sponsored project. Find out the difference among these and which office to work with at U-M depending on the type.

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Are you working with a subrecipient or a contractor? At U-M, knowing the difference impacts indirect costs and as well as which U-M office processes the agreement. This page helps you determine if you need a subaward, a hybrid agreement or a purchase order. 

Definitions: Subaward, subcontract, hybrid agreement, and purchase order

Subaward: A subaward is a form of agreement that provides for funds to a subrecipient to perform part of a project as a collaborator or co-principal investigator (PI). A subrecipient is an entity that receives a subaward from the University of Michigan to carry out a portion of work under a sponsored project.. Subawards are written, negotiated, and managed by the Office of Contract Administration (OCA) in Finance – Sponsored Programs.

Subcontract: A subcontract is an agreement issued by the University of Michigan to another entity to carry out a portion of work under a sponsored project.

Hybrid agreement: A hybrid agreement is used in OCA for non-commercial services necessary for a research project that could be done by others. These are written, negotiated and managed by OCA.

Purchase order: A purchase order is used for a contractor, supplier or vendor. Purchase orders are managed by Procurement Services. 

Comparison chart: Subaward, hybrid agreement or purchase order

The following offers a comparison of the characteristics of each. For questions regarding whether the collaboration involves a subrecipient, contractor or hybrid agreement, contact OCA at [email protected].

SubawardsHybrid agreementsPurchase orders / PO
Primary purposeTo perform part of a project as an equal collaborator/co-PITo perform part of a project as less than an equal collaboratorTo procure goods and services
EntitySubrecipientSubcontractor/ContractorContractor (formerly called vendor or supplier)
Entity role and details
  • Collaborator/key personnel
  • Co-PI at the subrecipient institution
  • Share or be responsible for programmatic decision making
  • Co-authors or writes the study protocol
  • Independently responsible for ensuring a portion of the SOW is completed
  • May determine who is eligible to participate in the federal program
  • Has performance measured against objectives of a federal program
  • Provides non-commercial services necessary to conduct the study; however, services are substitutable (can be done by others).
  • Investigator provides support to the study, but in role as adviser
  • Considered procurement transactions by the federal government
  • Vendor/supplier relationship (“work for hire”)
  • Intellectual property belongs to purchaser
  • Warranties on deliverables
  • Offers products or services commercially to all
  • Provides goods and services within normal business operations
  • Operates in a competitive environment
U-M reviewing officeOCAOCAProcurement Services
Processing systemeRPMeRPMePro Requisition
Indirect cost recoveryRecovered on the first $25,000 of subcontract only (For awards beginning on or after July 1, 2026, recovered on the first $50K)100% on total amount of hybrid agreement100% on total amount of PO

For information on subawards and working with subrecipients, visit the Working with Subrecipients / Subrecipient Forms page.