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A "subrecipient" is defined in § 200.93 as a non-Federal entity that receives a subaward (as defined in § 200.92) from a pass-thru-entity to carry out part of a Federal program; but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.
A "contractor" is defined in § 200.23 as an entity that receives a contract, which as defined in § 200.22 is a legal instrument by which a non-Federal entity purchases property, goods, or services needed to carry out the project or program under a Federal award. This term does not include a legal instrument, even if the non-Federal entity considers it a contract, when the substance of the transaction meets the definition of a Federal award or subaward (as defined in § 200.92).
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2 CFR 200.330 Subrecipient and contractor determinations
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It is the responsibility of the pass-through entity to make the correct determination between subrecipient or contractor determination. This determination is to be made on a case-by-case basis depending on the unique relationship of each individual situation. Entities should focus on the substance of the relationship, not the form of the agreement, when making this determination. Entities must use judgement in determining whether each agreement is a subaward or a procurement contract (§ 200.330(c).
Why is it important to properly distinguish between a subrecipient vs contractor?
Federal regulations differ between subrecipients and contractors. One of the biggest reasonings is that subrecipients are required to comply with applicable Federal compliance requirements (these get passed down from the pass-through entity to the subrecipient), while contractors are not subject to the same compliance requirements of the Federal program. It is the responsibility of the pass-through entity to identify the subaward to the subrecipient and include the information listed in § 200.331(a)(1-6) in the agreement form between the pass-thru-entity and the subrecipient.
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What guidance can you provide in order to help distinguish between a subrecipient or contractor?
§ 200.330(a) provides characteristics which generally support the classification of a non-Federal entity as a subrecipient. Characteristics generally supportive of a contractor are listed in 2 CFR 200.330(b). Both sets of characteristics are listed in the above section.
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Some of the more common characteristics of a subrecipient relationship include when the non-Federal entity: (1) determines who is eligible to receive the Federal financial assistance; (2) has its performance measured against whether the objectives of the Federal program are met; (3) has responsibility for programmatic decision making; (4) has responsibility for adherence to applicable Federal compliance requirements; and (5) uses Federal funds to carry out a program of the organziation as compared to simply providing goods or services for a program of the pass-through entity. Some additional characteristics (in reference to research projects) of a subrecipient relationship include, but are not limited to, when: (1) substantive, programmatic work or an important or significant portion of a research program or project is being undertaken by the other entity; (2) the other entity participates in a creative way in designing and/or conducting the research; (3) a principal investigator has been identified at the entity and functions as a "Co-Investigator"; (4) there is an expectation that the entity will retain ownership rights in potentially patentable or copyrightable technology or product that it products in the course of fulfilling its scope of work; (5) publications may be created or co-authored at the entity; and (6) the entity provides cost sharing or matching funds for which it is not reimbursed by pass-through entity.
What are some of the characteristics indicative of a contractor relationship with a non-Federal entity?
Some of the more common characteristics of a contractor relationship include when the non-Federal entity: (1) provides goods and services within normal business operations; (2) provides similar goods or services to many different purchasers; (3) operates in a competitive environment; (4) provides goods or services that are ancillary to the operations of the Federal program; and (5) is not subject to compliance requirements of the Federal program. Some additional characteristics (in reference to research projects) of a contractor relationship include, but are not limited to, when: (1) the entity has provided little or no independent decision-making in the design and conduct of the research being completed; (2) the entity commits to deliverable goods or services, which if not satisfactorily completed will result in no payment; (3) the entity does not expect to have its employees credited as co-authors on papers or publications that result from the research; and (4) the work will not result in any potential patentable or copyrightable products.
Can you provide an example of a WSFR scenario where a pass-through entity enters into a relationship with a subrecipient?
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Can you provide an example of a WSFR scenario where a pass-through entity enters into a relationship with a contractor?
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What additional requirements does the pass-through entity have in regards to its subrecipients?
§ 200.331 lists the various requirements that pass-thru entities have in regards to subrecipients.
Am I required to complete a Risk Assessment on both subrecipients and contractors before issuing the award?
§ 200.331(b) requires all pass-through entities to evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for the purposes of determining the appropriate monitoring needed to ensure that Federal funds are used properly. Pass-through entities are not required to complete a risk assessment on contractors.
Is the pass-through entity required to complete the subrecipient risk assessment prior to issuing the subaward or disbursing funds to the subrecipient?
§ 200.331(b) requires pass-through entities to evaluate each subrecipient's risk, but does not specify that the risk assessment must be done prior to issuing the subaward or the subsequent disbursement of funds. COFAR addressed this question in its FAQs (updated July 2017). Their response is: "No. While section § 200.331(b) requires risk assessments of subrecipients, there is no requirement for pass-through entities to perform these assessments before making subawards. Under the Uniform Guidance, the purpose of these risk assessments is for pass-through entities to determine appropriate subrecipient monitoring. Pass-through entities may use judgement regarding the most appropriate timing for these assessments. Regardless of the timing chosen, the pass-through entity should document its procedures for assessing risk. § 200.331(b)(1-4) includes factors that a pass-through entity may consider when assessing subrecipient risk. While § 200.205 imposes requirements for a Federal awarding agency to review the risk posed by applicants prior to making a Federal award, there are no corresponding requirements for a pass-through entity; however, it is a best practice for pass-through entities to evaluate risk prior to making a subaward."
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Learning Aids
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Related Pages
Risk Assessment Requirements for Pass-Through Entities
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Resources
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