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The subrecipient vs contractor determination is made by the pass-through entity when electing to work with third parties on the a Federal financial assistance award. These two roles have different purposes and Federal requirements, and improper identification of the relationship could result in disallowed costs from and/or unnecessary financial audits and/or reviews. 


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titleThis information applies to:

All grants and cooperative agreements

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Contents

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Overview

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The requirement placed on Federal financial assistance award recipients to determine relationships with third-party entities they work with on those awards is an important one: failure of the pass-through entity to establish the correct award instrument with the third party as either a subaward or a contract could mean subsequent audit findings that require repayment of improper costs (in the case of a subaward treated as a contract), or unnecessary audits that cost both time and money to the PTE and its partner in the relationship (in the case of a contract treated as a subaward). 

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Authorities

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2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

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