Page History

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[78 FR 78608, Dec. 26, 2013]

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Federal regulations differ between subrecipients and contractors.  One of the biggest reasoning 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 in in § 200.331(a)(1-6) in the agreement between the pass-thru-entity and the subrecipient. 

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No.  Many non-Federal entities, particularly State agencies, call all of their legal instruments "contracts".  A non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreement with the Federal awarding agency and pass-through entities.  Therefore, a pass-through entity must make a case-by-case determination whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor."  Pass  Pass-through entities need to reflect upon the nature of the case-by-case relationship of the agreement in order each agreement's relationship to determine if the non-Federal entity is a subrecipient or a contractor.  

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. 

What are some of the characteristics indicative of a subrecipient relationship with a non-Federal entity?

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

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organization as compared to simply providing goods or services for a program of the pass-through entity.  

Some  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  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.  

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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?

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Can you provide an example of a scenario where a pass-through entity enters into a relationship with a subrecipient?

Scenario #1: A state fish and wildlife agency receives a Sport Fish Restoration grant to study the effects of stocking white crappie into a large flood control reservoir in terms of bolstering the population in order to improve abundance for recreational fishing.  The state fish and wildlife agency in turn enters into a relationship with a local university to conduct the research as approved in the grant application.  Under this scenario, the state fish and wildlife agency acts as the pass-through entity and the university becomes the subrecipient.  A subrecipient determination would be adequate in this scenario because the university (1) has its performance measured against whether the objectives of the Federal program at met; (2) most likely has responsibility for programmatic decision making; (3) has responsibility for adherence to applicable Federal compliance requirements; and (4) uses the Federal funds to carry out a program of the organization as compared to simply providing goods or services.

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