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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 Entities MUST use judgement in determining whether each agreement is a subaward or a procurement contract (§ 200.330(c) above).
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Federal regulations differ between subrecipients and contractors. One of the biggest reasoning reasons is that subrecipients are required to comply with applicable Federal compliance requirements (these get passed , which are passed down from the pass-through entity to the subrecipient, while contractors are . 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 between the pass-thru-entity and the subrecipientassociated agreement document.
Our organization uses a "contract" as the legal instrument to enter into agreements with both subrecipients and contractors. Therefore we consider all of our relationships as contractors. Is this acceptable?
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-through entities need to reflect upon the nature of each agreement's relationship to determine if the non-Federal entity is a subrecipient or a contractor.
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