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Overview
The requirement placed on non-Federal entities to determine relationships with other non-Federal entities they work with on Federal awards is an important one: failure of the initiating non-Federal entity to establish the correct award instrument 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 non-Federal entity and its partner in the relationship (in the case of a contract treated as a subaward). Non-Federal entities should consult 2 CFR 200 for guidance on making the correct determination.
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A recipient of a Federal financial assistance award must determine the proper role of organizations they partner with to carry out the work under the prime Federal award. Depending on the role established, the partnering organization may be either a subrecipient or contractor. This determination is important in that each award instrument type (subaward or contract) has differing Federal regulations related to administrative practices and documentation, allowability of costs, and other Federal Federal compliance requirements. The incorrect determination by the pass-through entity could result in audit findings, such as the repayment of improper costs, or even affect their future Federal funding opportunities.
Authorities
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2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
§200.93 Subrecipient.
Subrecipient means a non-Federal entity that receives a subaward from a pass-through 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.
§200.23 Contractor.
Contractor means an entity that receives a contract as defined in §200.22 Contract.
[78 FR 78608, Dec. 26, 2013]
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§200.330 Subrecipient and contractor determinations.
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The non-Federal entity may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations 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. The Federal awarding agency may supply and require recipients to comply with additional guidance to support these determinations provided such guidance does not conflict with this section.
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[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 54409, Sept. 10, 2015]
Frequently Asked Questions
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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).
What are some of the characteristics indicative of a subrecipient relationship with a non-Federal entity?
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(4) not subject to compliance.
Learning Aids
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Related Pages
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Risk Assessment Requirements for Pass-Through Entities
Resources
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References
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