Understanding Subrecipient vs. Contractor Determination

Woman and team closely reviewing a document

If your organization receives federal grants and enters into agreements with subrecipients or contractors, it is critical that the substance of the relationship with each is fully understood.

This is crucial for several reasons but the primary reason is that it is required (see Uniform Guidance – 2 CFR 200.332 – Requirements for pass-through entities).

Uniform Guidance states that pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and the agreement must include information listed in 2 CFR 200.332(a)(1).

As a pass-through entity, your organization must require the sub awarded entity to adhere to provisions of your organization’s agreement with the federal awarding agency and any other responsibilities to meet requirements.

Understand the substance of the relationship

Redefining the substance of each relationship will also help with the consistent use of the correct general ledger codes to ensure internal financial reports reflect the correct use of federal funds for subrecipients or to contractors.

A Subrecipient vs. Contractor Determination chart is provided below but if you want to see exactly what language is in Uniform Guidance, go to 2 CFR 200.331 or 45 CFR 75.351 for grants from the U.S. Department of Health and Human Services.

Subrecipient vs. Contractor Comparison

Because this is an area of concern for many federal grantees, several federal agencies also provide supplementary guidance. Below are links to a few agencies’ guidance on the determination:

A close review of some of the determination variables may point to a change in defining the types of awards that your organization may currently be extending to sub recipients and contractors.

To learn how Grants Works can help your organization manage government grants, including federal grants, please contact us.