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.
Another important reason is to be fully aware of the subrecipient’s role on the project. If the subawardee is not being closely monitored, they may not be completing any program activities but are subgranting funds to other entities. At this point, not only is your organization noncompliant with its role as a pass-through entity, enforcing federal requirements becomes challenging if your organization is not aware which organizations may be receiving third-tier subawards.
Redefining the substance of each relationship will also help with the consistent use of the correct accounting 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.
For an overview of Uniform Guidance, read Grants Works’ summary of the August 2020 revision.
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:
- U.S. Agency for International Development
- Environmental Protection Agency
- U.S. Department of Justice – Office of Justice Programs
- U.S. Department of Health and Human Services, Health Resources and Services Administration
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.