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Subrecipient vs. Subcontractor vs. Subaward Designation

<p>I was recently speaking with a client that received two federal grants from two different federal agencies. They began working on the contractor agreements for their vendors, and realized that each agency interpreted 2 CFR 200 (Uniform Grant Guidance or UGG) subaward vs. subrecipient vs. subcontractor terminology very differently.</p>
<span>This not only is confusing from an operations standpoint, but can have immediate implications from a transparency perspective if the application is not standardized across the board. Let’s start out with some definitions.</span><br>
<li><strong>200.92 Subaward:</strong>&nbsp; Subaward means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract.</li>
<p><em><strong><u>Real-life application</u></strong>: A subaward in this context refers to the actual contractual agreement between grant recipient and subrecipient, and not the name referred to the party receiving the contract.</em></p>
<li><strong>200.93 Subrecipient:</strong> 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.</li>
<p><em><strong><u>Real-life application</u></strong>: In order to receive a subrecipient designation, the subrecipient must be performing tasks or deliverables that adhere to the work as identified in the application work plan.</em></p>
<li><strong>200.22 Contract: </strong>Contract means a legal instrument by which a non-federal entity purchases property or services needed to carry out the project or program under a federal award. A contractor is the recipient of said contract (also referred to as a vendor).</li>
<p><em><strong><u>Real-life application</u></strong>: In order to receive a subcontractor designation, the subcontractor/ contractor/ vendor (terms used synonymously) must provide ancillary or advisory support that is not integral to the actual completion of workplan deliverables as identified in the application.</em></p>
<p>This can be very confusing, especially as you develop contracts and determine how to apply these terms. What are the implications of these designations?</p>
<h2 style=""text-align: center;"">Subrecipients</h2>
<li>Must be monitored by the recipient/grantee</li>
<li>Must undergo risk assessment reviews as dictated in §200.205 in order to receive a subaward</li>
<li>Maintain strong internal controls, as these can be assessed by the recipient</li>
<h2 style=""text-align: center;"">Subrecipients &amp; Subcontractors</h2>
<li>May be required to provide information in preparation for the grantee’s A-133 audit</li>
<li>Maintain records, including invoices and award-related documents for at least three years after the end of the grant period</li>
<li>Adhere to the standard terms and conditions as identified in Appendix II to Part 200, and those provided in the notice of award, which may be included in the subaward or subcontract</li>
<h2 style=""text-align: center;"">A Note About&nbsp;MTDC&nbsp;</h2>
<p><span style=""background-color: transparent;"">According to §200.68 Modified Total Direct Cost (MTDC), all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award) can be counted towards indirect costs. However, I have seen this applied toward subcontracts and subrecipients, even though UGG clearly states that a subaward is intended for subrecipients.</span></p>
<h2 style=""text-align: center;"">Need Help?</h2>
<p><a href="""" target=""_blank"" rel=""noopener"">Lucy Morgan</a> is an excellent coach and provides training on all topics related to federal grant recipients and implications in the sector. In addition, the Association of Government Auditors (AGA) released a handy&nbsp;<a href=""/subrecipient-monitoring-tool"">Subrecipient Monitoring and Self-Assessment Guide</a>&nbsp;in November 2017.</p>
<h2 style=""text-align: center;"">About the Author</h2>
<p>Founder of&nbsp; <a href="""">RBW Strategy</a>, Rachel Werner&nbsp; spent nearly seven years as a dedicated fundraiser and grant writer for nonprofit organizations and freelance clients. She has served as a dedicated fundraiser and grant writer for nonprofit organizations and as a grants management specialist implementing a compliance system for large U.S. Department of Education No Child Left Behind funds within charter schools across the U.S. In addition to being a skilled project manager, she has strong subject matter expertise pertaining to the grants lifecycle. She can be reached at&nbsp; <a href=""mailto:[email protected]"">[email protected]</a>.</p>
<p><span class=""hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_rich_text"" data-hs-cos-general-type=""meta_field"" data-hs-cos-type=""rich_text""><em>(Editor’s note:&nbsp;This post was updated on May 1, 2018)</em></span></p>
<p>If you need help with your subrecipient and grants management, reach out to <em><strong>[email protected]</strong></em></p>

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