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3.14 Subrecipient Management and Monitoring


A subaward is an award made by a pass-through entity to a subrecipient for the purpose of carrying out a portion of the work funded by the pass-through entity???s Federal award. The pass-through entity may use any form of legal agreement for making a subaward, including an agreement that the pass-through entity considers a contract. A subaward is not a contract by which the non-federal entity (i.e., the recipient or a subrecipient) enters into an agreement with an entity to purchase property or services needed to carry out the project or program under a Federal award (see 2 C.F.R. ?? 200.22 (Contract).

In keeping with 2 C.F.R. ?? 200.330 (Subrecipient and Contractor Determinations), the following circumstances support classification of a non-federal entity as a subrecipient of the pass-through entity:

  • The non-federal entity determines who is eligible to receive what Federal assistance;
  • The non-federal entity???s performance is measured in relation to whether objectives of the Federal program were met;
  • The non-federal entity has responsibility for programmatic decision making;
  • The non-federal entity has responsibility for adhering to applicable program requirements under the Federal award; and
  • The non-federal entity uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.

In contrast, a contract for the purpose of obtaining goods and services for the pass-through entity???s own use creates a procurement relationship with the contractor. Circumstances supporting this type of relationship include:

  • The non-federal entity provides the goods and services within normal business operations;
  • The non-federal entity provides similar goods or services to many different purchasers;
  • The non-federal entity normally operates in a competitive environment;
  • The non-federal entity provides goods or services that are ancillary to the operation of the Federal program; and
  • The non-federal entity is not subject to the compliance requirements of the Federal program as a result of the agreement.

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In determining whether an agreement between a pass-through entity and non-federal entity creates a subrecipient or a contractor relationship, the substance of the relationship is more important than the form of the agreement.

All of the characteristics listed above may not be present in all cases, so the pass-through entity must use judgment when categorizing each agreement as a subaward or a procurement contract.

The contract or other written agreement must not affect the recipient's overall responsibility and accountability to the Federal Government as the award recipient for the duration of the project. As the recipient of the award, you are responsible for monitoring the subrecipient and ascertaining that all fiscal and programmatic responsibilities are fulfilled.