§ 200.331 - Subrecipient and contractor determinations.

§ 200.331 Subrecipient and contractor determinations.

The non-Federal An 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 . The pass-through entity must make is responsible for making case-by-case determinations to determine whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of the entity receiving Federal funds is a subrecipient or a contractor. The Federal awarding agency may supply and require recipients require the pass-through entity to comply with additional guidance to support make these determinations, provided such guidance does not conflict with this section. The Federal agency does not have a direct legal relationship with subrecipients or contractors of any tier; however, the Federal agency is responsible for monitoring the pass-through entity's oversight of first-tier subrecipients. All of the characteristics listed below may not be present in all cases, and some characteristics from both categories may be present at the same time. No single factor or any combination of factors is necessarily determinative. The pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract. In making this determination, the substance of the relationship is more important than the form of the agreement.

(a) Subrecipients. A subaward is for the purpose of carrying out a portion of a the Federal award and creates a Federal financial assistance relationship with the a subrecipient. See the definition for of Subaward in § 200.1 of this part. Characteristics which that support the classification of the non-Federal entity as a subrecipient include, but are not limited to, when the non-Federal entity:

(1) Determines who is eligible to receive what Federal assistance;

(2) Has its performance measured in relation to whether the objectives of a Federal program were met;

(3) Has responsibility for programmatic decision-making;

(4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and

(5) In accordance with its agreement, uses the Federal funds to carry out Implements 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.

(b) Contractors. A contract is for the purpose of obtaining goods and services for the non-Federal entityrecipient's own or subrecipient's use and creates a procurement relationship with the a contractor. See the definition of contract in § 200.1 of this part. Characteristics indicative of that support a procurement relationship between the non-Federal entity recipient or subrecipient and a contractor include, but are not limited to, when the contractor:

(1) Provides the goods and services within normal business operations;

(2) Provides similar goods or services to many different purchasers;

(3) Normally operates in a competitive environment;

(4) Provides goods or services that are ancillary to the operation implementation of the a Federal program; and

(5) Is not subject to compliance requirements of the a Federal program as a result of the agreement. However, though similar requirements may apply for other reasons.

(c) Use of judgment in making determination. In determining whether an agreement between a pass-through entity and another non-Federal entity casts the latter as a subrecipient or a contractor, 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, and the pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract.