govcon.forum

County moved our program from a grant to a contract. Is our nonprofit a subrecipient or a contractor now?

Ask a question
Asked Active Viewed 8 timesAnswered
Short answer · from the accepted reply
  • CFR 200.331 puts the call on the county as the pass-through entity, and it says the substance of the relationship matters more than the form of the agreement.
  • So the missing word in your contract doesn't settle it, and neither does per-participant pricing.
Read the accepted answer
2answers

I handle grants and contracts for a nonprofit in Grand Rapids. For years the county funded our youth mentoring program through a grant agreement passed down from federal money. This year the renewal came over as a professional services contract, priced per participant served, with an invoice schedule instead of the reimbursement requests we're used to.

Our finance committee is split. One side says nothing changed because the money still traces back to the same federal program, so we're still a subrecipient and still need the single audit setup and indirect rate we built. The other side says a per-unit contract makes us a contractor and the Uniform Guidance stops applying to us.

The county program officer told me to read the contract. I did. It doesn't use either word.

Who decides whether we're a subrecipient or a contractor, and what in the agreement should I be looking at to tell?

countysubrecipientuniform-guidancenonprofit
ShareReport
asked Priya N. Grants and contracts manager, nonprofit · Grand Rapids, MI · 4 rep

2 answers

2
Accepted answer

2 CFR 200.331 puts the call on the county as the pass-through entity, and it says the substance of the relationship matters more than the form of the agreement. So the missing word in your contract doesn't settle it, and neither does per-participant pricing.

I'd push back a little on the pricing point above. The Uniform Guidance allows fixed amount subawards under 2 CFR 200.333, so getting paid per person served doesn't make you a vendor by itself.

At my university, purchasing and the sponsored programs office make that determination before anything goes out, and these are the things we look at:

  • whether you decide who's eligible for the program
  • whether your performance is measured against the federal program's objectives
  • whether you're on the hook for federal program compliance rules
  • whether you sell the same service to lots of buyers as part of normal operations

The first three point to subrecipient. The last one points to contractor.

The fastest tell in your paperwork: 2 CFR 200.332 requires a subaward to identify itself as a subaward and carry the federal award information, including the assistance listing number and the FAIN. If that's not in there, email the program officer and ask for the county's written subrecipient or contractor determination.

It matters for your audit too. 2 CFR 200.501(f) says payments you receive as a contractor aren't federal awards, so they drop out of your single audit expenditures.

ShareReport
answered Kayla T. Purchasing assistant, public university · Eugene, OR · 33 rep
0

The county decides whether your nonprofit is a subrecipient or a contractor, and the substance of the agreement determines the classification. Your county program officer is right that you need to read the contract closely, looking for key indicators.

Since this funding traces back to a federal program, the county is likely following guidance that distinguishes between a subaward and a procurement contract. A subrecipient relationship typically involves performing a portion of a federal award, where the subrecipient has responsibility for programmatic decision-making and compliance with federal program requirements. A contractor, however, provides goods or services for the subrecipient's own operations, acting as a vendor.

Look for language that dictates how much control the county retains over the program's operations and objectives. If the county specifies the exact services to be delivered, how they are delivered, and retains ownership of the program design, that points towards a contractor relationship. The per-participant pricing and invoice schedule also suggest a contractor arrangement, as the county is procuring a defined service rather than funding your organization's broader program goals. Your finance committee needs to focus on the specific terms and conditions, not just the funding source, to understand the compliance requirements.

ShareReport
answered Keisha W. Verified vendor8(a) firm founder, staffing and training · Atlanta, GA · 319 rep

Your answer

Sign up to answerCite the FAR clause or procurement code where you can.

Related questions