Subrecipient and Vendor Determination Checklist Grants Contracts Support

Subrecipient and Vendor Determination Checklist Grants & Contracts Support Group December 10, 2008

Objectives • Understand differences between Subrecipients and Vendors • Purpose of the checklist • Methodology for evaluation 2

Definition • Subcontract – Agreement between the University and another entity in which the University agrees to fund the entity to conduct a portion of the tasks required to complete the Prime Award. – Subject to compliance requirements 3

Characteristics • Subcontractor/Subrecipient – Services directly related to furtherance of the scope of work on an award – Contributes to the scholarly and scientific conduct of the project – Services are unique to the award – Statement of work encompasses a variety of activities – Work is an identifiable segment of the project – Must provide periodic reports and/or other deliverables 4

Characteristics • Consulting Agreement – Provides professional and/or technical advice usually over a short period of time – Work is not unique to the research – Work independently using own resources – Not employees of the University – Not subject to the compliance requirements 5

Characteristics • Vendor – Provides goods and/or services for normal business operations – Operates in a competitive environment – Work is not unique to project – many customers – No research or judgment required – Not subject to compliance requirements – Examples include: • Standard lab testing • Report printing • Routine analysis 6

Checklist - purpose • Why was the checklist developed? • Vendors and/or consultants inappropriately classified as subrecipients • 13% misclassified – MU campus • Impacts F&A rate 7

2007 Columbia Sub-Awards 8

Compliance Supplement (New) • M. Subrecipient Monitoring: – “When determining whether the subrecipient monitoring compliance requirement applies in an R&D environment, the auditor should first assess whether the passthrough entity made the proper classification between subrecipients and vendors. . . – In deciding whether a subrecipient or vendor relationship exists, the substance of the relationship is more important than the form of the agreement and it is not expected that all of the characteristics of a subrecipient described in OMB Circular A-133 §__. 210 will be present. ” [Emphasis added] Per new 2008 A-133 Compliance Supplement – Part 3 9

Compliance Supplement (New) • M. Subrecipient Monitoring (continued): – “. . . A subrecipient relationship exists when funding from a pass-through entity is provided to perform a portion of the scope of work or objectives of the pass-through entity’s award agreement with the Federal awarding agency. A subrecipient performs part of the project activities. – A vendor, on the other hand, is generally a dealer, distributor or other seller that provides, for example, supplies, expendable materials, or data processing services in support of the project activities. ” [Emphasis added] Per new 2008 A-133 Compliance Supplement – Part 3 10

Checklist -Vendor 11

Checklist- Subrecipient 12

Concluding Points • Use the checklist to: – Document consideration of activity – Assist in a decision if uncertainty exists • Attach to sub award as documentation • Maintain in award file as support • Nature and substance of the transaction must be the deciding factor 13

Contact Information • Jennifer Duncan, CPA • Interim Director – Office of Sponsored Programs Administration • duncanjenn@missouri. edu • 573. 882. 7560 14