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

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 pass- through 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