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

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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

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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

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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

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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

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Checklist - purpose

• Why was the checklist developed?• Vendors and/or consultants

inappropriately classified as subrecipients• 13% misclassified – MU campus• Impacts F&A rate

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2007 Columbia Sub-Awards

766001 2280 0 C1830023 00013845 COLUM COLUM 0100019356DISABILITY MGMT CONSULTING GROUP16,000 2007766001 2280 0 C1830023 00013845 COLUM COLUM 0100020642PETTY,RAY 17,700 2007766001 2280 0 C1830023 00013845 COLUM COLUM 0100020641TABOR,MARGARET5,000 2007766001 2280 0 C1830037 00009740 COLUM COLUM 0100078517BRINKHOFF,JULIE A17,800 2007766001 2280 0 C1830037 00009740 COLUM COLUM 0100019356DISABILITY MGMT CONSULTING GROUP20,568 2007766001 2280 0 C1830037 00009740 COLUM COLUM 0100078442EDWARDS,MICHAEL A7,000 2007766001 2280 0 C1830037 00009740 COLUM COLUM 0100020642PETTY,RAY 19,332 2007766001 2280 0 C1830037 00009740 COLUM COLUM 0100020641TABOR,MARGARET3,500 2007766001 2280 0 C1850030 00002286 COLUM COLUM 0100008911LANIT CONSULTING OF COL INC2,383 2007766001 2280 0 C1850030 00002286 COLUM COLUM 0100021239RESEARCH & TRAINING ASSOC INC3,976 2007765001 2100 0 C1935026 00011946 COLUM COLUM 0100137485STARODUB INC2,800 2007765200 2200 0 C1995004 00001559 COLUM COLUM 0100078929MEC WATER RESOURCES50,934 2007766001 2200 0 C1995004 00001559 COLUM COLUM 0100078929MEC WATER RESOURCES57,096 2007765001 2100 0 C2370071 00015315 COLUM COLUM 0100155111MN COALITION ON GOV INFO5,000 2007765001 2285 0 C2614013 C0011317 COLUM COLUM 0100122056LOCAL INVESTMENT COMM25,000 2007766001 2285 0 C2614013 00010085 COLUM COLUM 0100122056LOCAL INVESTMENT COMM33,731 2007766001 2285 0 C2614013 C0011317 COLUM COLUM 0100122056LOCAL INVESTMENT COMM5,229 2007766001 2100 0 C2618018 CG003411 COLUM COLUM 0100002620BEHAVIORAL HEALTH CONCEPTS INC2,837 2007766001 2100 0 C2618021 00013752 COLUM COLUM 0100002620BEHAVIORAL HEALTH CONCEPTS INC22,693 2007765001 2100 0 C2640012 00015320 COLUM COLUM 0100074027CHANGE AND INNOVATION AGENCY25,000 2007765001 2100 0 C2640012 00015320 COLUM COLUM 0100153481PARKER DENNISON & ASSOC LLC3,469 2007766001 2100 0 C2640012 00015320 COLUM COLUM 0100074027CHANGE AND INNOVATION AGENCY25,454 2007765001 2285 0 C2658030 00012661 COLUM COLUM C000292202WALLACE,PATRICIA9,500 2007765001 2280 0 C2658031 00014922 COLUM COLUM 0100081778EYEBITS STUDIOS6,392 2007766001 2280 0 C2658031 00010682 COLUM COLUM 0100099387NATL CTR FOR FARMWORKERS HEALTH8,750 2007765001 0740 0 C3320004 00 COLUM COLUM 0100113508NEW HORIZONS COMPUTER LEARNING CTR STL43,650 2007

Fee for Service--> 35 13%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

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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

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Checklist -Vendor

Vendor

(Payments for these agreements should be under budget accounts that roll up to 720001.) Yes No

Does the organization operate in a competitive environment?

Does the organization provide goods and services within normal business operations to different purchasers?

Does the organization provide goods or services that are ancillary to the operation of the program?

Are services being performed routine services that could be performed for the general public or general research/scientific community rather than unique to the project?Is the contribution made to the project one of services performed rather than independent research?

Is the organization free from programmatic compliance (A-133) requirements?

Does the organization perform analysis or discretionary judgment related to the primary award?

Is the work to be conducted by an unidentified individual or team of personnel?

Is the activity performed a series of repetitive tests or activities requiring little or no discretionary judgment on behalf of the service provider? 11

Checklist- SubrecipientSubrecipient

(Payments for these agreements should be under budget accounts 765001 & 766001.) Yes No

Does the organization have distinct deliverables to deliver to the research goals of the project?

Relationship Determined to Be: Vendor Subrecipient

Does the organization have publishing rights and responsibilities?

Will the organization have rights to resulting patentable or copyrightable technology?

Does the organization make measurable, significant, scientific contributions to the final report or product?

Is the organization required to adhere to applicable program compliance (A-133) requirements?

Is the organization providing cost-share or matching funds?

Is the organization using funds to carry out a program of the organization rather than providing goods and services to a University program?

Was the organization identified in the proposal to the sponsor?

Is the organization free to decide how to carry out the activities of this program?

Is work being performed unique to the project and designed specifically to enhance the scientific research goals and outcomes of this project?

Will organization contribute deliverables with little direct supervision from the University?

Is there an identified investigator at the organization? If yes, is that person a co-investigator?

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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

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Contact Information

• Jennifer Duncan, CPA• Interim Director – Office of Sponsored

Programs Administration• duncanjenn@missouri.edu • 573.882.7560

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