Does your organization have “partners” that help it fulfill its grant obligations?  Whether your organization is operating a Head Start grant or under any other federal grant program, accurately determining the type of relationship is crucial. Perhaps your organization is an Early Head Start – Child Care Partnership grantee that partners with local child care providers?  Or maybe a Head Start grantee partnering with a delegate agency, or with local medical providers to do health screenings?  If the answer is yes to any of these questions, take this self-test to assess how well your program is following the requirements of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for HHS Awards (also known as the Ominicircular, Supercircular or the Uniform Grants Guidance or the UGG).

1. Has my organization formally determined whether our partner is a subrecipient or contractor?

If the partnership involves the use of grant funds the relationship is likely a subrecipient (or delegate under the Head Start Act) or contractor.  The UGG requires a grantee to make a case-by-case determination as to whether its partners are subrecipients or contractors. There are important consequences to this conclusion.  For example, the method for selecting partners depends on whether there is a subrecipient or contractor relationship.  Under the UGG, prior agency approval is necessary before beginning a subrecipient relationship. On the other hand, grantees must follow their internal procurement policies and procedures to select contractors.

A subrecipient relationship exists where the partner will carry out a part of the federal award’s objectives, as opposed to providing services that merely assist the grantee to carry out its own obligations under the award. In other words, the subrecipient stands in the shoes of the grantee for purposes of carrying out part of the award.  A subrecipient relationship is more likely present if its agreement with the direct grantee requires it to

1. carry out the program for the public purpose specified in the authorizing statute for the grant,
2. make programmatic decisions,
3. determine the eligibility of beneficiaries of the federal award, and
4. have its performance measured in relation to whether it meets the federal program’s objectives.

On the other hand, a contractor is not responsible for carrying out the federal award, but instead provides goods or services for the grantee’s own use in carrying out the federal grant.  A partner is more likely a contractor if it

1. provides goods and services in its normal business operations,
2. provides similar goods or services as it is providing under the agreement with the grantee to many different purchasers,
3. normally operates in a competitive environment, and
4. provides services that are merely ancillary to the operations of the federal program.

Make a formal determination, based on the above factors, as to whether the partner is a subrecipient or contractor.  The formal determination should be set forth in a written document that includes the rationale for the decision.  Keep this document in your organization’s files!

Grade your organization! 

• Your organization has NOT made a formal determination of whether the partners are subrecipients or contractors. 0 points.

• Your organization has made a formal determination of whether the partners are subrecipients or contractors, but does not have a written rationale for the decision. 1 point.

• Your organization has made a formal determination of whether the partners are subrecipients or contractors, and has a written rationale for the decision. 2 points.

2. Is there a written agreement that includes required provisions?

Grantee organizations should have a written agreement with their partners.  The written agreement will need certain provisions depending on whether the partner is a subrecipient or contractor.  For subrecipients you can find the rules here.  For contractors, you can find the rules here.  CAUTION:  these lists may not be exhaustive!  There may be other program or project specific requirements. Check the notice of grant award for more details.

Grade your organization! 

• Your organization does NOT have a written agreement with its partners. 0 points.
• Your organization has a written agreement with its partners, but has not made sure the agreement has required terms. 1 point.
• Your organization has a written agreement and has verified that the agreement has all required terms. 2 points.

3. Is your organization monitoring your partner?

Grant recipients are accountable for the actions of their subrecipient and contractors.  Among other things, you should be reviewing your subrecipient’s financial and performance reports, following-up to ensure that any identified deficiencies are corrected, and issuing management decisions for audit finding pertaining to the Federal award.  For contractors, you should be making sure that your contractor is complying with all aspects of your agreement, and taking action if necessary. The most important aspect of contract administration is to confirm that your organization got what it paid for.

Grade your organization! 

• Your organization has NOT established a written procedure for subrecipient monitoring/contract administration. 0 points.

• Your organization has a written procedure for subrecipient monitoring/contract administration but does not consistently follow it. 1 point.

• Your organization has a written procedure for subrecipient monitoring/contract administration and follows it consistently. 2 points.

How did your organization do?

If your organization scored 0 – 2 points, your organization’s procedures for working with partners is due for an overhaul!  Make it a priority this fiscal year to analyze each partner relationship to bring them in compliance with the UGG.

If your organization cored 3-4 points, your team is aware of the issue and moving in the right direction.  But, your agency may still be at risk.

If your organization scored 5-6 points, congratulations!  Your organization has done a great job!  But, as you know, compliance isn’t a one-time thing!  It requires you to maintain consistent vigilance and effort.

Contact our Director of Training and Technical Assistance for more information on in-depth training opportunities. Watch this webinar for information about managing your partner relationships and check out our future live trainings that will cover subrecipient/contractor distinctions.

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