Subrecipient and Vendor Determination Checklist

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

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

3. 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

4. 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

5. 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

6. 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

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

8. 2007 Columbia Sub-Awards

9. 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 agreementand 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

10. 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

11. Checklist -Vendor

12. Checklist- Subrecipient

13. 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

14. Contact Information • Jennifer Duncan, CPA • Interim Director – Office of Sponsored Programs Administration • duncanjenn@missouri.edu • 573.882.7560