Subrecipient vs. Contractor Determinations Transitioning to 2 CFR 200 the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Office of Sponsored Research Deborah Rutkowski-Howard, Subawards Manager, Research Management Services William Brett, Subcontract Team Associate, Research Management Services Supply Chain Management David Pendergast, Procurement Contracts Manager 4/23/2015

History from 1990 until today… The Office of Management and Budget (OMB) 1990 - The United States Office of Management and Budget (OMB) administratively extends the Single Audit process to non-profit organizations by issuing OMB Circular A-133, “Audits of Institutions of Higher Education and Other Non-Profit Organizations”. December 2013 - OMB issues 2 CFR 200, which superseded and combined the requirements from OMB Circulars A–21, A–87, A–110, A– 122, A–89, A– 102, and A–133. December 26, 2014 - All federal agencies were required to implement the regulations included in the new Uniform Guidance (UG) by December 26, 2014. Subrecipient vs. Contractor Determinations 11/15/2018

Uniform Guidance Section § 200.330 Subrecipient and contractor determinations “The non-Federal entity may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding agencies and pass-through entities. Therefore, a pass- through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” Subrecipient vs. Contractor Determinations 11/15/2018

Uniform Guidance Section § 200.330 This section further states under § 200.330 (c): “In determining whether an agreement between a pass-through entity and another non-Federal entity casts the latter as a subrecipient or a contractor, the substance of the relationship is more important than the form of the agreement”. NOTE: With the implementation of the UG the official terminology has been changed from “vendor” to “contractor”. Subrecipient vs. Contractor Determinations 11/15/2018

What is the effect of the new language? UCSF’s Single Audit Every year UCSF is audited on its subaward activity. It is possible that auditors will be directed to verify that direct recipients of federal funding are complying with the requirement to make these case-by- case determinations. In addition to our office, auditors may be coming to you and your investigators looking for the rationale behind classifying a transaction as either a subaward or a procurement, as well as any associated documentation of the assessment. Subrecipient vs. Contractor Determinations 11/15/2018

Who makes the determination? Subrecipient vs. Contractor Determinations 11/15/2018

Who does what? At proposal development: The Principal Investigator is primarily responsible for making the determination. However, the administrators helping to develop the proposal should also be reviewing all third party involvement to determine if it is categorized appropriately as either a procurement, or a collaborative subaward. Still not sure? Contact the Subawards Manager at least 30 days prior to submitting the proposal. Subrecipient vs. Contractor Determinations 11/15/2018

Who does what? At Subaward The RMS Subcontract Team also reviews this issue as part of its compliance review process that is required to be completed prior to issuing the subaward to the subrecipient institution. This is done in consultation with the PI, the RSC and the Department Subrecipient vs. Contractor Determinations 11/15/2018

How do we make the determination? Subrecipient vs. Contractor Determinations 11/15/2018

Subawards and Procurements What is the same? Both have a defined Scope of Work Both have a detailed budget Both are a formal legal agreement between The Regents of the University of California and the third-party entity Subrecipient vs. Contractor Determinations 11/15/2018

Subawards versus Procurements What is different? Procurements are used to acquire goods or services for the project, and Constitutes “work for hire”. Does not transfer programmatic effort to the third- party entity The third-party entity does not have a Principal Investigator There is no collaborative element to the scope of work UCSF is not required by the sponsor to flow down the requirements of the prime agreement Subrecipient vs. Contractor Determinations 11/15/2018

Subawards versus Procurements What is different? Subawards bring a third party entity into the project, and Transfers programmatic effort to the third-party entity Has a Principal Investigator The scope of work includes collaboration on the work for the UCSF award UCSF is required by the sponsor to flow down the requirements of the prime agreement UCSF is required to monitor and ensure the recipient’s ongoing compliance with the flow down requirements (eg. issue management plans for audit findings) Subrecipient vs. Contractor Determinations 11/15/2018

Working with Supply Chain Management The procurement process is not managed by RMS. The PI’s department is required to submit a requisition via the BearBuy system. Additional information can be found at: http://supplychain.ucsf.edu/ Go to the “How to Buy” tab Subrecipient vs. Contractor Determinations 11/15/2018

Guidance for submitting your request "How To" Guides are provided so end users have guidance on how to process certain types of orders. Subrecipient vs. Contractor Determinations 11/15/2018

Case Studies Subrecipient vs. Contractor Determinations 11/15/2018

Questions? Subrecipient vs. Contractor Determinations 11/15/2018