Confusion Abounds When Determining OMB Guidance on Subgrants and Contracts

July 7, 2014 | By Jerry Ashworth | Post a Comment

Here we are again, comparing grants to ducks. Why? Because the more things change, the more they stay the same. Let me explain.

More than three years ago, soon after we launched this blog, one of my first posts addressed the confusion grantees had determining the difference between a subgrant and a contract. At the time, I referred to a phrase that one of our former audioconference speakers used to say, noting that unlike contracts, subgrants take on the nature and requirements of the grant. To make his point, he said, “If it looks like a duck, and acts like a duck, it’s a duck.”

The Office of Management and Budget circulars made reference to subgrant and vendor relationships. In OMB’s uniform grant guidance, the term “vendor” has now been replaced with “contractor.” Still, that hasn’t helped ease the confusion between the two. During a question and answer session during the recent American Institute of Certified Public Accountant’s Not-for-Profit Conference, several questions revolved around the grantee/contractor determination issue, and is still appears there is a lot of confusion. What may be most confusing is an instance where a pass-through recipient awards a subgrant, yet terms it a “contract.” Despite the name, it is still a subaward, and should meet all the OMB requirements for a subaward. You don’t want to make this mistake, only to be told by an auditor later that you should have been treating the “contract” as a subaward.

The uniform guidance specifically defines “contracts” (§200.22) and “subawards” (§200.92) and explains how to determine whether the relationship is a subrecipient or contractor relationship in §220.330. Even better, Thompson’s Federal Grant Management Handbook in ¶315 provides an excellent chart to help subscribers better understand the difference. Thompson also recently held a webinar on subrecipient monitoring that covered this topic (click here to purchase a recording of the webinar), and expects to host another webinar discussing it again this fall.

The confusion, it seems to me, has not dissipated at all, and if anything, it has only intensified (thus the word “QUACK!” in all caps). I encourage all current grantees and grant applicants to fully understand the difference between subgrants and contracts, especially in the uniform guidance. A mistake in identifying this relationship could prove very costly.

Are you still confused between the differences between subgrants and contracts? You’re not alone. Let us know what questions you still have? We can help get them answered for you.


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