Authority/Reference(s) 45 CFR 75, Subpart F; Uniform Grant Guidance (UGG)
Revision Date May 15, 2017

Policy

DFPS must comply with Office of Management and Budget (OMB) Uniform Grant Guidance (UGG), the Health and Human Services enterprise policy, and the Application of Uniform Grant Management Standards  to categorize entities as either subrecipients, recipients, or contractors (vendors).

Subrecipient, Recipient, or Contractor (Vendor) Determination

The appropriate determination must be made during the procurement planning phase, as specified in New Service Request, or when federal or state guidelines change. The determination process involves various stakeholders that may include: contract staff and leadership, program staff, federal funds coordinator, legal services, and HHSC-PCS; with the final determination from COS director or designee.

In situations where the determination of an entity's category is unclear, contract staff, in conjunction with appropriate stakeholders, must study the substance of the relationship between DFPS and the entity. Specific relationship characteristics are:

Subrecipient and Vendor Characteristics

Contractor

Subrecipient or Recipient

  • Normally operates in a competitive environment
  • Provides similar goods and services to many different purchasers
  • Provides goods and services that are ancillary to the operation of the program
  • Provides goods and services within the normal business operations
  • Is not subject to federal or state program compliance requirements
  • Determines who is eligible to receive program assistance
  • Has responsibility for programmatic decision making
  • Federal or state funds are used to carry out the program for public purpose
  • Performance is measure against federal or state program objectives
  • Is responsible for adhering to federal or state program compliance requirements.

The following are definitions that contract staff must be familiar with:

Federal: The following definitions are from the Uniform Grant Guidance (UGG) State: The following definitions are from the Uniform Grant Management Standards (UGMS)

Subrecipient: A non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program; but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency. (2 CFR §200.93)

Subrecipient: An entity that receives a state award from a recipient or pass-through entity to carry out a state program, but does not include an individual that is a beneficiary of such a program. A subrecipient may also be a recipient of other state awards received directly from a state awarding agency.  (UGMS §200.93.01)

Contractor: An entity that receives a contract defined as a legal instrument by which a non-Federal entity purchases property or services needed to carry out the project or program under a Federal award. (2 CFR §200.23)

Contractor: An entity that receives a contract as in §200.00 contract (UGMS §200.23.00)

Recipient: A non- Federal entity that receives a Federal award directly from a Federal awarding agency to carry out an activity under a Federal program. The term recipient does not include subrecipients. (2 CFR §200.86)

Recipient: An entity that receives a Federal award directly from a Federal awarding agency to carry out a Federal program or receives a state award directly from a state awarding agency to carry out a state program. (UGMS §200.87.00)

Federal Award: The federal financial assistance that a non-federal entity receives directly from a federal awarding agency. (2 CFR §200.38)

State Award: The state financial assistance that recipients receive directly from state awarding agencies. (UGMS §200.90.02)

Once DFPS has classified an entity as a subrecipient or recipient, they may be subject to the single audit process

The Single Audit ActRequirement process applies to subrecipients and recipients. Entities classified as a contractor (vendor) do not have to undergo the single audit process.

State entities, local governments, and non-profit organizations that qualify as a subrecipient and have expenditures of $750,000 or more in federal awards, or a recipient and have expenditures of $750,000 or more in state awards during that entity’s fiscal year must have a single audit performed by an independent, third-party auditor.

A subrecipient or recipient not expending the specified thresholds will not be required to undergo a single audit, but must abide by UGG cost principles and administration requirements.

Per the HHS Circular C-041, Guidelines for HHS Agencies on Requiring Subrecipient Contractors, subrecipient or recipient contractors that are required to obtain a single audit must re-procure single audit services every six years. Contract staff should verify that the subrecipient or recipient has appropriate procedures in place to comply with this requirement.

If this requirement causes an undue hardship, a request for a waiver must be submitted and approved by the DFPS Associate Commissioner of Program Operations. See Single Audit Rotation Waiver procedures below.

List of Subrecipient/Recipient Determined Services

Single Audit Costs

Unless prohibited by law, a subrecipient may charge the cost of a required single audit as an allowable direct or indirect cost of the contract based on the amount of funds received. DFPS may reimburse audited entities its share of the allowable audit cost if:

  • Funding is available and reimbursement is permitted by applicable funding sources;

  • HHSC finds the audit to be acceptable; and

  • The audit and reimbursement request follow DFPS policies and procedures, including obtaining written approval (via email, letter, or fax) prior to procuring an audit.

It is important to note that required single audit costs are paid outside of the contract with the subrecipient through the use of a State of Texas purchase voucher. Contract staff should disallow any costs associated with single audits not conducted in accordance with the UGG.