1.2 Oversight and Monitoring | 1.2.2 Types of Recipients and Oversight Responsibilities

1.2.2 Types of Recipients and Oversight Responsibilities

Effective date: July 1, 2018

Non-Federal Entity

The Non-Federal Entity means a State, local government, Indian Tribe, institution of higher education, or non-profit organization that carries out a Federal award as a recipient or subrecipient.¹ State of Wisconsin, County of Racine, and Northwest Concentrated Employment Program (CEP), are examples of Non-Federal Entities.

The Non-Federal Entity is responsible for oversight and operations of the Federal award supported activities. The Non-Federal Entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the Non-Federal Entity must cover each program, function, or activity.²

The Non-Federal Entity must submit performance reports as required by the federal awarding agency or pass through entity to best inform improvements in program outcomes and productivity. These reports will include:

A comparison of actual accomplishments to the objectives of the Federal award established for the period,
The reason(s) why established goals were not met, if appropriate; and
Additional Pertinent information including, when appropriate, analysis of cost overruns or high unit costs.³

Events may occur between the scheduled performance reporting dates that have significant impact upon the supported activity. In such cases, the Non-Federal Entity must inform the Federal awarding agency or pass-through entity as soon as the following types of conditions become known:

Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the Federal award. This disclosure must include a statement of the action taken or contemplated, and any assistance needed to resolve the situation, and
Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipate or producing more or different beneficial results than originally planned.⁴

Pass-Through Entity

A pass-through entity is a non-Federal entity that provides a subaward to a subrecipient to carry out part of a Federal program.⁵ The State of Wisconsin and the Southeast Wisconsin Workforce Development Board are examples of pass-through entities.

Among its responsibilities regarding sub-recipients, a pass through entity must:

Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
Monitor the activities, as necessary, to ensure that the subaward is used for authorized purposes in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.
Verify that each subrecipient is audited as required by 2 CFR 200 Subpart F ̶ Audit Requirements when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded $750,000.
Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicated conditions that necessitate adjustments to the pass-through's own records.
Consider taking enforcement action against noncompliant subrecipients as described in 2 CFR §200.338 - Remedies for noncompliance of this part and in program regulations.⁶

Subrecipient

A subrecipient is a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a federal program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency.⁷ Workforce Resource, Inc. and ADVOCAP are examples of subrecipients, as examples of non-Federal entities that receive subawards from their local Workforce Boards.

Subrecipient oversight and monitoring requirements for the Title 1 WIOA received include:

Determine that expenditures have been made against the proper cost categories and within the cost limitations specified in the Act and the higher-level regulations and policy.
Determine whether there is compliance with other provisions of the Act and the WIOA regulations, to include applicable laws, regulations and policies.
Assure compliance with 2 CFR part 200; and
Determine compliance with the non-discrimination, disability, and equal opportunity requirements of WIOA Section 188.⁸

Subaward

A subaward is an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a Federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract.⁹

Contractor

A contractor is an entity that receives a legal instrument (i.e., contract) by which a non-Federal entity purchases property or services needed to carry out the project or program under a Federal award. The term as used in this part does not include a legal instrument, even if the non-Federal entity considers it a contract, when the substance of the transaction meets the definition of a Federal award or subaward.¹⁰ Wisconsin Indianhead Technical College and local Community Based Organizations are examples of Contractors.

Subrecipient / Contractor Determination

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. Payments received for goods or services provided as a contractor are not federal awards,¹¹ 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. The Federal awarding agency may supply and require recipients to comply with additional guidance to support these determinations provided such guidance does not conflict with this section. ¹²

Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity:

Determines who is eligible to receive what Federal assistance.
Has its performance measured in relation to whether objectives of a Federal program were met.
Has responsibility for programmatic decision making.
Is responsible for adherence to Federal program requirements specified in the Federal award.
In accordance with its agreement, uses Federal funds to carry out a program for public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.¹³

Characteristics indicative of a procurement relationship between the non-Federal entity and a contractor are when the non-Federal entity receiving the Federal funds:

Provides the goods and services within normal business operations.
Provides similar goods or services to many different purchasers.
Normally operates in a competitive environment.
Provides goods or services that are ancillary to the operation of the Federal program.
Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons.¹⁴

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 that the form of the agreement. All the characteristics listed above may not be present in all cases, and the pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract.¹⁵

"The chief elected official in a local area shall serve as the local grant recipient for, and shall be liable for any misuse of, the grant funds allocated to the local area...unless the chief elected official reaches an agreement with the Governor for the Governor to act as the local grant recipient and bear such liability." [WIOA section 107(d)(12)(B)(i)(I)]