TLDR
A subaward is not the same as a contract. The distinction determines whether you have subrecipient monitoring obligations — risk assessment, compliance terms, ongoing monitoring, single-audit verification. Getting the classification right matters because auditors apply the 2 CFR 200.331 test substantively, and a misclassified subaward is a finding regardless of what you called it.
A subaward is a mechanism for extending a federal program to partners — community organizations, colleges, clinics, or other nonprofits — that can deliver the program closer to the populations it serves. It is not a procurement. The distinction matters because it determines whether the pass-through entity has monitoring obligations that go far beyond what a contractor relationship requires.
The Subaward vs. Contract Distinction
The question of whether a relationship is a subaward or a procurement contract is determined by the substance of the arrangement, not by what the document is labeled. 2 CFR 200.331 provides the five-factor test.
A subaward exists when the receiving entity:
Determines who is eligible to receive the federal assistance (participant eligibility decisions, not just selecting who to pay).
Has performance measured in relation to whether the federal program objectives were met (not just whether a deliverable was produced to spec).
Has responsibility for programmatic decision-making within the program.
Is responsible for adherence to applicable federal program requirements under the federal award.
Uses the federal funds to carry out a program of its own organization — delivering services, not supplying inputs.
When these factors are present, the relationship is a subaward and the pass-through entity’s obligations under 2 CFR 200.332 are triggered: pre-award risk assessment, written sub-award with required provisions, ongoing monitoring, single-audit verification, and finding resolution.
What the Subaward Document Must Contain
2 CFR 200.332(a) specifies the required contents. Every subaward document must include the federal award information — the awarding agency, the FAIN (Federal Award Identification Number), the CFDA/Assistance Listing number, and the fiscal year of the award. Without this information, the subrecipient cannot trace its federal funding, the SEFA reporting is incomplete, and the monitoring trail breaks down.
The document must also specify the period of performance, the approved budget, applicable compliance requirements, financial and performance reporting requirements, access-to-records provisions, and the single audit requirement notification if the subrecipient may meet the $1,000,000 expenditure threshold.
Subaward agreements that omit required provisions are a compliance finding even when the program is operating well. The documentation failure is the finding, independent of program performance.
Subaward as a Term on the SEFA
Subawards received from pass-through entities appear on the organization’s SEFA as federal expenditures. If your organization receives a subaward from a state agency that is passing through federal funds, that subaward amount counts toward your federal expenditure total for single audit threshold purposes. The SEFA must include the pass-through entity’s name and its identifying number for each subaward.
See Also
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A complete subrecipient monitoring checklist covering pre-award risk assessment, agreement requirements, ongoing monitoring, and documentation — organized for the pass-through entity. Delivered by email.
Q&A
What must be in a subaward document under 2 CFR 200.332(a)?
2 CFR 200.332(a) requires the sub-award to include: the federal award identification (agency name, CFDA/Assistance Listing number, federal award name, FAIN, and award year); the period of performance; the approved budget amount; any flow-down requirements from the prime award; information on applicable compliance requirements; data collection requirements; requirements for financial and performance reporting; access to records provisions; requirements for the subrecipient to permit the pass-through entity to conduct monitoring; single audit requirements; and information about termination provisions.
Q&A
When is a payment a subaward vs. a procurement?
The 2 CFR 200.331 five-factor test determines classification: a subaward exists when the receiving entity (1) determines who is eligible for federal assistance, (2) has performance measured against federal program objectives, (3) makes programmatic decisions, (4) is responsible for federal compliance, and (5) uses federal funds to carry out its own program rather than providing goods/services to the pass-through. If these factors point to contractor characteristics instead, procurement standards apply.
Q&A
Can the same organization receive both a subaward and a contract from the same pass-through entity?
Yes. The classification is agreement-specific, not entity-specific. One organization can have a subaward for carrying out program activities and a separate contract for providing administrative or technical services. Each agreement is classified independently based on its substance.
Frequently asked