City of Boston
 
 
Auditing Department
Establishing a Sub-Recipient Relationship
Departments may find it necessary to establish relationships with other organizations in order to realize the goals of the grant. Some grants may in fact require that funds be distributed to third parties, or sub-recipients, who are in effect partners in the grant program, with at least some discretion in direction and administration. By definition, the grant, or the goals of the grant, will overlap with either part or all of the sub-recipient's organizational mission and a sub-recipient will have a vested interest in the outcome of the grant objectives.

*What's the difference between a Contractor and a Sub-Recipient?
Departments may establish a relationship with a sub-recipient in one of two ways:
  1. Through the Grant Application Process, the Department may stipulate the particular organization(s) that it will work with to implement the goals of the Grant. Once the grant has been awarded and approved (per the guidelines set forth in the Grant Application & Review area), the Department and the sub-recipient are de facto establishing a relationship, and need only formalize that relationship (see below).

  2. Through the Request for Proposals (RFP) or Invitation for Bids (IFB) Processes, the department will follow the City's standard RFP/IFB processes for the procurement of services. Once all responses have been received and reviewed, per City guidelines, an award is made to the most appropriate bidder, thereby establishing the relationship. More information on this process is available from Auditing/Accounts Payable at 5-4186.

Note: Departments should verify that any potential sub-recipient is not on the Federal Governments "Excluded Parties List System" by performing a search at http://epls.arnet.gov.

Formalizing a Relationship with a Sub-Recipient

A Contract and/or Memorandum of Agreement is drawn up and signed by the Sponsoring Department and a Sub-recipient to officially establish the relationship. This document serves to define the role of each party and the expected outcomes, and serve as the basis for reporting and payment requirements.

The MOA is restricted for use for agreements where all parties involved are either government or quasi-government agencies. There are two types of MOA:
  • An Administrative MOA is used to establish the objectives and roles of all parties involved. Administrative MOAs do not address financial issues.
  • A Financial MOA may encompass the characteristics of the Administrative one, but will also include financial arrangements. Financial MOAs play the same role as contracts.
A contract is used for any agreement where one or more of the parties is a private, non-profit, educational or for-profit organization. Standard City of Boston procedures should be used to select the appropriate method to solicit and award the contract.

Contracts or MOAs will vary depending on the type of relationship. If you are unsure of which document to use, or how to write one, contact Auditing/Grants Monitoring at 617-635-2647.

Note: Non-Profits must additionally submit their Certificate of Authority along with the Contract.

Processing Payments to Sub-Recipients

In order for reimbursements to be made to sub-recipients, both the Sponsoring Department and the Sub-Recipient should review the Sub-Recipient Roles & Responsibilities area. All requirements set forth in that area must be adhered to for any payment to be made. Further, a contract or Financial MOA must exist (see above). With these requirements met, the following steps should be taking to process a payment to a sub-recipient:
  1. Establish a Purchase Order: The Sponsoring Department establishes a Purchase Order to encumber funds equal to the amount of the contract or MOA. This designates the funds for the purposes outlined in the contract/MOA. This should be done at the same time as the contract/MOA is signed by all parties.

  2. Sub-recipient submits invoice: The sub-recipient will complete a Payment/Reimbursement Packet as detailed in the Sub-Recipient Roles & Responsibilities area.

  3. Submit Payment Voucher to Auditing: Once the Payment/Reimbursement Packet is received, reviewed and approved,

    The Sponsoring Department should submit a copy of the Purchase Order and Payment/Reimbursement Packet from the sub-recipient and any back-up that is required to Auditing/Accounts Payable.

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