Jim

Whenever possible, I would structure a prime awardee's
relationship with a for-profit organization as a
procurement-type subcontract rather than a subaward of
financial assistance.  In practice, the involvement of for-profit
organizations in federal grant-funded projects is almost
always providing goods and services of a technical nature
rather than receiving federal financial assistance.   And
treating the for-profit as a procurement subcontractor
excuses the prime grantee from the for-profit subrecipient
monitoring requirements of  A-133, Section .210(e).

However, if this option is not possible, I think a well-crafted
subcontract with the for-profit subrecipient that contains the
requisite prime grant flowdown requirements, clearly-stated
performance obligations with progress payments tied to
performance, periodic progress reporting, audit and
inspection rights and remedies for nonperformance would
be sufficient to satisfy A-133, Section .210(e)'s for-profit
subrecipient monitoring requirements.   As long as the
subrecipient performed, no further oversight would be
needed.  If the sub fails to perform, "monitoring" consists of
exercising your contractual remedies.

Of course, this makes the award to a for-profit subrecipient
essentially the same as a procurement subcontract, but
that's my point-transactions with commercial firms are best
characterized as business deals, not financial assistance
relationships.

Good luck!

Jim Simpson
General Counsel
Public Health Institute
2001 Addison St., 2nd floor
Berkeley, CA 94704
xxxxxx@publichealth.org
(510) 644-8200

 <xxxxxx@MAXEY.DRI.EDU> 09/22/97 06:51pm >>>
At our latest A-133 audit a question came up about the new
requirement/threshold for monitoring sub-recipients,
particularly how they apply to for-profit private firms.  My take
was satisfactory performance in the opinion of the PI, and
our standard review of invoices before payment was
sufficient.  Our auditor seemed to think we should consider
more review, up to considering on-site audits.  Any rational
suggestions for policy or procedures to handle this would
be appreciated.

Thanks,

Jim Romaggi
Desert Research Institute
Reno, Nevada