Every county, and even many vendors, subgrant DHS funding to other agencies. On occasion, a granting agency may encounter a situation where a prospective subgrantee has particular characteristics which create a higher than usual risk of having problems in administering the subgrant. The subgrantee, for instance, may have a history of unsatisfactory performance, being financially unstable, and/or not having a reliable financial reporting system. Even when these problems exist, however, it is not always feasible to award the subgrant to a different agency.
In these situations, the granting agency may wish to consider imposing special conditions or using other techniques to protect the funding. The federal Common Rule, or the federal "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," lays out some criteria for identifying "high risk" agencies and some possible actions to take when contracting with these agencies. The Common Rule is available in chapter C2 of the Financial Management Manual, but the portions relevant to high risk agencies are included below.
Counties may find the federal guidelines useful in developing criteria to use in identifying subgrantees which are experiencing particularly difficult problems, and in identifying possible options for taking action. The attached information also may point to the types of information a granting agency may wish to routinely collect from all subgrantees as part of a larger information collection and tracking system to be used in flagging "high risk" subgrantees. The excerpted information also can serve to remind a granting agency that authority does exist for that agency to take more rigorous action, when necessary, to devise more stringent controls and tighter contract language in order to adequately monitor the use of federal and state funds.
FEDERAL "COMMON RULE" GUIDANCE ON "HIGH RISK" SUBGRANTEES
"'____.12 Special grant or subgrant conditions for "high-risk" grantees.
"(a) A grantee or subgrantee may be considered "high risk" if an awarding agency determines that a grantee or subgrantee:
"(b) Special conditions or restrictions may include:
"(c) If an awarding agency decides to impose such conditions, the awarding official will notify the grantee or subgrantee as early as possible, in writing, of:
NOTE: See the "Common Rule" for a discussion of the management standards. DHS has adopted a majority of these standards and they are reflected throughout this manual.
Special Conditions for High Risk Grantees
Last Revised: October 2, 2019