When does the federal government use a federal grant or a cooperative agreement?
The Government uses either a grant or cooperative agreement – instead of a procurement contract -- when the principal purpose of the relationship is to transfer something of value to a state or local government or a non-profit entity (and sometimes others) to carry out a public purpose. The purpose may be one of support or "stimulation" authorized by a law of the United States. That differs from the Government’s acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States.
A "grant" is used when substantial involvement is not expected between the Government and the recipient when carrying out the activity contemplated in the agreement.
A "cooperative agreement" is used when there is expected to be substantial involvement between the Government and the recipient when carrying out the activity contemplated in the agreement. See 31 U.S.C. sections 6304, 6305.
The rules applicable to Federal grants and cooperative agreements are generally found in agency regulations that implement Office of Management and Budget ("OMB") Circulars, such as OMB Circular A-102 and OMB Circular A-110.
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