What forms of government contract are used in business with the federal government?
UPDATED: December 13, 2019
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Doing business under a federal contract is different than doing business with a private entity. The government has special protections afforded to it as well as a special obligation to the people, and as such, each government contract is governed by specific rules. Because of these circumstances, there are several specific types of federal contract used by those who engage in business with the federal government.
Agreements with the Federal Government
Agreements between the federal government and private individuals and businesses generally take one of three forms:
- A procurement contract is the most common type of government agreement, and is used when the government and a private party wish to set up an arrangement in which the government receives property or services for use by the United States. The procurement contract protects the interests of both the government and the private party by laying out the details of the transaction. This is a type of purchase agreement, but the fact that the federal government is one of the parties involved means that certain regulations and requirements applicable to a government agreement must be met. If you are prepared to sign a federal government procurement contract, be sure you understand the specific rules of your agreement detailed in the contract.
- A federal grant is a financial assistance award given by the federal government out of federal revenue to another party. The assistance is typically used to carry out public support or support public stimulation. This type of government agreement can cover everything from non-profit organization grants to educational grants for individuals. Some federal grants are given via competitions, meaning the recipient has to apply and be selected in order to receive them. Others are given based on income, situation, or other factors. All federal grants will require the recipient to follow specific rules on how to spend the federal money, so be sure to understand the requirements of any federal grant when you accept one.
- A cooperative agreement controls transactions or transfers from the federal government to a state or local government, or to a non-profit entity, for the purpose of public support. This type of government agreement is similar to a federal grant, but the government and the other party are typically far less involved with one another in a grant than they are in a cooperative agreement. With a grant, the financial award is often given with little or no involvement between the two, whereas a cooperative agreement may require contracts or a negotiation of terms before the transaction officially takes place.
Getting Legal Help with Agreements with the Federal Government
If you are entering into an agreement with the federal government, you may wish to consult an attorney to look over that government agreement. This can help you protect your interests and ensure that the details of the government agreement are fair and correct. Any business conducted with the federal government will require restrictions on how money can be spent, regular reporting of the business, and a list of additional rules the parties must follow. You must know the rules before you can enter an agreement with the federal government, and an experienced attorney can help you understand the agreement you enter in to.