What is the purpose of grant agreements and cooperative agreements in public contracts with the U.S. federal government?
The federal government uses legal tools called “grant agreements” or “cooperative agreements” for certain types of public contracts. Typically these agreements are used in order to highlight the nature of the financial relationship between the government and the other contracting party.
Assistance-Based Public Contracts
Both grant agreements and cooperative agreements are used primarily in assistance-based financial relationships. “Assistance-based” refers to public contracts that are executed primarily for the purpose of transferring something of value. The recipient of the value is meant to be a state or local government, or even a non-profit entity.
Grants vs Cooperative Agreements
Assistance-based financial relationships carry out a public purpose. The purpose may be one of support or one of "stimulation," as authorized by a law of the United States. What separates grant agreements from cooperative agreements is the extent to which government staff will be involved in delivering the expected value to the public.
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 substantial involvement is expected. 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.
Other Types of Public Contracts
The assistance-based relationships highlighted by grant agreements and cooperative agreements represent just one type of financial relationship. The federal government often executes acquisition-based relationships using public contracts as well, but these are classified differently from the assistance-based relationships described above. As the name implies, the government’s purpose in the latter type of relationship is acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States.
If you have any further questions about public contracts or are engaged with the government in a public contract, you should consider pursuing the support of a qualified attorney specializing in the law of non-profit entities. Government law can be difficult to grasp, with serious consequences for making even minor procedural mistakes. Having an experienced legal representative on your side will help ensure you reap all the benefits you can from contracting with the United States government.