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Does the U. S. Congress Violate The Grants and Cooperative Agreement Act?

By bob antonio on Friday, June 15, 2001 - 07:20 am:

Last week someone mentioned that quite a few grants should be contracts in accordance with the law noted above. Some of the notices for grants and/or cooperative agreements that I post may be more appropriately issued as a request for proposal and then awarded as a contract. A typical second-guesser would immediately blame the grants officer. However, I think there may be something more to this assuming that a thorough analysis proves that some grants should be contracts.

I have also noted that proposed grant and cooperative agreement legislation may provide for services that could be done through contract. However, my memory tells me that the legislation states that it should be a grant or cooperative agreement. That would put the authorizing legislation, if enacted, in conflict with the law named above.

Have any of you experienced any examples of grants or cooperative agreements that should be contracts under the above law but are directed to be grants under another law?

By Anonymous on Wednesday, June 20, 2001 - 12:55 pm:

Yes. My agency went so far as to change it's appropriation language to allow for such actions. The language provides us with a new agreement category called a "non-assistance cooperative agreement". The instrument allows us to accomplish non-competitive procurement actions, as long as the recipient has a mutual interest in the undertaking and makes a nominal contribution it's own resources. The instrument is not limited to any particular type of recipient. The "non-assistance cooperative agreement" is outside the FGCA, but we must use our agency Federal Grant and Cooperative Agreement Handbook for our guidance.

By formerfed on Thursday, June 21, 2001 - 07:22 am:

The type of agreement Anon mentions is fairly common and goes back many years. Many agencies use this type of arrangement termed "joint project" agreement. The key piece is both sides (government and other organization) have to contribute resources. The intent is for both to split costs, but it often happens the government provides money while the other side provides time, facilities, and other expenses. Depending on the circumstances, it can look like a grant or a contract. In any event, they are always noncompetitive. This also has been around so long most agencies have the authority spelled out in their chapter of the CFR.

By bob antonio on Thursday, June 21, 2001 - 08:26 am:


Is it possible to distinguish the item you mention from a non-competitive "assistance cooperative agreement" where the government and recipient share the costs?

By formerfed on Thursday, June 21, 2001 - 10:36 am:

I don't know if I can make a clear distinction. Joint project authority is supposed to be used where some entity and the agency share a common interest in exploring something. Actual dollar costs don't have to be shared, but each party is supposed to make comparable contributions. Typically the Government puts up money but the other institution doesn't. Instead, they offer use of their facilities or have graduate students work on a program. It's used with educational institutions, non-profits, state and local governments, and even foreign entities with prior State approval. I believe in most cases, the power to enter into these are with the Secretary but that obviously is delegated to a lower level.

By Anonymous on Thursday, June 21, 2001 - 02:21 pm:

We have had "joint agreement" instruments available for some time. They differ from our "non-assistance cooperative agreements" because they must be outside the scope of both procurement and Federal assistance (outside the FGCAA). Our "joint agreements" require both parties to contribute approximately equal funds or tangible resources. They are similar in that both can be entered into with almost any type of entity (both Federal and non-Federal) and both parties must have mutual interest and share responsibility in the undertaking.

Our "joint agreements" fall under a category of agreements that my agency terms "working agreements". "Working agreements" include those instruments outside the FGCAA, e.g., interagency agreements (Economy Act), contribution agreements, MOU's, and agreements for our services with state and local governmental entities (Intergovernmental Cooperation Act of 1968).

Sometimes the hardest part of writing an agreement is determining which instrument best fits the situation.

By Anonymous on Wednesday, June 27, 2001 - 10:09 am:

In reading through this discussion, I am hit with the "So what?" question. Besides sidestepping the intent of the law, what are some of the effects of awarding cooperative agreements or grants for efforts more appropriately procured with a contract?

By carol elliott on Wednesday, June 27, 2001 - 03:14 pm:

There are some significant differences between financial assistance and contracts. Financial assistance is essentially a cost reimbursement instrument and the awardee is only obligated to provide their best efforts. Especially with grants, but even with cooperative agreements, the Government is limited in their level of oversight and involvement. There is no termination for convience provisions and since it is "best efforts ", termination for default is difficult.

Audits are reduced. Many offices rely on an annual audit performed by a commercial CPA firm hired by the non-profit firm to ensure that accounting systems comply with cost principles. Since the systems are acceptable, they further presume that cost reported under the grant complies with cost principles and are acceptable. There is often no audit of cost incurred under individual grants/cooperative agreements, even though it is suppose to be cost reimbursement, not fixed price.

The funds are generally paid out in advance of the expenses being incurred and there is usually no provisions to withhold a portion of the funding prior to closeout. When the grant is for a research project, study, etc. It is not unusual to have the final report be late, inadequate, or simply not turned in.

Altough some specialists include it, there is no requirement for past performance to be considered in competitive awards. The responsibility determination is a lower standard than required for contracts. I've seen several non-profit organizations receive mult-million dollar grants with little to no experience, staff, or assets. If performance is unsatifactory and/or costs are disallowed, there are no assets to repay the Government.

Of course, I'm generalizing many of the differences. Some organizations impose more requirements than are required by the OBM circulars to address some of these problems. Grants and cooperative agreements with States, State supported universities, and local governments generally don't need additional requirements, because they have adequate systems in place. Grants and cooperative agreements work well to accomplish activities that are intended to, helping the community as a whole.

If the end product is neccessary to accomplish an agency's mission it should be a contract. It is the only way the agency has the tools necessary to make sure that the product is delivered.

By bob antonio on Thursday, June 28, 2001 - 07:49 am:


Carol provided a good explanation of key differences. There is one item I will add. The Grants and Cooperative Agreement Act of 1977 was enacted to define when federal agencies are to use procurement contracts, grants, and cooperative agreements. Federal agencies were using federal assistance instruments to avoid the competition requirements for procurement contracts.

In reviewing hundreds of pieces of legislation for federal assistance, I noticed that some legislation specifically directed awards as either grants or cooperative agreements. I also noticed some agencies' requests for applications appear to be more in line with meeting the needs of a federal agency and not to serve a "public purpose."

That led me to wonder if Congress requires federal assistance awards in legislation where a procurement contract is more appropriate. If that is the case, then Congress is bumping into its own law.

By formerfed on Friday, June 29, 2001 - 01:06 pm:


Congress did something rather strange a few years ago. Apparently several members wanted to help a local university get a bigger computer center. Two agencies (one civilian) each received several million dollars in their appropriation for the purpose of having the university provide computing help through the establishment of a data center. Both agencies struggled with how to accomplish it for months. Was this a contract? If so did the legislation provide sole source authority? Was it financial assistance? The civilian agency didn't have specific authority to award grants but the other did. That caused concern on whether it is proper to take another agencies appropriation to supplement your grant. It was only the annual FY deadline that forced things to finally happen.

So, after seeing that, I don't believe Congress often thinks things through as we might imagine.