What does the term "substantial Federal involvement" mean exactly? I know that when it's anticipated it is the key difference between calling an instrument a grant or cooperative agreement. I always thought that "substantial Federal involvement" meant that an agency would somehow actively participate or provide direct oversight and control of a recipient or the recipient's activities.

Recently however, I have come to the conclusion that there are many who believe the difference between a grant and cooperative agreement lies in if the Government specifically dictates what activities will be performed by a recipient. I have limited knowledge on the subject, but I tend to disagree with this analysis. I believe that even if the Government specifies the activities to be accomplished by a recipient that this does not automatically mean that the instrument should be a cooperative agreement.

I guess what I'm trying to find out is what constitutes "substantial Federal involvement" and at what time during the grant and cooperative agreement process (pre-award or post-award) would substantial involvement have to occur to be able to determine what is the proper type instrument to use? Or in other words, is a cooperative agreement the proper instrument to use if the only involvement the Government will have is to specify the work the recipient will perform?

By bob antonio on Wednesday, November 15, 2000 - 08:03 pm:

If my memory is correct, The Grants and Cooperative Agreement Act was enacted in response to the Commission on Government Procurement from 1972. The background documents for the Commission are in green volumes and I think I can find them. The Act is a 1977 law and may also have a legislative history--that probably makes little sense.

I will see if I can find something.

By Carol Elliott on Thursday, November 16, 2000 - 10:19 am:

The criteria for distinguishing between grants and cooperative agreements is that for cooperative agreements, substantial involvement is anticipated between the agency and the recipient DURING performance of the activity.

If the recipient can run the project without the agency's collaboration, participation, or intervention then it generally should be a grant.

Some examples of anticipated involvement that could be considered substantial are:

(1) Agency authority to stop work if detailed specs, such as construction specifications, are not met. These would be in addition to the standard suspension remedies for nonperformance.
(2) Agency review and approval required at the completion of one stage of the work, prior to moving on to subsequent phases.
(3) Agency review and approval of subcontracts or subgrants that exceed standard regulatory approvals.
(4) Agency involvement in the selection of key personnel.
(5) Joint collaboration or participation with the recipient in performing the project.
(6) Agency monitoring of the work with the potential of the Agency redirecting work because of interrelationships with other projects.
(7) Direct Agency involvement to ensure compliance with cross-cutting statutory requirements.
(8) Highly prescriptive agency requirements prior to award limiting recipient discretion with respect to scope of services offered, organizations structure, mode of operations, and other management processes.

Examples of the type of involvement that is not considered substantial involvement include:

(1) Approval of recipient plans prior to award.
(2) Normal exercise of Federal oversight responsibilities, including performance reviews, financial reviews, site visits, audits, etc.
(3) Unanticipated involvement to correct deficiencies identified during performance.

Hope this helps.

Carol

By Anonymous on Thursday, November 16, 2000 - 10:48 am:

I might have found the answer to my question in an old coopertive agreement course manual. I would like some kind of feedback though. It (the course manual) says that the instrument should be a cooperative agreement if..."recipient can expect agency collaboration or participation in the management of the project" and should be a grant if the..."recipient can expect to run the project without agency collaboration, participation, or intervention".

The manual goes on to provide examples of agency activities during performance that dictates the proper instrument.

What I read makes me believe the key to understanding the term "substantial Federal involvement" is the anticipated level of Federal involvement during the performance or in the management of a project.

This now brings another question to mind. Can the Government specify the work to be accomplished under a grant or cooperative agreement? Or should the Government set programmatic parameters and allow the potential recipients to specify the work that will be done under a project?

Feedback appreciated.

By bob antonio on Thursday, November 16, 2000 - 12:31 pm:

Anonymous:

The concept of a "cooperative agreement" was developed in the 1972 Report of the Commission on Government Procurement, Vol. 3, p. 163.
There was confusion between grants, contracts and something in the middle of the two. In the area of federal assistance, the Commission found that "grant-type transactions vary according to the extent and type of interaction that occurs between the Government and the recipient during performance of the supported activity."

One of these transactions required "little or no Federal involvement during performance" and this is the common grant. The Commission noted that another type of federal assistance "is characterized by significant Federal involvement during performance. The programs or projects found in this second class of grant-type relationships are of such a nature that Federal/recipient interaction is necessary or desirable during performance to assure the solving of a problem or the production by the recipient of a useful product or service." The Commission included in this group relationships in which federal project management was useful, collaboration in performing the work is desirable, federal monitoring is desirable to permit direction or redirection of the work, federal direction is needed in research where standards are being developed.

The Commission recommended a new instrument called a "cooperative asgreement" to accomodate the assistance relationships requiring substantial Federal/non-Federal interaction during performance."

By Anonymous on Thursday, November 16, 2000 - 03:49 pm:

Thanks a lot for the information. Carol's example No. 8 provided the answer I was seeking.

"(8) Highly prescriptive agency requirements prior to award limiting recipient discretion with respect to scope of services offered, organizations structure, mode of operations, and other management processes."

If I am interpretting this correctly it means that the proper instrument to use when the Government is going to strictly dictate what the recipient will do under a project, is a cooperative agreement. This kills my earlier idea that linked "substantial Federal involvement" to performance. Also, I guess that means that the Government can strictly dictate the work to be done by the recipient.

Am I correct?

By carol elliott on Thursday, November 16, 2000 - 04:48 pm:

Anon,

The example has to do with Government requirements involving in the organizational structure of the recipient, not just the how the recipient plans to perform a particular scope of work. The reason this often requires a cooperative agreement is that when the Government gets involved in management issues of a private organization, it usually will require substantial Government involvement during the grant to monitor the organization and resolve operational issues.

Bob's right the key is the level of Federal involvement DURING performance. Even though the Government strictly dictates what the recipient will do, if this can be adequately spelled out in the grant and the Government won't have to be involved in oversight or monitoring in excess of the normal level of oversight; then you still have a grant.

As to the second question, I agree. Whether the instrument is a grant or a cooperative agreement, the Government can dictate the work the Government will support.

By Anonymous on Thursday, November 16, 2000 - 04:57 pm:

Thanks a bunch, both of you.