You say tomato, and I say… well, tomato, but we mean completely different things.

When I first started in research administration, I thought the use of the terms “grant” and “contract” were interchangeable.  I figured when someone said “grant,” they were really talking about a contract.  After all, isn’t a grant a type of contract in terms of enforceability?  The answer is yes.  Gifts, grants, cooperative agreements, service agreements, contracts, etc. are all contracts in the purest sense of the definition, “a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.”  However, when we start talking Federal grants and contracts, a distinction clearly forms, and we quickly see that distinguishing between the two is not just a matter of semantics.

Award Mechanisms

Grants and contracts are mechanisms by which the Federal government moves funds into the public.  Grants, along with cooperative agreements, fall under an award type called assistance.  Assistance awards are a way in which the U.S. Federal government supports its citizens in areas of education, health, public welfare, and public works.  Assistance awards are administered by a majority of the Federal agencies and come in a variety of types (project grants, cooperative agreements, direct loans, Pell grants, community development block grants, and so on).

Contracts, on the other hand, are a type of procurement.  With a contract, the Federal government is looking to purchase goods and/or services.  The primary purpose of the Federal contract mechanism is to purchase services for direct benefit of or use by the U.S. government.

In addition to the purpose or intent of these two mechanism being different (assistance = support; contract = purchase), the regulations for the two differ (assistance = Uniform Guidance (UG); contract = Federal Acquisition Regulation (FAR)).  Look for more on government regulation, and differences between the UG and FAR, in a future blog.

Grants, Cooperative Agreements, and Contracts

Now that we’ve made the distinction between an assistance award and contract, let’s compare and contrast two types of Federal assistance awards- grants and cooperative agreements- and contracts in terms of their purpose and level of involvement with the sponsoring or authorizing/issuing agency.

Grants vs. Cooperative Agreements

In the table above you may have noticed that grants and cooperative agreements look similar.  Both are assistance mechanisms, both provide funds to support a public purpose, and both are governed by the terms of the award, the sponsoring agency, and Uniform Guidance.

With a cooperative agreement, the issuing agency is substantially involved with the implementation of the program or project being sponsored, whereas with a grant they are not.  For example, when an investigator writes a grant proposal, he or she is generating the idea, the objectives to be met, and the scope of work to be done.  With a cooperative agreement, the issuing agency might pre-determine the scope of work they want accomplished.

Cooperative Agreements vs. Contracts

The fact that the sponsoring or issuing agency might be involved with the program is confusing for some because all the sudden cooperative agreements start to look like contracts.  Typically with a contract, the issuing agency exercises a higher level of control over the work being done as they are purchasing a service.

Which Mechanism Should I Use?

The sponsoring or issuing agency will determine which mechanism is applicable.  So how does an agency decide whether to issue a grant, cooperative agreement, or contract?  Like many answers in research administration, “it depends.”  Dependent factors include the pot of money and rules and regulations surrounding that money; the purpose or intention of the program, and if the awarding agency needs to be involved with the programmatic implementation.  The Office of Management & Budget (OMB) provides guidance to the Federal agencies that helps them make the determination of which mechanism is most appropriate give the circumstances.

The important things for us to understand are:

• there are true differences between assistance awards (grants and cooperative agreements) and contracts in terms of purpose, regulations, and requirements; and
• we should always be aware of the type of award mechanism under which we are operating.

Resources

For more resources and an informative video on the differences between grants, cooperative agreements, and contracts, go to:

“What is the Difference Between a Grant and a Contract?” –David Mayo, YouTube video

“Federal Funding (Grants vs Cooperative Agreements vs Contracts)” –Purdue University