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  • Question

    Can you please provide a list of advantages/disadvantages to the government with using either a contract, or a cooperative agreement?


    Answer

    Research reveals there is no "one list" that describes advantages vs. disadvantages between Grant/Cooperative Agreements and Procurement Contracts; most likely due to the fact the rationale or purpose behind the action is different and depends primarily on who receives benefit/value, see the following table.
     
    Use When
    Grant Agreement (1) The principal purpose is to transfer a thing of value…to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and
    (2) Substantial involvement is not expected between the agency and the recipient.
    Cooperative Agreement (1) Same purpose as for grant agreement purpose [(1) above]
     
    (2) Substantial involvement is expected between the agency and the recipient.
    Procurement Contract The principal purpose is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government.
     
    Because of the rules and the authority (I won’t list all the citations) associated with issuing grants and cooperative agreements, it is not often the case that either instrument could be used.  As such, it probably depends greatly on the “circumstances” of your particular case which method would be a better choice.  The following table may provide some assistance:
     

    Qualitative Differences
    Assistance Acquisition
    Support or stimulation (invest) Purchase/acquire
     
    Public purpose Good or service purchased for the awarding agency
    Level of Support Price
    Partnership Buyer/seller
    No profit or fee* Profit allowed
    Unilateral right to terminate by the recipient Unilateral right to terminate by the Government
     
    * That is DoD guidance, some federal agencies are allowed to provide a fee mostly for small business reasons.  As with anything, this table is not all inclusive as there are almost always exceptions e.g. cost sharing contracts with no profit or fee and instances where the Government may terminate a grant, etc.
     
    It may be helpful to evaluate the purpose behind the funding being utilized for the Grant or Cooperative agreement or procurement action.  Typical funding rules:
     

    Appropriation Act [Title 31, U.S. Code, Sec 1301]
    •  AKA “The Purpose Statute”, requires funds to be used only for the purposes and programs for which the appropriation was made.
    •  Violations are misappropriations
    Anti-Deficiency Act [Title 31, U.S. Code, Sec 1341 & 1517] 
    •  Prohibits making or authorizing an obligation in excess of the amount available
    •  Forbids obligation to pay money from the US Treasury in advance of an appropriation
    •  Requires agency to fix responsibility for violations of the Act
    Bona Fide Needs Rule
    •  Requires funds to be used only for needs or services in the year of the appropriations obligation period

    An article on how the Bona Fide Needs Rule impacts Grants can be found at the following link:  http://www.wifcon.com/bona/bonafide10.htm  

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