The government applies standardized procedures and utilizes a variety of mechanisms to buy products and services from suppliers who meet certain qualifications. The Federal Grant and Cooperative Agreement Act of 1977 (41 USC 501) guides government agencies in their use of federal funds to distinguish between contracts, grants, and cooperative agreements. The central issue is the “primary purpose” of the action or relationship.  

Contracts 

The most common mechanism is a contract. A contract is how the U.S. Government purchases or procures products or services that are for the direct benefit and use of a government agency. A contract is a legally binding agreement that is governed by the Federal Acquisition Regulation (FAR). 

A contract provides the government greater accountability and control over implementation as the statement of work is negotiated and stipulates specific actions/deliverables, key personnel require government review and approval, government penalties can be exercised, and there are standard contracting provisions to protect the government’s interests. Contract vehicles are examples of these FAR-based contracts, but there a many contract types and contract methods. 

Grants 

For federal grants, the principal purpose is to transfer something (usually money) to “carry out a public purpose of support or stimulation authorized by a law.” Grants support critical recovery initiatives, innovative research, and many other programs listed in the Catalog of Federal Domestic Assistance (CFDA). Grant opportunities are commonly found at grants.gov.  

Cooperative Agreements 

The main difference between a grant and a cooperative agreement is that in a grant, not much substantial interaction occurs between the federal government and the awardee. In a cooperative agreement, there is significant involvement by the federal government associated with the stated agreement. 

Other Transaction Agreements (OTAs) 

OTAs are defined in law by what they are not rather than what they are. Only the Department of Defense and select civilian agencies such as NASA and DHS have authority from Congress to conduct OTAs. OTAs offer greater flexibility in tailoring terms to a particular project and the needs of the participants. Every clause is negotiable; however, they often contain clauses like those found in FAR-based contracts. Consortia are often found in OTAs, but are not required. The Other Transaction (OT) consortium model is an “enterprise partnership” between the government and solution providers in a specific domain. OTA awards have grown exponentially in recent years. 

OTAs are a tool in the government’s toolbox and another route to market for some companies. Often government views them as an “easy button” for faster contracting when in reality both government and industry need to go in eyes wide open with explicit objectives and terms. There are a lot of considerations that must be accounted for before an OT is awarded and a lot of FAR-based thinking that needs to go out the window. Standalone OTs are usually the most difficult to negotiate. Consortium based OTs are usually far more streamlined because the contracting activity usually insists upon one basic OT package and one basic type of award. The actual selection process, however, can certainly be tailored to what the government customer is looking for. Regardless, once the competition is completed, it is exceedingly difficult to go back and make changes.  

Additional Non-Traditional Mechanisms 

The Department of Defense and select civilian agencies are allowed to conduct Commercial Solutions Opening Pilots (CSOPs) a competitive process to obtain solutions or new capabilities that fulfill requirements, close capability gaps, or provide potential technological advances. Broad Agency Announcements (BAAs) are a technique for the government to solicit ideas from outside groups for certain basic and applied research. The agency can then select ideas to fund as contracts or grants. Challenges and prize competitions are also widely used across all agencies. These generally lower dollar awards allow for nearly any citizen the opportunity to respond to a government problem. 

Different Mechanisms = Different Partners 

Government has a range of engagement options to choose the mechanism and the partner in the best position to meet their evolving and unique needs. Partners/companies examine the purpose, desired outcomes, their capabilities matched against the government requirement, their experience, financial structure, etc. Some private sector partners are unable to support the government when a contract is not used because of financial caps on overhead costs or legal risks.  

Jefferson helps clients navigate the competitive and acquisition landscapes to position for contract wins and successful contract performance.