• Background
• Types of Financial Assistance
• Cooperative Agreements
• Procurement Contracts
• Other Types of Agreements
• Grants

Background

The primary goal of federal financial assistance is to further a public purpose. There are two primary types of financial assistance awards grants and cooperative agreements. The Federal Grant and Cooperative Agreement Act of 1977, as amended, 31 U.S.C. § 6301-6308, (the Act) requires executive agencies to distinguish procurement relationships from assistance relationships with non-Federal parties and provides some general guidance to assist agencies in making these distinctions. The Act requires the use of procurement contracts for all agency acquisition activity and the use of financial assistance instruments (grants and cooperative agreements) for specified types of assistance relationships. Based upon this distinction, this chapter focuses primarily on financial assistance rather than procurement relationships, the characteristics of each type of assistance agreement, and provides guidance on distinguishing which type of assistance agreement is most appropriate given the specific situation.

Assistance agreements can vary depending on the type of legislative authority, type of awardees and type of program. They are normally cost-reimbursable agreements, only permissible charges directly related to the project, and the agreed-upon rate of indirect costs. These costs may be provided in advance via funds transfer or reimbursed to the grantee through a vouchering process. Most FMCSA grants operate on a reimbursement process. These agreements include deliverables but may require other submissions or objectives described in the award document and attachments.

The following three factors affect the decision to award assistance as a grant or cooperative agreement. However, final determination on which legal instrument to use should always be coordinated with MC-CC:

• Legislative or statutory authority: Federal agencies must be authorized by statute to stimulate or support an activity. This statutory authority from Congress must exist either in broad legislation or in a program-specific statute. Without any statutory or legislative authority, a Grants Officer may not use an assistance instrument.
• Principal purpose: If the primary purpose of a project is to support or stimulate a public purpose, a grant or cooperative agreement is appropriate when there is also statutory authority for the agency to provide that support or stimulation.
• Degree of Federal Government involvement: The distinction between a grant and a cooperative agreement is the expected level of Federal involvement and direction. If substantial involvement by the Government is anticipated, a cooperative agreement should be used. If substantial involvement by the Government is not anticipated, a grant should be used.

Types of Financial Assistance

Grants

Cooperative Agreements

A cooperative agreement is the legal instrument reflecting a relationship between FMCSA and a recipient whenever:

• The principal purpose of the relationship is to transfer money, property, services, or anything of value to accomplish a public purpose of support or stimulation authorized by Federal statute
• There is substantial involvement (e.g., collaboration, participation, or intervention by FMCSA in the management of the project) anticipated between FMCSA and the recipient during performance of the contemplated activity. See 31 U.S.C. 6305.

Cooperative agreements are subject to the same laws OMB, Treasury, and other Federal directives as grants.

The following are examples of oversight activities that would demonstrate substantial involvement by the Agency if they were included in the terms and conditions of a financial assistance award:

• Authority to halt an activity immediately if detailed performance specifications (e.g., construction specifications) are not met;
• Stipulation that the recipient must meet or adhere to specific procedural requirements before subsequent stages of a project may continue;
• Approval by an appropriate FMCSA official of substantive provisions of proposed sub-awards;
• Involvement in the selection of key recipient personnel;
• Requirement that the appropriate FMCSA official collaborate with the recipient by working jointly with a recipient scientist or technician in carrying out the scope of work;
• Requirement to train recipient personnel or detail Federal personnel to work on the project effort;
• Specify direction or redirection of the scope of work due to inter-relationships with other projects, such as requiring recipients to achieve a specific level of cooperation with other projects; and
• Limitation on recipient discretion with respect to scope of work, organizational structure, staffing, mode of operations and other management processes, coupled with close monitoring of operational involvement during performance.

For more detailed examples, see the OMB guidelines, "Implementation of Federal Grant and Cooperative Agreement Act of 1977" (43 FR 36860).

Procurement Contracts

A Procurement Contract is a legal instrument reflecting a relationship between FMCSA and a business, organization or individual whenever:

• The principal purpose of the relationship is the acquisition by purchase, lease, or barter, of property or services for the direct benefit or use of the Federal Government
• It is determined in a specific instance that it is appropriate to use a type of procurement contract

Procurement Contracts are governed by the Federal Acquisition Regulation (see 31 U.S.C. § 6303) and will be awarded and administered in accordance with the provisions of the Federal Acquisition Regulation (FAR), the Transportation Acquisition Regulation (TAR), the Transportation Acquisition Manual (TAM), and other FMCSA directives covering contracting activities. FMCSA contracts are awarded by the Office of Acquisitions Management.

A procurement contract should be used when acquiring the following:

• Supplies to support day-to-day operations
• Evaluation (including research of an evaluative nature) of the performance of government programs, projects, or activities initiated by FMCSA
• Goods and services for a third party, including those receiving grants or cooperative agreements (for example, where a National Training Center contract for the development of training courses that are provided to State and local law enforcement agencies).
• Surveys, studies and research which provide specific information needed by FMCSA for its direct activities
• Conferences conducted on behalf of the FMCSA
• Consulting or professional services of any kind if provided to FMCSA
• Production of publications or audiovisual materials required primarily in support of the conduct of direct operations of FMCSA
• Design or development of items for FMCSA use or pursuant to FMCSA definition or specification
• Generation of management information or other data for internal FMCSA use.

Other Types of Agreements

There are transactions and other types of legal transactions other than grants, cooperative agreements, and procurement contracts under which FMCSA can enter into a relationship with outside entities. The Grant Manager, MC-CC, and Acquisitions Office of Acquisition Management can offer advice and assistance with respect to the appropriate instrument to be used in any specific set of circumstances. However MC-CC will make any final determinations as to the appropriate instrument to be used.

One example of another type of assistance agreement is an Economy Act Agreement. The Economy Act, 31 U.S.C. 1535, authorizes Federal agencies to place orders with other Federal agencies for goods or services and to pay the actual or estimated costs of the goods or services, when certain conditions are met.