A federal contract is used where the principal purpose is to acquire property or services for the direct benefit of the U.S. Government (31 USC 6303). In contrast, the U.S. Government uses grants to carry out a public purpose of support or stimulation (31 USC 6304). Accordingly, grants are more flexible in their terms and conditions than contracts since the intent with grants is more general in nature. Some important differences between contracts and grants are:
- Terms: Contracts are governed by relatively strict terms and conditions, including clauses from the Federal Acquisition Regulations. Grants are governed by the terms of the Notice of Award (NOA), in accordance with the NIH Grants Policy Statement.
- Statement of Work: The SOW associated with a federal contract is carefully constructed in conjunction with applicable U.S. Agency and often include specific deliverables and milestones. The failure to provide the final deliverables and milestones may have serious ramifications. Grants have more flexibility with the associated scope of work. The primary requirement associated with a grant is reasonable due diligence is efforts to advance the research.
- Reporting: With contracts, there are usually frequent reporting requirements and a constant need to keep the applicable U.S. Agency updated on the conduct under the contract and results. With grants, there is usually only an annual reporting requirement.
Federal Contract Proposals v. Federal Grant Proposals
Most solicitations should indicate when funding will be awarded under a federal contract as opposed to a federal grant. If there is uncertainty with this, there are a number of other indicators one can use to identify a federal contract.
- If the award or solicitation contains references to the Federal Acquisition Regulations (FARs or DFARs for DOD contracts), this is a good sign that the project is funded through a Federal Contract.
Examples of FAR Clauses are: FAR 52.227-14 – Rights in Data, General; DFAR 252.225-7001 - Buy American Act and Balance of Payments Program; or HHSAR 352.224-70 - Privacy Act.
- If the sponsor is the NIH, the Contract Number will begin with HHSN or N01.
- The cover page of the contract, in most cases, will also indicate that it is a Federal Contract. For Example: If Section I, Contract Clauses has an X next to it and/or the signature block section is checked to indicate Negotiated Agreement/Contractor Required to Sign (usually block 17).