# Presentation: 750360

## Acquisition vs. Assistance:How Contracts Differ from GrantsInteragency Agreements

- Georgia Hubert
- Federal Assistance Director
- Office of the Procurement Executive
- U.S. Department of State
- October 23, 2002

## Acquisition

- What is a procurement contract?
- Principal purpose of the relationship is to acquire by purchase, lease or barter, property or services for the direct benefit of the Federal Government.
- Use a procurement contract when the principal purpose is:
- To acquire property or services
- For the direct benefit of the USG

## Acquisition Definitions – FAR 2.101

**Acquisition** = the acquiring by contract with appropriated funds of supplies or services (including construction) ***by and for the use of the Federal Government*** through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated.

## Acquisition Definitions – FAR 2.101

**Contract** = a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them.

- Contract

## Acquisition

- “Every agency has inherent authority to enter into contracts to procure goods and services for its own use, as long as the purpose of the procurement is reasonably related to the agency’s mission.”
- GAO *Principles of Federal Appropriation Law,* 2d ed. at 10-11

## Assistance

- “However, there is no comparable _inherent_ authority to give away the government’s money or property. . . to benefit someone other than the government; this must be authorized by Congress.  Therefore, the agency’s basic legislation must be studied to determine whether an assistance relationship is authorized at all, and if so, under what circumstances and conditions.”
- GAO *Principles of Federal Appropriation Law*, 2d ed. at 10-11

## Assistance

- Use a **grant agreement** when the principal purpose is:
- To transfer a thing of value;
- To carry out a public purpose of support or stimulation;
- Authorized by law; *and*
- Substantial involvement is _not_ expected

- Use a **cooperative agreement** when the principal purpose is:
- To transfer a thing of value;
- To carry out a public purpose of support or stimulation;
- Authorized by law; *and*
- Substantial involvement _is_ expected

## Substantial Involvement

- Gives the USG greater control over the project
- Does _not_ include:
- Approval of recipient plans or applications
- Normal Federal stewardship, e.g., site visits, performance and financial reporting, audits
- General statutory requirements agreed to in advance, e.g., civil rights, environmental protection, provisions for handicapped
- General administrative requirements in OMB Circulars and 22 CFR Parts 135, 137, and 145

## Assistance

**Key Question:**  Is the principal purpose to serve the immediate needs of the federal government, or is it to provide assistance to a non-federal entity in serving a public purpose?
- Grants and cooperative agreements are not “procurement contracts,” but they are contracts, requiring actions by the recipient – otherwise, without such requirements, they would be gifts.
- 10 *Nash & Cibinic Report* p 2 (Jan 1996)

## Assistance Authorities

- Federal Grant and Cooperative Agreement Act does not provide authority to award grants.
- Normally, the authority to award grants is in the basic legislation for each agency.
- Statutory authority to make grants is limited to specific annual amounts or authorizations.
- Authority of heads of agencies is constrained by various OMB circulars and regulations.

## Grants Officer Appointment

- Must have separate Grants Officer warrant
- Appointed by the Procurement Executive
- DS-Form 1859
- Issued to individuals, not positions
- DOS employees with Contracting Officer warrant do _not_ have inherent authority to award grants or cooperative agreements

## Interagency Acquisition

- A procedure by which one Government agency needing supplies or services (the requesting agency) obtains them from or through another agency (the servicing agency)

- FAR 17.501

## Economy Act (31 U.S.C. 1535)

- An agency may place orders with any other agency for supplies or services that the servicing agency may be better able to supply, render, or obtain by contract, if it is determined by the head of the requesting agency , or designee, that it is in the Government’s interest to do so.

- FAR 17.502

## Economy Act

**Requirements for Use**
- Legal authority for the acquisition exists
- Action does not conflict with any other agency’s authority and responsibility
- The acquisition conforms to the FAR requirements regarding contractor versus Government performance

- FAR 17.503

## Interagency Acquisitions

- Cannot be used as a means to avoid FULL AND OPEN COMPETITION!
- The Government Contracts Reference Book, p. 229

- FAR 6.002

## State First Policy for Acquisition

- Bureaus and offices may only transfer funds to another agency for acquisition services after formal consultations with their contracting office and in strict adherence to the DOSAR.
- Maintains contracting and fiscal accountability where it belongs – at the Department of State.

## Foreign Assistance Act (sec. 632)

- Codified at 22 U.S.C. 2392
- President may *allocate or transfer* funds to any agency of the USG for the procurement of commodities, defense articles, military education and training, or services (including defense services).
- Funds available for obligation for authorized purposes, in accordance with granted authority or under authority of the USG agency to which such funds are allocated or transferred.

## Foreign Assistance Act – Allocation versus Transfer

**Allocation**
- Funds remain in USAID’s account
- USAID retains some financial responsibility
- Recipient agency provides periodic financial reports to USAID

**Transfer**
- Reapportionment by OMB
- Moves funds to recipient agency’s appropriation account
- Legal augmentation of recipient agency’s appropriation

## Foreign Assistance Act – Sec. 632(b)

- Similar to an Economy Act IAA
- USAID is the requesting agency
- IAA should include:
- Scope of work, budget, and other applicable terms and conditions
- Reporting requirements for servicing agency
- USAID monitors both financial and programmatic performance

## Foreign Assistance Act – Sec. 632(b)

**Applicable DOSAR Sections**
**617.502-70(a)(2)(iv) – clearance with budget office**
**617.504-70(a) – individuals authorized to execute**
**617.504-70(b) – use of DS-1921, if requesting agency does not have own form (USAID has one – it is acceptable)**
**617.504-70(c)(3) – clearance by L**
**617.504(d)(4) – IAA manager must consult with appropriate contracting activity before IAA is signed**
**617.504(d)(5) – uniform numbering system**