Annex E: FAM Part 2 - General Requirements for Federal Assistance

CHAPTER 2-100

USING CONTRACTS, GRANTS AND COOPERATIVE AGREEMENTS

2-100-00 What does this chapter do?

2-100-10 Where do these requirements come from?

2-100-20 Why does it matter whether we use a contract, grant or cooperative agreement?

2-100-30 What is the difference between procurement and assistance?

2-100-40 What transactions should be contracts?

2-100-50 What transactions should be grants or cooperative agreements?

2-100-60 What is substantial OSMRE involvement during program performance?

2-100-70 What procedures will we follow when we determine whether to use a contract,

grant or cooperative agreement?

2-100-80 Can a single assistance agreement include both grant and cooperative agreement

components?

2-100-90 Can we get an exception to this policy?

2-100-100 Can we award an assistance agreement to a single source without competition?

2-100-00 What does this chapter do?

A. This chapter explains how we, the Office of Surface Mining Reclamation and

Enforcement (OSMRE), determine whether we should use a contract, a grant, or a

cooperative agreement to award Federal funds.

B. This chapter also defines procurement and assistance, and explains the differences

between them.

C. This chapter does not cover intra-agency or interagency agreements or memoranda of

understanding. It also does not apply to licenses, sale documents, leases and special use

permits unless they are for purposes of public support or stimulation.

2-100-10 Where do these requirements come from?

The Federal Grant and Cooperative Agreement Act of 1977, as amended (31 USC 6303) 

establishes the distinctions between Federal assistance relationships, and Federal procurement 

relationships. 

2-100-20 Why does it matter whether we use a contract, grant or cooperative agreement?

Federal law establishes different legal requirements for procurement and assistance relationships. 

If we select the wrong instrument, we will be in violation of the law. Department of Interior 

Inspector General audits have repeatedly found serious problems with misuse of contracts, 

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grants, and cooperative agreements. OSMRE offices must select the appropriate type of 

agreement.

2-100-30 What is the difference between procurement and assistance?

A. The main purpose of a procurement action is to acquire property or services by purchase,

lease, or barter for the use or direct benefit of the Federal government. We use a contract

as the legal instrument to award a procurement action.

B. The main purpose of an assistance action is to transfer money, property, services, or

anything of value to the recipient in order to accomplish a public purpose of support or

stimulation. The agency must have legal authority to award assistance agreements for

this purpose. We use either grants or cooperative agreements to award assistance funds.

2-100-40 What transactions should be contracts?

A. We must use a procurement contract when our main purpose is to get services or property

by purchase, lease, or barter, for our use or direct benefit.

B. We may also use a contract in a specific instance if we determine that an emergency

project contract is appropriate. This allows us to determine when we can satisfy specific

public needs best by using the procurement process. However, we cannot use this

provision to circumvent the legal requirements for use of procurement or assistance

instruments. This authority must be used only in extraordinary circumstances with the

approval of the Assistant Director, Program Support (AD-PS) in coordination with the

Assistant Director, Finance and Administration (AD-F&A).

C. We would normally use contracts for the following purposes.

1. To assess the performance of Federal programs or projects or recipient activity.

This does not include research of an evaluative character unless we initiate the

request for its performance.

2. To provide professional or technical support services for us or any third party.

This does not include services rendered by a state or local government, Indian

tribe, or professional group to its own constituency or members.

3. To conduct surveys, studies, and research to provide specific information for our

use or for public release.

4. To conduct training where we select the individuals or groups to be trained or

specify the content of the curriculum (not applicable to fellowship awards).
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5. To publish or produce materials in any media, except for the results of research 

projects, or the proceedings of scientific conferences, which are not for our use.

6. To design or produce items for our use, or subject to our specifications.

7. To conduct conferences on our behalf.

8. To develop plans, management information, or other data for OSMRE use.

2-100-50 What transactions should be grants or cooperative agreements?

A. We will normally use grants or cooperative agreements for the following purposes:

1. General financial assistance to eligible recipients for a public purpose of support 

or stimulation under specific authorizing legislation.

2. Financial assistance for a public purpose to a specific program activity eligible for 

such assistance under specific authorizing legislation.

B. We use a grant when no substantial involvement is anticipated between us and the 

recipient during the performance of the proposed assistance activities.

C. We use a cooperative agreement when substantial involvement is anticipated between us 

and the recipient during program performance.

D. We will decide whether to use a cooperative agreement or a grant for a specific award 

based on the need for us to have substantial programmatic involvement in the activity. 

E. Some programs require the use of cooperative agreements exclusively, such as the 

Watershed Cooperative Agreement Program. We make this determination for the entire 

program based on statutory requirements or policy level determinations that program 

performance will require substantial Federal programmatic involvement. Other programs 

may use a mix of grants and cooperative agreements, depending on the nature of the 

project or the abilities of the recipient. For example, we may start out a project with a 

cooperative agreement, but use grants in later years if the project no longer needs our 

substantial involvement.

2-100-60 What is substantial OSMRE involvement during program performance?

A. We may consider the following activities as substantial involvement in program 

performance, depending on the specific circumstances.

1. We have an option to halt an activity immediately (for example, if construction 

specifications are not met).
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2. Requiring you to get our approval of one stage of program activity before you can 

begin work on a subsequent stage within the performance period of the assistance 

agreement. However, this example does not suggest the use of cooperative 

agreement when we reserve the right to approve or disapprove a subsequent grant, 

provided each grant is a separate instrument.

3. Approving, or helping you select, recipients of contracts or subgrants you award 

under the assistance instrument, if this level of involvement is required by law or 

authorized by waiver.

4. Helping you select your key personnel. However, a research project which 

provides in the award for the participation of a named principal investigator 

would not by itself justify use of a cooperative agreement.

5. Collaborating or participating jointly with you to perform the program activities.

6. Monitoring performance to provide specific direction or redirection of the work.

7. Setting requirements before the award limiting your discretion over the scope of 

services offered, organizational structure, staffing, mode of operation, and other 

management processes. Closely monitoring or working with you to ensure 

compliance with these requirements beyond the exercise of normal Federal 

stewardship.

B. We do not consider the following activities to be substantial involvement in program 

performance.

1. Approving your plans before we award the agreement.

2. Performing normal Federal stewardship responsibilities during performance to 

ensure that the objectives, terms and conditions of the award are accomplished. 

This could include site visits, and reviewing and responding to your program, 

financial, and audit reports.

3. Reviewing your performance after the project is completed. 

4. Enforcing legal requirements such as civil rights, environmental protection, and 

provisions for the disabled.

5. Enforcing general fiscal and administrative requirements such as those included in 

OMB regulations.
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6. Becoming more involved than we expected because of problems in your program 

or financial performance.

C. We do not consider providing technical assistance, advice, or guidance to you as 

substantial involvement during performance, if any of the following conditions are met.

1. We provide the assistance at your request.

2. We do not require you to follow the advice.

3. We do require you to follow our guidance, but we provide it before the project 

starts and we informed you of this requirement before we awarded the agreement.

2-100-70 What procedures will we follow when we determine whether to use a contract, 

grant or cooperative agreement?

A. Any program announcement, public notice, solicitation, or request for applications or 

proposals must show whether the relationship will be procurement or assistance and 

whether the agreement will be a contract, grant or cooperative agreement. For 

cooperative agreements, the announcement must include an explicit statement of the 

anticipated Federal programmatic involvement.

B. Decisions on whether to use a contract, grant or cooperative agreement must be justified 

and documented in the official file. Our written determinations must contain complete 

information on the nature of the relationship between us and the recipient to justify the 

selection of the award instrument.

C. If major individual transactions or programs contain elements of both procurement and 

assistance in such a way that they cannot be characterized as having a principal purpose 

of one or the other, the awarding office should seek initial guidance from the AD-PS. 

D. We will request guidance from the Office of the Solicitor as needed. Upon request, the 

Solicitor may review new programs or policies, or a proposed cooperative agreement or 

grant which is of such complexity or novelty that it raises issues justifying legal review. 

Cooperative agreements and grant awards issued under well-established programs should 

not require Solicitor review.

2-100-80 Can a single assistance agreement include both grant and cooperative agreement 

components?

Yes, it is acceptable for an agreement to include more than one type of assistance relationship, so 

that some components are funded by grants and others by cooperative agreements. For example,

a Regulatory Administration & Enforcement grant includes funding for a state’s regulatory 

program and also its Federal lands cooperative agreement. Joint funding agreements are 
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appropriate to simplify application and award requirements or efficient administration of the 

project, or to serve the best interests of the programs. The Joint Funding Simplification Act, P.L. 

97-258 provides the opportunity and authority to participate in jointly funded projects in any 

number of funding relationships.

2-100-90 Can we get an exception to this policy?

A. Yes, we may request an exception from OMB in very rare instances. The Federal Grant 

and Cooperative Agreement Act allows the Director of OMB to exempt individual 

transactions or programs from the Act. OMB grants exceptions only on the basis of 

agency requests that include strong justification based on severe disruption to a program 

or serious consequences to a recipient.

B. A request for an exception should be sent from the Regional Director (RD) to the AD-PS 

and then to the Director of OSMRE. The request must answer the following questions.

1. Is the exception requested for a whole program, a group of awards, or for an 

individual award?

2. Why are we requesting an exception? 

3. What will we do if an exception is not granted, and how will this harm the 

program or recipients?

4. What are the legal or program policy implications of the request?

5. What will we do if the exception expires before there are any changes to the law?

C. OSMRE must send the exception request through the Department of the Interior. The 

Director, in coordination with the Office of the Solicitor, must submit requests through 

the Assistant Secretary, Land and Minerals Management, and the Director, Office of 

Acquisition and Property Management, to the Assistant Secretary, Policy, Management 

and Budget. 

2-100-100 Can we award an assistance agreement to a single source without competition?

A. Yes, a funding opportunity may be specifically directed to a single known recipient. This 

single source recipient may either be named in legislation, or determined by OSMRE 

based on demonstrable criteria such as unique expertise or capacity.

B. We rarely award Federal funds in a single source assistance agreement with no 

competition. If we decide to make a single source award, the decision must be able to 

withstand scrutiny. We must demonstrate in the award file that the award protects the 

public interest, and is in accordance with legal requirements and OSMRE priorities and 
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objectives. 

C. An award without competition must fit one or more of the following standards.

1. An unsolicited proposal, representing a unique or innovative idea, method or 

approach, not the subject of a current or planned assistance award, which will 

benefit program objectives.

2. A continuation or completion of an activity presently being funded, if competition 

would significantly harm the activity. 

3. Legislative intent, demonstrated in law or legislative history, clearly indicating 

Congress’ intent to restrict award to a particular recipient or purpose.

4. A uniquely qualified applicant for the activity to be performed based upon 

demonstrable factors such as technical expertise, location, voluntary support 

capacity, cost-sharing ability, or other unique qualifications.

5. An emergency situation with insufficient time available for competitive 

procedures, due to a substantial danger to health or safety or a compelling and 

unusual urgency

D. We must complete the following actions before awarding a single source award for 

$25,000 or more.

1. Announce a notice of intent to make the award. The announcement may be 

published on Grants.gov, the Federal Register, or any medium which will provide 

transparency.

2. Put a written justification in the award file explaining why competition is not 

practicable, including a statement of which of the above criteria apply and why.