In the latter case, the granting sponsor usually disburses funds on an annual basis. The Principal Investigator may be required to submit a continuation application as each subsequent grant year approaches in order to report program activity and assure the agency that the work is being performed in accordance with the plan outlined in the original proposal. Usually, a grant renewal, as opposed to a continuation , requires submission of another proposal that is competitively peer-reviewed. The contract establishes an agreement between the sponsor and recipient to acquire, by purchase, lease, or barter, property or services for the direct benefit of the sponsor. Generally, contracts specify deliverables within a specified project period.
Contracts are consequently much more formal and specific than grants.
Through contracts, a sponsor stipulates its needs, and the recipient and the sponsor come to an agreement. The process sometimes involves bidding and competitive negotiations. Strictly speaking, contracts do not have a principal investigator. Instead, a proposer describes a work plan and the costs needed to produce a product or service. Contract negotiation is more likely to involve discussion of proposed provisions restricting the publication or other use of research data, or clauses affecting potential patent rights and licensing agreements than is grant negotiation.