An Act to distinguish Federal grant and cooperative agreement relationships from Federal procurement relationships, and for other purposes.
PL 95-224 (H.R.7691), enacted 02/03/1978

PUBLIC LAW 95-224—FEB. 3, 1978 
92 STAT. 3 
Public Law 95-224 
95th Congress 
An Act 
To distinguish Federal grant and cooperative agreement relationships from 
Federal procurement relationships, and for other purposes. 
Be it enacted hy the Senate and House of Representatives of the 
United States of America in Congress assembled, That this Act be 
cited as the "Federal Grant and Cooperative Agreement Act of 
1977". 
FINDINGS AND PURPOSE 
SEC. 2. (a) The Congress finds that— 
(1) there is a need to distinguish Federal assistance relation-
ships from Federal procurement relationships and thereby to 
standardize usage and clarify the meaning of the legal instru-
ments which reflect such relationships; 
(2) uncertainty as to the meaning of such terms as "contract", 
"grant", and "cooperative agreement" and the relationships they 
reflect causes operational inconsistencies, confusion, inefficiency, 
and waste for recipients of awards as well as for executive agen-
cies; and 
(3) the Commission on Government Procurement has docu-
mented these findings and concluded that a reduction of the exist-
ing inconsistencies, confusion, inefficiency, and waste is feasible 
and necessary through legislative action. 
(b) The purposes of this Act are— 
(1) to characterize the relationship between the Federal Gov-
ernment and contractors. State and local governments, and other 
recipients in the acquisition of property and services and in the 
furnishing of assistance by the Federal Government so as to pro-
mote a better understanding of Federal spending and help elimi-
nate unnecessary administrative requirements on recipients of 
Federal awards; 
(2) to establish Government-wide criteria for selection of appro-
priate legal instruments to achieve uniformity in the use by the 
executive agencies of such instruments, a clear definition of the 
relationships they reflect, and a better understanding of the 
responsibilities of the parties; 
(3) to promote increased discipline in the selection and use of 
types of contract, grant agreement, and cooperative agreements 
' 
and to maximize competition in the award of contracts and 
encourage competition, where deemed appropriate, in the award 
of grants and cooperative agreements; and 
(4) to require a study of the relationship between the Federal 
Government and grantees and other recipients in Federal assist-
ance programs and the feasibility of developing a comprehensive 
system of guideline for the use of grant and cooperative agree-
ments, and other forms of Federal assistance in carrying out such 
programs. 
Feb. 3, 1978 
[H.R. 7691] 
Federal Grant 
and Cooperative 
Agreement Act of 
1977. 
41 u s e 501 note. 
41 u s e 501. 
92 STAT. 4 
PUBLIC LAW 95-224—FEB. 3, 1978 
DEFINITIONS 
41 use 502. 
SEC. 3. As used in this Act, the term— 
(1) "State government" means any of the several States of the 
United States, the District of Columbia, the Commonwealth of 
Puerto Rico, any territory or possession of the United States, any 
agency or instrumentality of a State, and any multi-State, 
regional, or interstate entity which has governmental functions; 
(2) "local government" means any unit of government within 
*
' • 
a State, a county, municipality, city, town, township, local public 
authority, special district, intrastate district, council of govern-
, , 
ments, sponsor group representative organization, other inter-
. : 
state government entity, or any other instrumentality of a local 
government; 
(3) "other recipient" means any person or recipient other than 
a State or local government who is authorized to receive Federal 
assistance or procurement contracts and includes any charitable 
or educational institution; 
(4) "executive agency" means any executive department as 
defined in section 101 of title 5, United States Code, a military 
department as defined in section 102 of title 5, United States Code, 
an independent establishment as defined in section 104 of title 5, 
United States Code (except that it shall not include the General 
Accounting Office), a wholly owned Government corporation; 
and 
(5) "grant or cooperative agreement" does not include any 
agreement under which only direct Federal cash assistance 
to individuals, a subsidy, a loan, a loan guarantee, or insurance is 
provided. 
USE OF 
CONTRACTS 
41 use 503. 
SEC. 4. Each executive agency shall use a type of procurement con-
tract as the legal instrument reflecting a relationship between the 
Federal Government and a State or local government or other 
recipient— 
(1) whenever the principal purpose of the instrument is the 
acquisition, by purchase, lease, or barter, of property or services 
for the direct benefit or use of the Federal Government; or 
(2) whenever an executive agency determines in a specific 
instance that the use of a type of procurement contract is 
appropriate. 
USE OF GRANT AGREEMENTS 
41 use 504. 
SEC. 5. Each executive agency shall use a type of grant agreement as 
the legal instrument reflecting a relationship between the Federal Gov-
ernment and a State or local government or other recipient whenever— 
Transfers. 
(1) the principal purpose of the relationship is the transfer of 
money, property, services, or anything of value to the State or 
local government or other recipient in order to accomplish a pub-
lic purpose of support or stimulation authorized by Federal 
' statute, rather than acquisition, by purchase, lease, or barter, of 
property or services for the direct benefit or use of the Federal 
Government; and 
(2) no substantial involvement is anticipated between the 
executive agency, acting for the Federal Government, and the 
State or local government or other recipient during performance 
of the contemplated activity. 
PUBLIC LAW 95-224—FEB. 3, 1978 
92 STAT. 5 
USE OF COOPERATIVE AGREEMENTS 
SEC. 6. Each executive agency shall use a type of cooperative agree- 41 USC 505. 
ment as the legal instrument reflecting a relationship between the Fed-
eral Government and a State or local government or other recipient 
whenever— 
(1) the principal purpose of the relationship is the transfer of Transfers, 
money, property, services, or anything of value to the State or 
local government or other recipient to accomplish a public pur-
pose of support or stimulation authorized by Federal statute, 
rather than acquisition, by purchase, lease, or barter, of property 
or services for the direct benefit or use of the Federal Govern-
ment; and 
(2) substantial involvement is anticipated between the execu-
tive agency, acting for the Federal Government, and the State or 
local government or other recipient during performance of the 
contemplated activity. 
AUTHORIZATIONS 
SEC. 7. (a) Notwithstanding any other provision of law, each execu-
tive agency authorized by law to enter into contracts, grant or coopera-
tive agreements, or similar arrangements is authorized and directed to 
enter into and use types of contracts, grant agreements, or cooperative 
agreements as required by this Act. 
(b) The authority to make contracts, grants, and cooperative agree-
ments for the conduct of basic or applied scientific research at non-
profit institutions of higher education, or at nonprofit organizations 
whose primary purpose is the conduct of scientific research shall 
include discretionary authority, when it is deemed by the head of the 
executive agency to be in furtherance of the objectives of the agency, 
to vest in such institutions or organizations, without further obliga-
tion to the Government, or on such other terms and conditions as 
deemed appropriate, title to equipment or other tangible personal 
property purchased with such funds. 
Contracts, grant 
or cooperative 
agreements. 
41 USC 506. 
Scientific 
research. 
STUDY OF FEDERAL ASSISTANCE PROGRAMS 
SEC. 8. The Director of the Office of Management and Budget, in 41 USC 507. 
cooperation with the executive agencies, shall undertake a study to 
develop a better understanding of alternative means of implementing 
Federal assistance programs, and to determine the feasibility of devel-
oping a comprehensive system of guidance for Federal assistance 
programs. Such study shall include a thorough consideration of the 
findings and recommendations of the Commission on Government 
Procurement relating to the feasibility of developing such a system. 
The Director shall consult with and to the extent practicable, involve 
representatives of the executive agencies, the Congress, the General 
Accounting Office, and State and local governments, other recipients 
and other interested members of the public. The result of the study 
shall be reported to the Committee on Government Operations of the 
House of Representatives and the Committee on Governmental Affairs 
of the Senate at the earliest practicable date, but in no event later than 
two years after the date of enactment of this Act. The report on the 
study shall include (1) detailed descriptions of the alternative means 
of implementing Federal assistance programs and of the circumstances 
in which the use of each appears to be most desirable, (2) detailed 
Contents. 
Consultation. 
Report to 
congressional 
committees. 
92 STAT. 6 
PUBLIC LAW 95-224—FEB. 3, 1978 
descriptions of the basic characteristics and an outline of such compre-
hensive system of guidance for Federal assistance programs, the devel-
opment of which may be determined feasible, and (3) recommendations 
concerning arrangements to proceed with the full development of such 
comprehensive system of guidance and for such administrative or 
statutory changes, including changes in the provisions of sections 3 
through 7 of this Act, as may be deemed appropriate on the basis of the 
findings of the study. 
GUIDELINES 
41 use 508. 
SEC. 9. The Director of the Office of Management and Budget is 
authorized to issue supplementary interpretative guidelines to promote 
consistent and efficient use of contract, grants agreement, and coopera-
tive agreements as defined in this Act. 
Repeal; effective 
date. 
41 u s e 501 note. 
41 u s e 509. 
Excepted 
transactions. 
41 u s e 501 note. 
Expiration date. 
REPEALS AND SAVINGS PROVISIONS 
SEC. 10. (a) The Act entitled "An Act to authorize the expenditure 
of funds through grants for support of scientific research, and for other 
purposes", approved September 6,1958 (72 Stat. 1793; 42 U.S.C. 1891 
and 1892), is repealed, effective one year after the date of enactment of 
this Act. 
(b) Nothing in this Act shall be construed to render void or voidable 
any existing contract, grant, cooperative agreement, or other contract, 
grant, or cooperative agreement entered into up to one year after the 
date of enactment of this Act. 
(c) Nothing in this Act shall require the establishment of a single 
relationship between the Federal Government and a State or local 
government or other recipient on a jointly funded project, involving 
funds from more than one program or appropriation where different 
relationships would otherwise be appropriate for different components 
of the project. 
(d) The Direxitor of the Office of Management and Budget may 
except individual transactions or programs of any executive agency 
from the application of the provisions of this Act. This authority shall 
expire one year after receipt by the Congress of the study provided for 
in section 8 of this Act. 
Approved February 3, 1978. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-481 (eomm. on Government Operations). 
SENATE REPORT No. 95-449 accompanying S. 431 (eomm. on Governmental Affairs). 
CONGRESSIONAL RECORD: 
Vol. 123 (1977): Sept. 27, considered and passed House. 
Oct. 1, considered and passed Senate, amended, in lieu of S. 
431. 
Vol. 124 (1978): Jan. 19, House agreed to Senate amendment.