Preaward - Contract FAQs
- What is the difference between a grant and a contract?
A contract is used as a tool of procurement for a specific good or service. A contract has definable tasks, milestones, and deliverables that are expected by the sponsoring agency.
In contrast, a grant is an agreement that provides financial assistance to support a public purpose. These agreements have a loosely defined scope of work and the sponsor usually requires annual and/or final reports documenting the progress of the grant. All contracts require UA signature, while most grants do not require institutional signature.
The basis of these definitions can be found in 31 U.S.C. 6301-6305 of the United States Code, which provides criteria for federal agencies when selecting the appropriate legal instruments:
"An executive agency shall use a procurement contract as the legal instrument. . . when the principal purpose of the instrument is to acquire. . . property or services for the direct benefit or use of the United States Government. . ."
"An executive agency shall use a grant agreement as the legal instrument. . . when the principal purpose. . . (is) to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government. . . and substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement."
"An executive agency shall use a cooperative agreement as the legal instrument. . . when the principal purpose. . . (is) to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement."
The Federal Acquisition Regulations System (FAR) is established for the codification and publication of uniform policies and procedures for acquisition by all executive agencies. See FAR Part 16 for a discussion of the various types of contracts, e.g., fixed-price, cost reimbursement.
The following table gives a visual comparison of what criteria define a grant and contract.
Contract |
Grant |
| Specific scope of work |
Loosely defined scope of work |
| Procurement of goods and services |
Financial assistance for public purpose |
| Milestones, tasks, deliverables |
Annual and/or final progress reports and publications required |
| Request for Proposals (RFPs) |
Program announcement |
| University signature required |
No signature usually required |
| OMB A-21 applies |
OMB A-21 applies |
| OMB A-110 does not apply |
OMB A-110 applies |
| FAR clauses used for regulations |
Agency policy manual used for regulations |
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