851 Purpose. This section implements the guidance in the Federal Grant and Cooperative Agreement Act of 1977 (P.L. 95-224), hereinafter referred to as the "Act," for determining when the use of a procurement contract, or an assistance instrument (grant or cooperative agreement) is appropriate.
852 Scope. The provisions of this section apply to all contracts, grants, agreements or any other documents executed by departmental Agencies which will serve as the legal basis for obligating funds for the acquisition of goods, services, construction or the providing of financial assistance.
853 Background
a. The Department of Labor (DOL) accomplishes its many and diverse missions to some extent through direct in-house activities but predominantly through arrangements with non-Federal organizations, using instruments reflecting either a procurement purpose or an assistance purpose. The various types of instruments used to accomplish procurement or assistance purposes create different relationships between the parties involved. Thus, selection of the appropriate type of instrument is essential to creating the relationship intended by the parties, consistent with legislative and administrative authority for conducting the activities.
b. The Act requires executive agencies to distinguish procurement relationships from assistance relationships. The Act also requires using procurement contracts for all agency acquisition activities, and grants or cooperative agreements for specific types of assistance relationships. Agencies are required to achieve consistency in the use of the appropriate instrument, and to maximize competition in the award of procurement contracts and discretionary grants and cooperative agreements. Finally, the Act authorizes Federal Agencies to use contracts, grants, or cooperative agreements whether or not the enabling legislation specifically mentions the type of instrument to be used. However, OMB has indicated that Federal agencies may not award grants to profit making organizations unless there is specific statutory authority to do so.
854 Policy
a. The Department shall use a type of procurement contract as the legal instrument reflecting a relationship between DOL and a State, local government or other recipient whenever the principal purpose of the instrument is the acquisition by purchase, lease or barter of property or services for the direct benefit of DOL.
b. The Department shall use a type of grant agreement as the legal instrument reflecting a relationship between DOL and a State, local government or other recipient whenever the principal purpose of the relationship is the transfer of money, property, services or anything of value to the recipient to accomplish a public purpose of support or stimulation authorized by Federal statute and no substantial involvement is anticipated between DOL and the State, local government or other recipient during performance of the contemplated activity.
c. The Department shall use a type of cooperative agreement as the legal instrument reflecting a relationship between the DOL and a State, local government or other recipient whenever the principal purpose of the relationship is the transfer of money, property, services or anything of value to the recipient to accomplish a public purpose of support or stimulation authorized by Federal statute and substantial involvement is anticipated between the DOL and the recipient during performance of the contemplated activity.
d. The requirement for competition of contracts for acquisition is well established and is set forth in Federal and DOL Acquisition Regulations. With regard to grants and cooperative agreements the requirement for competition has not been so readily established. However, pursuant to the Act, all grant and cooperative agreement programs involving discretionary recipients shall provide for competition among the prospective recipients whenever appropriate. The Federal Register shall be the principal means for publicizing the DOL grant and cooperative agreement requirements. However, when circumstances justify it, DOL grant and cooperative agreement requirements shall be published in newspapers or other suitable trade publications.
855 Distinguishing Between Acquisition (Contracts) and Assistance (Grants and Cooperative Agreements)
a. Any public notice, solicitation or request for an application or proposal shall indicate whether the intended relationship will be one of acquisition or assistance.
b. DOL Agencies shall interpret the requirement to use assistance instruments (grants or cooperative agreements) to "accomplish a public purpose of support or stimulation authorized by Federal statute" as including but not restricted to traditional assistance transactions which DOL traditionally has called "grants." Thus, for example, where an Agency within its authority enters into a transaction where the principal purpose of the transaction is to stimulate or support research, it must use either a grant or a cooperative agreement. Conversely, if the principal purpose of a transaction funding research is to produce something for the Department's own use, a procurement contract must be used.
c. DOL Agencies will ensure that decisions regarding the award of contracts, grants and cooperative agreements are made consistent with the Act, and this section. Implementation of the provisions of the Act and this section shall include, where necessary, the development of supplemental, program-specific criteria to make the determinations. This implementation shall not include rewording or revision of this section. An information copy of all program-specific criteria shall be submitted to the Office of Grants and Procurement Management, Directorate of Administrative and Procurement Programs, OASAM.
Agencies shall document, in the program information files or official award files, why awards were made in the form of assistance instruments. Determinations made for a class of transactions shall be recorded in program files. If an individual award differs from the others under a class determination, or if a mix of procurements and assistance is being used for a class of awards, each individual award file must be documented.
d. Procurement contracts will normally be used for obtaining the following:
(1) Evaluation (including research of an evaluative character) of the performance of departmental programs or projects or grantee activity initiated by the funding DOL Agency for its direct benefit or use.
(2) Technical assistance rendered on behalf of the Department to any third party, including those receiving grants or cooperative agreements.
(3) Surveys, studies, and research which provide specific information desired by the Department for its direct activities, for dissemination to its grantees and contractors or for dissemination to the public.
(4) Consulting services or professional services of all kinds if provided to the Department or, on behalf of the Department, to any third party.
(5) Planning projects or services for departmental use.
(6) Production of publications or audiovisual materials required primarily for the conduct of the direct operations of the Department.
(7) Design or development of items in accordance with departmental specifications for departmental use.
(8) Conferences conducted on behalf of the Department.
(9) Management services, reports or other information or other data for departmental use.
(10) Supplies, materials or facilities equipment.
e. Assistance mechanisms (grants or cooperative agreements) will normally be used for the following purposes:
(1) General financial assistance (stimulation or support) to eligible recipients under specific legislation authorizing such assistance.
(2) Financial assistance (stimulation or support) to a specific program activity eligible for such assistance under specific legislation authorizing such assistance.
f. Administrative requirements for both grants and cooperative agreements are set forth in Title 29 Code of Federal Regulations, Part 97.
856 Anticipated Substantial Involvement During Performance. The basic statutory criteria for distinguishing between grants and cooperative agreements is that for the latter, "substantial involvement is anticipated between the executive agency and the recipient during performance of the contemplated activity." To ensure consistent determinations, all DOL Agencies shall use only the following criteria when deciding to use either a grant or a cooperative agreement:
a. Anticipated substantial departmental involvement is a relative rather than an absolute concept. The examples that follow in subparagraphs (1) and (2) are not meant to be a checklist or to be considered as individual determinants. Rather, they are to illustrate the general policy that:
(l) Substantial involvement is not anticipated when the terms of an assistance instrument indicate the recipient can expect to run the project without Agency collaboration, participation, or intervention.
(2) Substantial Agency involvement is anticipated when the instrument indicates the recipient can expect Agency collaboration or participation in the management of the project.
b. As a guide to making these determinations, anticipated substantial involvement during performance does not include:
(1) Agency approval of recipient plans prior to award.
(2) Normal exercise of Agency stewardship responsibilities during the project period such as site visits, performance reporting, financial reporting, and audit to ensure that the objectives, terms and conditions of the award are accomplished.
(3) Unanticipated Agency involvement to correct deficiencies in project or financial performance from the terms of the assistance instrument.
(4) Generally applicable statutory requirements understood in advance of the award such as civil rights, environmental protection, and provision for the handicapped.
(5) Agency review of performance after completion.
(6) General administrative requirements, such as those included in OMB Circulars A-21, A-87, A-102 and A-110, and 29 CFR 97.
c. Conversely, anticipated departmental involvement during performance would exist and, depending on the circumstances, could be substantial, where the relationship includes, for example:
(1) Agency authority to immediately halt an activity if detailed performance specifications (e.g. construction specifications) are not met. These would be provisions that go beyond the suspension remedies of the Federal Government for nonperformance as in OMB Circulars A-102 and A-110 and 29 CFR 97.
(2) Agency review and approval of one stage before work can begin on a subsequent stage during the period covered by the assistance instrument.
(3) Agency review and approval of substantive provisions of proposed subgrants or contracts. These would be provisions that go beyond existing policies on Federal review of grantee procurement standards and sole source procurement.
(4) Agency involvement in the selection of key recipient personnel. (This does not include assistance instrument provisions for the participation of a named principal investigator for research projects.)
(5) Agency and recipient collaboration or joint participation.
(6) Agency monitoring to permit specified kinds of direction or redirection of the work because of interrelationships with other projects.
(7) Substantial direct Agency operational involvement or participation during the performance of the assisted activity is anticipated prior to award of the grant or cooperative agreement to ensure compliance with such generally applicable statutory requirements as civil rights, environmental protection, and provision for the handicapped.
(8) Highly prescriptive Agency requirements prior to award of the grant or cooperative agreement which limits recipient discretion with respect to scope of services offered, organizational structure, staffing, mode of operation, and other management processes, coupled with close Agency monitoring or operational involvement during performance over and above the normal exercise of Agency stewardship responsibilities to ensure compliance with these requirements.
d. DOL Agencies shall limit departmental involvement in assisted activities to the minimum consistent with program requirements. Nothing in the Act shall be construed as authorizing Agencies to increase their involvement beyond that authorized by other statutes.
e. The practice of some DOL Agencies of providing technical assistance, advice, or guidance to recipients of financial assistance does not constitute substantial involvement if:
(1) It is provided at the request of the recipient, or;
(2) The recipient is not required to follow it, or;
(3) The recipient is required to follow it, but it is provided prior to the start of the assisted activity and the recipient understood this prior to the financial assistance award.
f. There may be a few cases of assistance programs where neither a grant nor a cooperative agreement is suitable. In such cases, an OMB exception shall be requested in accordance with paragraph 857f below.
857 Guidelines for Grants and Cooperative Agreements
a. At times DOL Agencies may find it necessary to increase their involvement in a grant-funded project during the period of time covered by the grant. This could happen, for example, when standard grant reports or monitoring indicate some sort of problem. If this occurs, Agencies should not view the Act as restricting their authority to intervene as necessary to bring the project into conformance with original intentions. Agencies should not, however, seek to become substantially involved in a long-term or ongoing grant-funded activity without either converting the grant instrument to a cooperative agreement following negotiation with the recipient, or converting to a cooperative agreement beginning with the next funding period.
b. The determination resulting in the choice of a cooperative agreement is largely one involving "programmatic" considerations as differentiated from administrative or fiscal ones. The designation of a recipient as "high risk" is principally one involving administrative and fiscal factors. Therefore the use of a cooperative agreement and the designation "high risk" are independent of one another. "High risk"recipients may or may not warrant the type of substantial involvement anticipated in the award of a cooperative agreement. Likewise, a cooperative agreement recipient need not be "high risk."
c. In all cases, the determination of when to use cooperative agreements will be based on the need for substantial Agency programmatic involvement in the assisted activity. Some programs will require the use of cooperative agreements exclusively. This determination should be based on statutory requirements or policy level determinations of substantial Agency programmatic involvement in the performance of the assisted project. Other programs may use a mix of grant and cooperative agreements, depending on the nature of the project or the abilities of the recipients. For example:
(1) Some projects may start out as cooperative agreements in the first year and be converted to grants after recipient capacity had been established.
(2) Other projects, initially funded as grants, may have to be renewed or continued for subsequent budget periods as cooperative agreements if there is a need to revise the project or upgrade recipient capacity, or protect the Federal program interest.
d. Each cooperative agreement must include an explicit statement of the nature, character, and extent of anticipated Agency programmatic involvement to ensure that the responsibilities of both parties are understood.
e. OMB has exempted non-monetary assistance from the provisions of the Act governing grants. Existing Agency practices for providing non-monetary assistance where no Agency involvement in the assisted activity is anticipated should continue. Thus a formal grant instrument is not required to provide surplus property, consultation, or data. Where substantial Agency involvement is anticipated, however, a cooperative agreement is required.
f. Agencies shall make every effort to ensure that their relationships conform with those specified in this section. If, however, there are major individual transactions or programs which contain elements of both procurement and assistance, but which cannot be characterized as having a principal purpose of one or the other, thought should be given to dividing the program into two parts or transactions; one assistance and the other procurement. In any event, the Office of Procurement and Grant Management, DAPP, is available for assistance.
DOL
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