Cooperative Agreement
A “cooperative agreement” is a type of grant that involves modest oversight, such as approval
of work plans, key personnel, and quarterly reports. Cooperative agreements are
often used to support programs implemented by U.S. nonprofit organizations and universities.
Simple “grant agreements,” allowing for even more limited agency oversight, tend to
be used to support programs implemented by international organizations, such as the United Nations Development Program or the Organization for Security and Cooperation in Europe—organizations with established programs and financial systems.
Funding Mechanisms: Contracts and Grants
After the U.S. government agency identifies needs and designs the program, it implements
the program by either entering into a contract with a private firm or releasing funds by way
of a grant to an organization with relevant expertise. When deciding whether to implement
a rule of law activity through a contract or through a grant, the agency will consider a number
of factors, including the amount of funds available, whether the program must be initiated
quickly, and how much oversight is needed.
Contract mechanisms—used most often with private firms—tend to take more time to
procure and are more costly. They also allow for more government agency involvement
through oversight of project implementation. For example, the project officer must approve
all key contract personnel, including consultants, and review program spending and
reports on a monthly basis. For larger contracts, some companies enter into subcontracts
with other companies that have relevant areas of expertise. For example, a larger contracting company may be awarded a USAID contract in Country X to work with the courts; this company may in turn subcontract with a smaller organization that has specialized expertise with court automation.
Grants fund projects through a process that allows for less agency involvement
and oversight. These types of agreements are awarded when the government has general
objectives but is looking for a creative way to achieve those goals. Grant competitions are
usually held to solicit applications, and the best plan for meeting the agency’s program objectives is selected. Grant recipients submit program and financial reports.
Once a funding method is selected, the U.S. agency usually prepares either a statement of
work (for a contract) or a program description (for a grant). These documents outline the
objectives of the program, provide illustrative activities, and explain the implementer’s
administrative responsibilities. Interested organizations usually have one to three months
to prepare a response to the solicitation, called an RFP (Request for Proposals) for contracts
and an RFA (Request for Applications) for grants. Contractors interested in submitting a bid often send a team to a country for a few weeks to gather information for their submission. Members of the team interview potential stakeholders, visit courts, and examine the conditions in the country. This information helps the contractor prepare its proposal. Firms and organizations learn about these opportunities primarily through U.S. government websites.
At USAID and State, technical review committees are convened to evaluate applications
and proposals. Factors considered during this process include:
- the technical approach of a project (how the organization plans to meet the overall objectives);
- the expertise of proposed staff; and
- prior experience in the sector or country, as well as past demonstrated success.
Members of the technical review committees cannot speak to anyone about the evaluation (including other USAID or State staff). Strict rules surround this process, ensuring that each submission receives a fair review. After the agency identifies the best proposal or application, the successful bidder negotiates specifics with an agency contracting officer.
This procurement process, starting with the design of a new program and ending with a
project agreement, can take about one year. For this reason, programs are usually planned
two to three years ahead. However, if immediate action is needed to respond to an important
new development, the funding agency can employ pre-competed grant and contract
mechanisms, often through an indefinite quantity contract (IQC) process. There are two methods used to issue an RFP: open competition, whereby any organization can submit a proposal, and an “indefinite quantity contract” (IQC), whereby proposals from a limited pool of organizations are considered. When USAID bids out an indefinite quantity contract, contractors and organizations apply to provide a range of services in a particular sector, such as judicial reform, judicial education, and court management. Indefinite quantity contracts may be issued for a specific country or may be “global” and available to USAID missions around the world. An indefinite quantity contract is awarded to two or more companies or organizations. When a relevant program need arises, the funding agency issues a statement of work only to the indefinite quantity contract holders—a far more limited pool of candidates than that for a general RFP.
Because the funder is selecting among this smaller number of proposals, the procurement process takes less time.
Because indefinite quantity contracts have already met the competition requirements, project agreements using this mechanism can be negotiated in a relatively short period, often two or three months. For emergency situations, such as after a disaster or war, USAID and the State Department use other flexible contracting mechanisms to provide technical assistance on an expedited basis.
Interagency Agreements
An interagency agreement is a contractual obligation whereby one federal agency “buys” the services of another U.S. agency. This type of agreement was designed to be used when there is a need for highly specialized and unique expertise or experience. Contracting rules and regulations govern these agreements, but essentially they operate like a grant agreement, whereby an organization receives a certain amount of funding to carry out a specific program.