An Overview of Cooperative Agreements in Federal Contracting
“Cooperative Agreements” are legal instruments that facilitate the transfer of something of value from federal executive agencies to states, local governments, and private recipients for a public purpose or benefit.
Cooperative Agreements are distinct from traditional procurement contracts and thus are not subject to the Federal Acquisition Regulation (FAR). Like Other Transaction Authority, this approach provides agencies greater freedom to craft the terms of an agreement around new or innovative endeavors. For example, the FDA uses this freedom to advance food safety with states by funding implementation of food safety rules. As the Federal contracting landscape becomes increasingly complex, Cooperative Agreements represent an opportunity for some contractors to pivot to a more streamlined federal funding mechanism.
In many respects, Cooperative Agreements are similar to federal grants. Under the Federal Grant and Cooperative Agreement Act of 1977 (FGCAA), the principal purpose of both relationships is to transfer value from federal to state, local, and private organizations. Cooperative Agreements are distinguished from grants by the degree to which the federal and non-federal entities are expected to cooperate post-award. The federal stakeholder administering a grant usually takes on a purely monitoring role once the grant is awarded, but the awarding agency in a Cooperative Agreement is “substantially involved” in the execution of the publicly-beneficial activity.
While the federal agency stays involved in performance, the task must never shift such that it is being performed for the agency. The FGCAA specifically prohibits federal agencies from using Cooperative Agreements to acquire property or services for the direct benefit or use of the federal government. This distinction is what separates Cooperative Agreements from “procurement contracts” or “acquisitions” bound by the FAR. This distinction is also instrumental in limiting the protest remedies available to disappointed bidders for Cooperative Agreement opportunities.
As the Federal Circuit held in Hymas v. United States, 810 F.3d 1312 (Fed. Cir. 2016), the Court of Federal Claims’ bid protest jurisdiction under the Tucker Act (28 U.S.C. § 1491(b)(1)) “speaks exclusively to procurement solicitations and contracts” (internal quotes omitted). This means that if a federal agency chooses to structure its procurement as a Cooperative Agreement (a decision entitled to great deference under Chevron U.S.A., Inc. v. Natural Res. Defense Council, 467 U.S. 837, 865-66 (1984)), contractors’ only venue for protesting an agency award decision is in District Court, under the Administrative Procedures Act.
Even with this restriction, Cooperative Agreements are an intriguing funding instrument which contractors, as well as state and local governments, should monitor in order to gain a new avenue to contract with the federal government.
Watch for the next post in our ongoing series on Alternatives to Traditional Federal Procurement.