The type of sponsored program award — grant, contract, or cooperative agreement — is an indication of general program requirements regarding the sponsor’s role in the program, the Principal Investigator/Project Director’s (PI/PD’s) responsibilities, the nature of expected outcomes, the payment method and schedule, and the use of program results or data. The particular program requirements for each sponsored program are specified in the award document.
Generally, the grant mechanism is used when the sponsor is not seeking immediate benefit for itself but is simply providing support for work initiated by the proposal writer. Grant recipients make no guarantees other than that work will be done as described in the proposal, in a responsible manner, and that all relevant policies and procedures will be followed. A funded proposal already incorporates the conditions outlined in the sponsor’s guidelines, and the sponsor will typically make no or few further restrictions. The sponsor expects to receive reports, but it does not supervise the project. The sponsor usually does not place limitations on the use or publication of program results.
Grants are generally made for a specific period. For multi-year projects, funds may be disbursed on an annual basis by the sponsor. The PI/PD may be required to submit a continuation application or an annual report as each subsequent grant year approaches in order to report program activity and assure the agency that work is on track with the plan outlined in the original proposal. On the other hand, getting the grant renewed, as opposed to continued, usually requires submission of another proposal that is competitively peer-reviewed.
Contracts are commonly used by sponsors when they have specific products in mind. Generally, contracts specify deliverables within a specified project period. These deliverables are often tangible items and/or services rather than basic research outcomes. Contracts are consequently much more formal and specific than grants. Through contracts, a sponsor stipulates its needs, and the PI/PD and the sponsor come to an agreement. The process may involve bidding or competitive negotiations. Contract negotiation may involve discussion of proposed provisions restricting the publication or other use of research data and clauses affecting potential patent rights and licensing agreements. Contracts also generally require frequent, detailed reporting. In a contract arrangement, the sponsor is actively involved in overseeing the progress and direction of the project.
One type of contract is the fixed-fee contract. The sponsor pays a fixed amount regardless of whether the actual costs of the activities involved turn out to be higher or lower. If the project ends up costing more than originally estimated, the university must cover the extra expense.
Another type of contract is the cost-reimbursement contract. Under this arrangement, the sponsor reimburses the university for the actual costs of the sponsored program, up to the amount originally awarded.
In both fixed-fee and cost-reimbursement contracts, prior approval from the sponsor is required in order to increase the amount of the award.
A subcontract (also subgrant, subagreement) is a document issued under the authority of and consistent with the terms and conditions of an award that transfers a portion of the research or effort of the project to another institution or organization. Like contracts, subcontracts may be either fixed-fee or cost-reimbursement arrangements.
An agreement that combines elements of both grant and contract is known as a cooperative agreement. In a cooperative agreement, as with a grant, the sponsor is not seeking immediate benefit for itself. As with a contract, the sponsor expects to have some involvement in the project. Because the degree of sponsor involvement and the segregation of responsibility require specification, the cooperative agreement usually involves more detail than a grant, though perhaps less than a contract.