Cooperative agreements, also referred to as cooperative contracts or cooperative procurements, are agreements between the government and a business that benefits both parties involved. Cooperative agreements differ from many other relationships between government and business. For this reason, planning and managing cooperative agreements can be a complex task to handle alone. With the help of expert financial advisors, like JS Morlu, as well as a well-rounded knowledge of cooperative agreement basics, your business can feel confident in the preparation and execution of cooperative contracts.
What is a Cooperative Agreement?
A cooperative agreement is a relationship between the US Government and a recipient business created with the purpose of lowering the cost of procuring services or goods that multiple entities commonly need. Cooperative agreements are designed to make the most efficient and logical use of public funds. The government’s goal in cooperative contracts is to lower the price on commonly needed goods by amassing the combined efforts of multiple organizations. Government contracts can be lucrative for any business with the right management and procedures.
Traditional procurement contracts involve a single lump sum price agreed upon before work begins and is then paid in stages as work proceeds. Cooperative agreements differ from traditional procurement contracts because they are not subject to the Federal Acquisitions Regulation (FAR). The Federal Acquisitions Regulation is the principal set of rules regarding government procurement in the United States. Because of their distinction away from FAR, businesses have more freedom to create the terms of a cooperative agreement regarding new or innovative ventures.
The main goal of any public procurement is to obtain quality goods and services to support efficient and effective use of public government funding. Cooperative agreements are becoming increasingly common between state and local governments and the federal government. Grants and cooperative agreements for commercial companies have also increased in popularity and hold their own set of pros and cons.
Grant vs Cooperative Agreement
According to the OMB Uniform Guidance, cooperative agreements and grants are “a legal instrument of financial assistance between a federal awarding agency or pass-through entity and a non-Federal entity.” Non-Federal agencies can include state and local governments as well as commercial businesses. Simply put, grants and cooperative agreements are enacted to transfer value from the federal level to the non-federal level.
The main difference between a grant and a cooperative agreement is the level of involvement federal entities require once an award is granted. Cooperative agreements involve substantial involvement between the federal awarding agency and the non-federal entity. When a grant is awarded, the awarding federal agency will strictly maintain a management and monitoring role. Cooperative agreements differ because federal employees will work closely with the operation of the program. Cooperative agreements are just that, a cooperative effort between federal and non-federal entities cooperating side-by-side.
Although federal agencies work closely with the performance of the awarded program, the task cannot shift to be performed by the awarding agency. The Federal Grant and Cooperative Agreement Act of 1977 prohibits federal agencies from using cooperative agreements to attain any services or property for the direct use or gain of the federal government. For this reason, cooperative agreements are not bound by FAR.
What Cooperative Agreements and Purchasing Models Does JS Morlu Commonly Work With?
Cooperative Research and Development Agreement (CRADA)
A common cooperative agreement regarding advancing and testing new technologies is the Cooperative Research and Development Agreement. The National Institute of Standards (NIST) and Technology promote American innovation and industrial competitiveness. CRADA is utilized to combine both federal and non-federal efforts to innovate in a variety of industries.
NIST contributions to CRADA can take the form of facilities, intellectual property, personnel, equipment, or other resources associated with the specific research and development underway. One of the distinctions of CRADA, however, is that no federal funds can be dispersed to non-federal parties.
Definite Quantity and Delivery
There are a variety of purchasing models for cooperative agreements that are applied for specific situations with individual pros and cons. In a definite quantity and delivery cooperative purchasing model, there is a distinct and direct economic relationship between risk and price. In these contracts, cooperative members and requirements are clearly defined and associated with specific schedules and delivery locations.
This model is subject to guaranteed demand and, in turn, includes the lowest possible prices. This model makes it difficult to commit or predict specific schedules. It may also be difficult to agree upon set requirements before work is underway.
Indefinite Quantity and Delivery
Indefinite quantity and delivery cooperative purchasing models are able to reduce administrative costs and attain economies of scale. Participants are clearly defined. Requirements are estimated and purchase-specific commitments are ambiguous. The price is the driver of estimate confidence from bidders.
This model allows for easier access for bidder solicitation because of reduced commitments specific to definite quantities and contracts are generally more flexible for members to negotiate requirements, terms, or conditions. On the other hand, uncertainty may lead to higher prices and bidders are often deterred from offering their top prices as a result of a lack of confidence in the requirement estimations of the agreement.
Piggyback contracts occur when government entities allow other jurisdictions or entities to use a previously established contract. It is termed piggybacking because the previously established contract’s terms and prices are reused for a new cooperative agreement. The vendor must agree to the specific piggyback terms included in the contract. Piggyback contracts are the most immediate cooperative purchasing source that not only benefit small communities specifically but also have an impact on large communities by applying pressure for lower prices.
Piggyback contracts are generally easier to implement, have the potential for a wider range of participants due to the abundance of available contracts, have lower administrative costs, and allow small governments or entities to save money. As for disadvantages, piggyback contracts could have only minimal savings because participation is largely unpredictable, local vendors can see the contracts as unequal, and contract users often do not attain the full benefits if other entities do not join the contract.
What Other Services Does JS Morlu Offer?
Before entering any binding contracts, businesses should ensure that the contract is fair and follows all best practices. In order to do so, businesses should look to outsource a firm capable of handling Due Diligence Practice in a highly confidential and professional manner. At JS Morlu, we help our clients agree to the right contracts, agreements, and concessions to ensure that the companies and individuals our clients deal with operate with the highest Standards of Due Care. Having proactive Due Diligence Practices can not only prevent an organization from generating excessive negative publicity, but also can help prevent any fines associated with practicing without due diligence.
Our Due Diligence Practice can also help your business promote anti-bribery legislation such as US FCPA. We also help businesses prevent any violations associated with improper business practices regarding human rights. Our Due Diligence team is comprised of experts in a variety of fields with years of combined experience. Not only do we employ the talents of proven certified public accountants and Master of Business Administration, but we have Certified Fraud Examiners provided by the ACFE and Certified Financial Forensics provided by AICPA.
Our Due Diligence team can provide expert support on anything from mergers and acquisitions to cooperative agreements. Our services also extend to intellectual property, employment, pending litigation, commercial property, joint ventures, and a variety of other situations. JS Morlu’s benefit to your business does not end with Due Diligence Practice, however. JS Morlu offers a plethora of services aimed at growing and maintaining anything from major companies to personal finances.
The JS Morlu Advantage
JS Morlu Certified Public Accountants is a member of JS Morlu Global. JS Morlu Global is comprised of a network of independent firms of accountants spread across the globe with headquarters in Virginia, United States of America. Our services include, but are not limited to, auditing, accounting, investigations, tax, training, and management consulting. At our core, we understand that each business or individual has their own goals and an idea of how to get there. We provide the right people, skills, technology, and knowledge to get you there.
With more than 20 years of professional experience amongst our staff, we will work with small businesses, not for profits, government contractors, healthcare and insurance needs, and subsidiaries of multinational firms. While you focus on the day-to-day needs of your business, our expert CPAs can provide tax and accounting advice. We understand that your efforts are best spent where your expertise is and JS Morlu’s services allow you to delegate your financial tasks to us.
The difference between JS Morlu and many other accounting firms is that at JS Morlu, we believe people are our biggest asset. Our expert advisors, financial managers, and accountants focus on building relationships that value each customer and understand the importance of trust. We understand each client is unique, which is why we offer personalized services and provide advice based on what is best for your business.
We value each client and strive to provide top-of-the-line reliability and dependability. We deliver on time with a focus on quality all in an effort to promote and build long-term relationships to become your trusted advisor in any matter relating to your business’s accounting, finances, or taxes. Reach out to one of our team members today for more information.