What is a Grant vs. Contract?
Also known as: Federal grant, Assistance vs. acquisition
A federal contract buys goods or services for the government's direct use, while a federal grant provides funding to support a public purpose with no direct deliverable to the government. Contracts are acquisitions under the FAR; grants are financial assistance under different rules.
Key differences
- Purpose — a contract obtains something for the government; a grant funds a recipient's project for public benefit.
- Rules — contracts follow the FAR; grants follow assistance regulations (such as the Uniform Guidance).
- Relationship — contracts are buyer/seller; grants are funder/recipient with more recipient discretion.
- Reporting — both require accountability, but the mechanisms and oversight differ.
Why the distinction matters
Choosing the right instrument shapes how you pursue funding. USAspending.gov shows both, so you can see whether an agency funds the work you do through contracts, grants, or both.
Frequently asked questions
Can the same agency use both grants and contracts?
Yes. Agencies use contracts when they are buying goods or services for their own use and grants (or cooperative agreements) when they are funding a recipient to carry out a public-purpose activity.
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