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Cooperative Agreement experience

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I'm hoping someone might share their experience(s) with cooperative agreements. I work for a company with a large federal contracts practice (as well as commercial practice). My company currently has a commercial agreement with a small business who is now seeking financial aid from a subset of the Department of Commerce. After the agreement was signed between my company and the small biz, the federal agency sent a separate agreement to the small biz, which is required to be signed by the agency, small biz, and my company before the agency will give any funding to the small biz. 

The law authorizing cooperative agreements (31 U.S.C. § 6305) states that a cooperative agreement shall be used when (1) the principal purpose of the relationship is to transfer money to a recipient to carry out a public purpose of support or stimulation authorized by United States law and (2) substantial involvement is expected between the federal agency and the recipient when carrying out the activity contemplated in the agreement.

I do not see why my company needs to be involved in this cooperative agreement, given that we will not be receiving any funding directly from the Commerce agency. I spoke with the agency's director, and his explanation was that because his agency is providing taxpayer money to the small biz for purposes of its purchase from my company, the agency must have an agreement in place to show that the use of taxpayer funds went toward the purchase from my company. The director was unable to explain why a separate agreement between the agency and the small biz was insufficient, and instead posited that this agreement involves three parties: my company, the small biz, and the agency.

Shouldn't a cooperative agreement be between the funding agency and the funding recipient? Is it a normal practice to also loop in a larger business that has no relationship with the agency but instead is the seller of the small biz recipient's purchase for which the small biz is seeking funding? No one on our team, either commercial or government, has seen this kind of agreement before, and the agency point of contact is not helping me understand this. I think we may just have a difference in opinion on facts, but I'm having a hard time believing that other companies of our size have agreed to this kind of cooperative agreements. (The agency director said that these agreements are signed "all the time," but they are not publicly available, and he was unwilling to share any information on what companies they have worked with.) 

Does anyone have experience with these? Any information would be helpful. Thanks. (And please let me know if further info is needed; I often try to keep these as brief as I can, but then end up leaving out information or details.)

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The FAR does not apply to grants and cooperative agreements.  OMB has issued uniform guidance regarding the use of grants and CAs.  This guidance can be found at 2 CFR 200.  The uniform guidance is not regulatory in nature.  Instead, agencies are to issue regulations covering the use of grants and CAs within the agency.  These regulations are to be based on the OMB guidance.  Unfortunately, the uniform guidance was not written with for profit commercial organizations in mind.  Nevertheless, I suggest that you read the OMB guidance and the agency regulations implementing that guidance.  Many agency regulations are also found in 2 CFR.

I have had some experience with grants and CAs and this process is something that I have never seen and does not make sense.

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Thanks, Retreadfed. I have scanned through those regs and guidance - this entire process is very strange to me, and it's reassuring to hear you say that it doesn't seem to make sense. That's how I feel about it also.

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It doesn't make any sense to me, either. I used to be a grants officer for DoD and I never heard of such a thing. 

What is the nature of your company's "commercial agreement" with the small business?

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Thanks Don. The agreement is IT in nature - cloud software. From my perspective, this small business has already entered into a binding agreement with my company; if it was relying on another agreement with this government agency for purposes of funding, then it should have waited until that was finalized before signing the agreement with my company. I can understand why the small biz wants the agreement signed (free money from the gov't), and my hunch is that the agency wants to treat my larger company almost as an insurance policy and someone against whom it can enforce rights, so I can understand the agency wanting the agreement signed. But I can't understand why my company would or should sign this. 

The agency director's stance made me think that perhaps this is just normal - I'm admittedly unfamiliar with cooperative agreements, and in my time with government I never once dealt with one. 

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