Federal Grant Management
Federal grants are the financial aid instrument provided by the United States federal government. There are numerous grant programs offered by federal grant awarding agencies. These programs include federal grant awards related to agriculture, education, renewable energy, research and development, science and technology, and transportation.
Grants are awarded as federal assistance awards or contracts to businesses. For example, several grant financial assistance award agreements exist for renewable energy companies, engineers, and research and development firms. Note, a grant is not used to acquire property or services on behalf of the government for their benefit.
The definition of a grant includes, funds provided by a grant agency, typically a Government Department, Corporation, or Trust a nonprofit entity, educational institution, business or an individual. In order to obtain a grant, Grant Writing is necessary in the form of a proposal or grant application.
The grant process includes grant application, submittal, and award process. Steps necessary in obtaining the federal grant include writing the grant proposal or application, and once received, maintaining regulatory compliance with the grant. Federal grants are typically provided by government agencies. However, private companies, non-profit organizations, not-for-profit corporations, and charities also may provide grants.
Depending on the grant agreement, grants can be unrestricted, to be used by the recipient in any manner within the recipient organization deems appropriate
There are four general types of federal grant financial assistance contracts, all of which reimburses the grantee for allowable, allocable, and reasonable cost incurred. Numerous grant contract types exist including the following:
- Cost Plus Fixed Fee
- Cost Plus Incentive Fee
- Cost Plus Award Fee
- Cost Plus Percentage of Cost
A cost plus contract, also known as a cost reimbursment contract where the contractor is reimbursed for the expenses paid for allowable indirect and direct costs associated with the project award. In some cases, the grant permits for a set limit plus additional payment for profit. A fixed price grant contract occurs when the grantee is paid a negotiated amount regardless of the expenses incurred.
The Office of Management and Budget (OMB) Works cooperatively with the grant awarding agencies and the grant recipient community, OMB leads development and enforcement of government policy and procedure to ensure that federal grants are properly administered and that Federal tax payer dollars are spent in accordance with applicable laws and regulations.
It is important to understand and comply with the complex federal regulatory compliance requirements related to federal grants. Understand and learn to identify company compliance risk areas and provide corrective action plans to ensure your organization properly manages the grant award and continues to operate efficiently.
In addition, it is imperative to have professional knowledge and experience with regulatory compliance requirements of the Code of Federal Regulations (CFR), Federal Acquisition Regulations (FAR), and the Office of Management & Budget (OMB) Circulars A-21, A- 87, A-122 and A-133.
Federal Acquisition Regulation (FAR) Part 31 – Contract Cost Principles and Procedures, contains guidance related to federal grant management, allowable, allocable, and unallowable costs. Grant contracts with commercial organizations including all contracts for supplies, services, experimental, or research and development work awarded to organizations other than educational institutions, architect-engineer contracts, state and local Governments, and nonprofit organizations.
A cost is determined allowable to a federal grant when it complies with the regulatory compliance requirements FAR 31.201-2. The cost must me reasonable, allocable, and agreed upon in the grant contract terms. If the grantee's accounting principles and practices are inconsistent with FAR 31.201-2, this will result as costs being deemed unallowable. The grantee or contractor is responsible for applying correct accounting principles and practices, accounting for cost appropriately, maintaining records, including payment supporting documentation to adequately support that costs claimed and requested for reimbursements have actually been incurred. It is the contacting officer's discretion to determine whether the cost has been adequately supported and may disallow all or part of a claimed cost that is exclusively supported.