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In the hearings preceding enactment of the law that established this Commission, it was recommended that grants be studied by the Commission." Because of the importance of Federal grant activities and the uncertainty of their relationships to procurement, a limited review 2 of Federal grant-type assistance 3 was conducted. The purpose of this review was to gain an understanding of the significance, if any, of the interchangeable use of grants and contracts and of the extent to which procurement rules and regulations are or should be applied to grant-type assistance.

As data on Federal grant-type programs were examined, the focus was enlarged to include questions such as:

• What is the nature of the grant-type assistance relationships that exist between the Government and the recipient? • Can and should grant-type assistance be distinguished from procurement? • Can the confusion which seems to beset grant-type programs be reduced by giving relationship-based definitions for Governmentwide use to terms such as contract, grant,

and grant-in-aid? These efforts led to the recognition of certain

needs and the development of proposals to deal with them.

Federal grant-type activities are a vast and complex collection of assistance programs, functioning with little central guidance in a variety of ways that are often inconsistent even for similar programs or projects. This situation generates confusion, frustration, uncertainty, ineffectiveness, and waste. This disarray can be traced to three basic causes :

• Confusion of grant-type assistance relationships and transactions with procurement relationships and transactions • Failure to recognize that there is more than one kind of grant-type relationship or transaction • Lack of Government-wide guidance for Federal grant-type relationships and transactions.

To deal with these problems and confusions we have concluded that legislation is required to: (1) distinguish assistance from procurement by restricting the term “contract” to procurement relationships and by requiring the use of other instruments to implement assistance relationships; (2) distinguish among grant-type relationships by introducing a “new” instrument (cooperative agreement) to accommodate the assistance relationships requiring substantial Federal/non-Federal interaction during performance; (3) override statutes which prevent the agencies from using the most appropriate instrument in each grant-type and procurement situation; and (4) give the agencies new authority to use grant-type instruments in situations which call for them.

We have concluded also that Federal assistance programs require guidance on program implementation and a greater degree of standardization and consistency than now exists. There is a need to spell out basic assistance policies and procedures in the way that procurement regulations spell out basic procure ment policies and procedures. Pending legisla

1 U.S. Congress, House, Committee on Government Operations, Government Procurement and Contracting (Part 6), Hearings on H.R. 474 before a Subcommittee of the Committee on Government Operations, 91st Cong., 1st sess., May 15–21, 1969, pp. 1636–1637. * See Appendix A for a description of the methodology followed. * The term “Federal assistance" means the provision of money, services, or real or personal property for the purpose of supporting, stimulating, strengthening, subsidizing, or otherwise aiding or assisting non-Federal activities. We have examined grant-type assistance programs, transactions, and relationships and not other types of assistance such as loans. subsidies, insurance, and the various forms of nonfinancial assistance. The best composite data on Federal assistance activities is in the Catalog of Federal Domestic Assistance prepared by the Office of Management and Budget.

tion that will reduce the present statutory barriers to consistency and that will give the agencies new authority for grant-type relationships, a study should be made of the feasibility of developing a Government-wide system of guidance for all Federal assistance programs.

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