Acquisition vs. Assistance

This site focuses primarily on the regulatory environment specific to assistance awards. What's the difference between assistance and acquisition?

US law (31 USC Chapter 63, specifically §§ 6301-6305) divides federal outlays into two broad (but clearly distinct) categories, according to purpose of the transaction. Thus, a federal instrument documenting the expenditure of funds will be either:

  • a Procurement Contract, when its purpose is "to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government," (§ 6303) or
  • a Grant or Cooperative Agreement, when its purpose is "to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation … instead of acquiring (buying) property or services for the direct benefit or use of the United States Government" (§ 6304, emphasis added).

Federal regulations and agency policies more commonly identify these two classes of action as acquisition (for procurement contracts) and assistance (for financial assistance, i.e. grants and cooperative agreements).

2 CFR 200 (OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, aka the "uniform guidance"), along with all it's various agency implementations, underscores this distinction at §§ 200.201 Use of grant agreements and in the definitions at §§ 200.1 Definitions for the terms Contractor, Cooperative agreement, and Grant agreement.

Note particularly that § 200.331 Subrecipient and contractor determinations requires pass-through entities to make this same distinction when spending federal award funds.

Any expenditure your organization makes can reasonably be categorized as either acquisition or assistance. Your policies and procedures and the agreements you make when you spend money should all make this same distinction as well.

Granted, there is a considerable "gray area" in which it can be difficult to classify a specific transaction. In this same area, it can also be tempting to classify according to whim. So I recommend that organizations maintain written policy and guidance to staff on (a) how to distinguish between the two (assistance/acquisition), (b) the chain of authority for making the final determination, and (c) how to doccument the final decision so that the determination is fully supportable under audit.

If you're developing such a policy, you may find it helpful to review USAID's guidance to its AOs/COs on this matter. Read USAID’s ADS Chapter 304 to see the policies that AOs/COs are supposed to follow. Excellent supplementary guidance on this topic can be found in USAID’s ADS303sai, guidance to AOs on profit under assistance instruments.

Your organization may have already adopted these terms (assistance and acquisition). If not, I recommend adopting them, and I use them consistently with the above meanings throughout this site.

See also:
What's the difference between a "grant" and a "cooperative agreement"?

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