Federal Contracts and Federal Grants

The Federal Government provides funding for research and development to the University through a variety of agreements.  The most common are grants and contracts (federal procurement contracts).  Grants and contracts are similar in many ways, i.e. they fund university research, but their execution and negotiation is very different.

The Federal government uses grants to fulfill a public purpose instead of purchasing property or services for the direct benefit or use of the Federal government. Federal grants and contracts are both awarded competitively, but grants are more flexible than contracts.  Grants are flexible and are used to provide funding in the “hope” of achieving an outcome.  If that outcome is not achieved, there is typically no negative consequence (you have not violated your grant agreement).

Federal contracts are used where the government is acquiring goods or services for the direct benefit or use of the government.  When the Federal government issues a contract it is procuring services.  A contract is a legally binding document where a party promises it will deliver a product or service in return for consideration (money) from the other party.  If the product or service is not delivered as described in the agreement, there are legal consequences.

Federal contracts require strict timelines for performance within the budget agreed to by the parties.  These contracts are governed by Federal laws that mandate strict terms and conditions (Federal Acquisition Regulations) that affect the PI and the University as a whole.  There is typically a higher level of responsibility placed on the PI and University under a Federal contract vs. a Federal grant.

Federal Contracts

Federal Grants

Binding, relatively inflexible agreement between two or more parties to provide specific goods or services in return for consideration (money) Binding agreement that is flexible, designed to provide money to support a public purpose
Governed by the Federal Acquisition Regulations Governed by the grant agreement
Inflexible as to scope of work, budget, timelines and other changes Flexible as to scope of work, budget, timeline and other changes
Emphasis on delivery of results, product or performance Diligent efforts are used to complete research and the delivery of results
Payment typically based on deliverables and milestones Payment awarded in annual sum
Frequent reporting requirements Annual reporting requirements
High level of responsibility on the PI and University for the conduct of the project, conduct of the PI and University and production of results PI has freedom to adapt the project and less responsibility to produce anticipated results

E-Verify Requirements

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Certain federal contracts and subcontracts specifically include the Federal Acquisition Regulation (FAR) clause: FAR 52.222-54 Employment Eligibility Verification. This clause is referred to as the E-Verify clause. When this clause is included in a federal contract, OSP will notify the PI, who will be required to fill out the E-Verify form and submit to HR. HR will perform the E-verification process (E-Verify Routing Form) The federal rule is not the same as the state E-Verify rule. The federal rule applies to employees being paid under a federal contract.

When this clause is included in a federal contract, The University of Alabama Department of Human Resources, must verify qualifying new and existing employees, including employees who may be assigned through a transfer to a qualified federal contract/subcontract. Grants are not subject to the federal rule, only qualified federal contracts/subcontracts. The E-Verify process must be done in a nondiscriminatory manner and, in the case of new hires, only after the individual has accepted an offer of employment and completed the Form I-9.

For new hires assigned to the federal contract/subcontract meeting the conditions for E-Verify, the Form I-9 must first be completed within three business days of the hire date.