Subcontract under Cooperative Agreement

Subcontract Under Cooperative Agreement: Understanding Its Role in Federal Grants

When it comes to federal grants, one term that often comes up is “cooperative agreement”. A cooperative agreement is a legal instrument used by federal agencies to collaborate with external parties (e.g. states, universities, non-profit organizations) to achieve a common goal or objective. Under this kind of agreement, the federal agency provides significant involvement and oversight in the project, as opposed to a grant or contract, where the recipient has more discretion and autonomy.

But what if the project requires specialized skills or resources that the recipient organization doesn’t have? This is where a subcontract under cooperative agreement comes in.

A subcontract is a legally binding agreement between the recipient organization (the prime) and a third-party entity (the sub) to perform a portion of the work required by the cooperative agreement. In other words, the sub is hired by the prime to help carry out the project. The sub may be a vendor, consultant, or another organization with complementary expertise or capabilities.

Why use a subcontract under cooperative agreement?

There are several reasons why a prime organization may choose to subcontract some of its work under a cooperative agreement. These include:

1. Access to specialized skills or resources: A sub may have niche or technical expertise that the prime lacks. For example, a university conducting research on a rare disease may subcontract a laboratory with specialized equipment and trained technicians to perform the necessary experiments.

2. Geographic reach: A sub may have a local or regional presence that the prime doesn’t. For example, a state health department may subcontract a community-based organization to conduct public health outreach and education in underserved areas.

3. Risk management: A sub may help mitigate risk by assuming some of the responsibility for project deliverables and outcomes. For example, a non-profit organization managing a disaster relief project may subcontract a logistics provider to ensure timely and efficient delivery of supplies to affected areas.

4. Time and resource optimization: A sub may help the prime organization optimize its use of time and resources by allowing it to focus on core activities while outsourcing non-core activities. For example, a federal agency tasked with implementing a large-scale IT project may subcontract a vendor to handle the installation and configuration of hardware and software components.

How does a subcontract under cooperative agreement work?

A subcontract under cooperative agreement is similar to any other subcontract in that it defines the scope of work, timelines, deliverables, payment terms, and other contractual obligations between the prime and the sub. However, there are some unique considerations when it comes to federal grants.

Firstly, the prime organization is responsible for ensuring that its subcompliance with all applicable regulations and requirements. This includes compliance with federal laws and regulations, as well as any specific terms and conditions of the cooperative agreement. The prime must also ensure that any costs incurred by the sub are reasonable, necessary, and allocable to the project.

Secondly, the sub may be subject to audits and reviews by the federal agency overseeing the cooperative agreement. This means that the sub must maintain accurate and transparent records of its work and expenses, and be prepared to provide evidence of its compliance and performance upon request.

Finally, the prime organization must ensure that the subcontractor’s work is fully integrated with the overall project plan and that the sub’s deliverables are on-time and of the required quality. The prime is ultimately responsible for the success of the project, so it’s crucial to choose subcontracts carefully and manage them effectively.


A subcontract under cooperative agreement can be a valuable tool for organizations seeking to collaborate on federal grants. By strategically outsourcing certain project activities to specialized third parties, the prime organization can optimize its use of resources and increase its chances of achieving project success. However, it’s important to bear in mind the unique legal and regulatory considerations of federal grants, and to ensure that all subcontracts are structured and managed effectively.

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