When it comes to US government funding for international development, two commonly used terms are contract and cooperative agreement. While both serve similar purposes, there are some key differences that are important to understand.

A contract is a legally binding agreement between two parties, where one party provides goods or services to the other in exchange for payment. In the context of USAID (United States Agency for International Development), a contract typically involves a private company or organization providing specific technical assistance or delivering goods and services such as building infrastructure or conducting research studies. The terms of the contract are spelled out in detail, including scope of work, timelines, deliverables, and payment schedules. The contractor is responsible for meeting all the requirements of the contract and delivering the results as agreed upon.

On the other hand, a cooperative agreement is a form of funding that involves a collaborative partnership between USAID and a recipient organization. The recipient may be a non-profit, educational institution, or government agency that shares USAID`s development goals and has the capacity to carry out the proposed project. Unlike a contract, a cooperative agreement involves more flexibility and less control by USAID over the implementing partner. The recipient organization has more autonomy in designing and implementing the project, including the ability to make adjustments to the project scope and budget as needed. However, the recipient must still adhere to the terms and conditions of the cooperative agreement, including reporting requirements and financial management standards.

While there are similarities between contracts and cooperative agreements, the main difference lies in the level of control and involvement by USAID. Contracts are more prescriptive, with USAID specifying exactly what it wants to buy and how it wants it delivered. Cooperative agreements are less prescriptive, with USAID providing general guidance on the project goals and allowing the recipient organization to design and implement the project in a way that best fits their expertise and context.

In summary, contracts and cooperative agreements are both important financing mechanisms for USAID`s development work, but they differ in their level of control and flexibility. Understanding these differences can help organizations better decide which funding mechanism is most appropriate for their specific project goals and objectives.