When you are in the midst of all the paperwork it is sometimes hard to distinguish between a grant and a contract. Many grants do look and feel like contracts, and vice versa. Nonetheless, it is important to remember the conceptual differences and the operational differences, because they can trigger substantial differences in procedure, in paperwork, and ultimately in legal responsibility.

Concepts

The key difference in practice is that grants are intended to assist an activity the sponsor wants to encourage, whereas contracts are meant to secure something the sponsor wants for its own use. In the parlance of the federal bureaucracy, it is the difference between "assistance" on the one hand and "procurement" or "acquisition" on the other. Thus the Catalog of Federal Domestic Assistance refers to grants and the Federal Acquisition Regulations refer to contracts.

Once it is clear that the sponsor intends to procure rather than assist, three important changes take place.

First, it means the sponsor has entered the marketplace, and for governmental sponsors at least that step triggers a host of regulations about the government's role in the marketplace -- concerns such as open competition, fair pricing, and liability. Universities and faculty members are not always familiar with these issues.

Second, it means the sponsor is interested in a "deliverable" -- some product or service that will be made available to it for its use -- and a schedule for producing the deliverable. The sponsor has the right to (and may actually) specify what it wants in great detail and even has the right to sue if the specifications are not met.

Third, it means the sponsor probably wants more control over related matters such as confidentiality, intellectual property rights, and the linkage between payments and progress.

Therefore the following kinds of issues often prove more important in contracts than in grants:

Deliverables & Schedules. These matters are at the heart of the difference between a grant and a contract. The start and completion dates for a grant usually only need to be reasonable, and often are adjusted to meet the recipient's needs, such as the academic year schedule. For a contract they may need to fit very specific criteria, usually for the sponsor's convenience.  A missed deadline or an incomplete product can have serious legal consequences.

Publication. For grants, most sponsors encourage the publication and dissemination of the project results,to increase the good effect of the sponsored work on society. The sponsor usually asks only that its financial support be acknowledged. In contracts, especially with private firms, the sponsor may wish to limit publication of the results. Because universities are committed to open publication of results, there may be difficult negotiations on this topic. 

Pricing. In grant reviews, price is usually only one consideration. In bidding on contracts, it may be the primary formal consideration. While grants are usually funded on a cost-reimbursement basis, in a contract there may be an agreement on a "fixed price", for example, in which the product or service will be delivered for the stated price regardless of actual cost.

Termination. Grant sponsors rarely seek the right to terminate for their own convenience; contract sponsors often do. The NOCCCD prefers to have mutual "exit clauses" as protection against uncertainty for both sides. 

Insurance and Indemnification. In most grant situations, it is presumed that the recipient assumes all liability for property damage and personal injury occasioned in the performance of the work. In a contract situation, it's not that simple. The contractor receiving funds for work may argue that insurance and indemnification should be assumed by the sponsor, because the contractor is doing the activity only at the requirement of the sponsor. The sponsor may argue that the payment it is making should buy it some freedom from worry. The NOCCCD does carry substantial insurance, but many of its contracts require special negotiations on insurance and indemnification. In general, the NOCCCD prefers mutual indemnification clauses.