The business relationship between NASA and the recipient of a cooperative agreement differs from the relationship that exists between NASA and the recipient of a grant. Under the auspices of a grant, there is very little involvement and interaction between NASA and the grantee (other than a few administrative, funding, and reporting requirements, or in some cases matching of funds). Under a cooperative agreement, because of its substantial involvement, NASA assumes a higher degree of responsibility for the technical performance outcomes and associated financial costs of research activities. In some cooperative agreement projects, NASA may be required to indemnify the recipient (to the extent authorized by Congress). While the principal purpose of NASA's involvement and commitment of resources is to stimulate or support research activity, a major incentive for involvement by commercial firms (particularly where costs are shared) is the profit potential from marketable products expected to result from the cooperative agreement project.

Cooperative agreements (in areas or research relevant to NASA's mission) are ordinarily entered into with commercial firms to—

Support research and development;

Provide technology transfer from the Government to the recipient; or

Develop a capability among U.S. firms to potentially enhance U.S. competitiveness.

Projects that normally result in a cooperative agreement award to a commercial entity are projects that:

Are not intended for the direct benefit of NASA;

Are expected to benefit the general public;

Require substantial cost sharing; and

Have commercial applications and profit generating potential.

The principal purpose of cooperative agreements is to stimulate research to benefit the general public through the criteria stated in paragraphs (a) through (c) of this section. Since all research activities must be within NASA's authorized expenditure of appropriations, there may be instances where NASA can derive incidental use or benefits while preserving the principal purpose of the cooperative agreement. However, a careful balance must be established and maintained in the cooperative agreement's technical and business objectives, so that the principal purpose of the project serves to benefit the general public (i.e., technology will transfer from the Government to the public and the commercial partner expects a marketable product to result). If a cooperative agreement is awarded when the proper award instrument should have been a contract (because the primary purpose of the award is for the direct benefit of NASA), the cooperative agreement award can be protested. Thus, before pursuing any incidental benefits that materialize under a cooperative agreement, NASA Centers should ensure that the advice of legal counsel is obtained.