The U.S. Air Force SBIR/STTR program offers contracts. It does NOT offer grants.
Contracts are more demanding than grants. A contracting agency is looking to procure a good or service that will be of direct benefit to the government. A contract is a binding agreement between a buyer and seller to provide goods or services in return for compensation. The scope of the work is fairly inflexible. There are frequent reporting requirements and payments are based on deliverables and milestones. Classified work is done as contracts, not grants.
Outside of the U.S. Air Force SBIR/STTR program, the federal government uses grants to accomplish a public purpose, advance a national objective, address a public problem, or stimulate a particular activity desired by the awarding Agency. Grants are very flexible, allowing considerable latitude to the Principal Investigator, or PI. With grants, the applicant often defines the scope of work. The PI is required to make their best effort and has more freedom to adapt the project and the outcome, since there is no legally binding requirement to achieve results. The payment method is also more flexible, often using a “drawdown” system.