[Federal Register: August 7, 2003 (Volume 68, Number 152)]
[Rules and Regulations]
[Page 47149-47200]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au03-10]
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Part II
Department of Defense
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32 CFR Part 21, et al.
DoD Grant and Agreement Regulations; Final Rule
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Parts 21, 22, 32, 34, and 37
RIN 0790-AG87
DoD Grant and Agreement Regulations
AGENCY: Office of the Secretary, DoD.
ACTION: Final rule.
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SUMMARY: The Department of Defense (DoD) is adding a new part to the
DoD Grant and Agreement Regulations (DoDGARs) to incorporate policies
and procedures for the award and administration of technology
investment agreements (TIAs). TIAs are a relatively new class of
assistance instruments. DoD Components use TIAs to support or stimulate
defense research projects involving for-profit firms, especially
commercial firms that do business primarily in the commercial
marketplace. The new part therefore gives DoD agreements officers
greater flexibility to negotiate award provisions in areas that can
present barriers to those commercial firms (e.g., intellectual
property, audits, and cost principles). The DoD also is revising
several additional parts of the DoDGARs to conform them with the new
part.
DATES: These final rules are effective on September 8, 2003.
FOR FURTHER INFORMATION CONTACT: Mark Herbst, (703) 696-0372.
SUPPLEMENTARY INFORMATION:
A. Background and Basis for the Rulemaking
The Congress and the DoD have a civil-military integration policy
that envisions a national technology and industrial base capable of
meeting national security objectives, including the performance of
research and development to ensure that our armed forces have systems
with superior technology. The policy calls for DoD reliance, to the
maximum extent practicable, on the commercial sector of that technology
and industrial base.
To help achieve civil-military integration, the Congress in 1989
enacted 10 U.S.C. 2371, ``Research projects: Transactions other than
contracts and grants'' to authorize DoD use of cooperative agreements
and other transactions. Using this authority, DoD Components through
the mid-1990s developed types of cooperative agreements and other
transactions to support research (called ``dual-use'' research) with
good potential for both commercial and defense applications. The DoD in
1997 issued interim guidance that merged various cooperative agreements
and other transactions that were similar to each other into a single
class of assistance instruments called technology investment agreements
(TIAs).
This rulemaking's primary purpose is to establish policies and
procedures for the award and administration of TIAs, based on the DoD
Components' experience with them. The specific actions that the DoD is
taking in order to do so are to:
[sbull] Adopt the new part 37 of the DoDGARs (32 CFR part 37) to
cover TIAs. The new part is in plain language format.
[sbull] Revise the existing part 21 of the DoDGARs (32 CFR part 21)
that sets out DoD Components' general responsibilities for managing
assistance functions. The revision makes part 21 apply to TIAs, as well
as other assistance instruments, and recasts it in a plain language
format.
[sbull] Make minor amendments to the existing parts 22, 32, and 34
of the DoDGARs (32 CFR parts 22, 32, and 34), to conform those parts
with the new part 37 and the revised part 21.
B. Comments and Responses
DoD published a proposed rule in the Federal Register on April 30,
2002 (67 FR 21486) requesting comments on a proposal to make the
changes described in the previous paragraph. We received comments from
an industry association representing firms doing business in the
commercial marketplace, one for-profit Government contractor, an
association of academic institutions, and a number of DoD Components.
We considered all comments in developing the final rule.
Commenters raised specific issues but supported the creation of
TIAs as a new class of assistance instruments and responded favorably
to the rules' plain language format and clarity. The following
paragraphs summarize the more significant specific issues raised by the
comments and the responses to them. The comments are grouped by the
subpart of part 37 to which they apply and therefore by subject area.
In addition to the changes noted in the following paragraphs, we made
other changes to update references and increase readability.
Situations for Use of TIAs (Subpart B)
Comment: One commenter said it was unsure of the basis for
encouraging awards to consortia, other than the reason given in Sec.
37.210(c)(1) [which is that consortium members are more equal partners
in research performance and more directly involved in planning the
effort, reviewing progress, and overseeing financial aspects of the
project than subawardees under a prime recipient usually are]. The
commenter questioned the statement in the rule that there is less self-
governance when a single firm is the recipient, rather than a
consortium that may include multiple for-profit recipients that
normally are competitors within an industry.
Response: No change. DoD agreements officers who have awarded and
administered TIAs believe that interactions among a consortium's
members can increase self-governance. One reason is that the members
have more insight into each other's efforts than a subawardee has into
the efforts of a prime awardee. Coupled with that insight, each member
has an interest in ensuring that other members make their agreed-upon
technical and financial contributions to the project. Importantly, the
regulatory language in Sec. 37.210 does not prohibit awards to single
firms. It states that the agreements officer should consider whether an
award to a single firm requires greater involvement of the Federal
program official, but it gives the agreements officer the necessary
authority to make the decision using his or her good business judgment.
Types of TIAs (Subpart C)
Comment: One commenter strongly recommended dropping fixed-support
TIAs from the rule and said that this type of instrument appeared to be
a fixed-price development contract by another name. The comment cited
the proposed Sec. 37.560, in which it is acknowledged that the
contractor would be responsible for all further costs needed to
complete the project, beyond the Federal Government's agreed-upon level
of support.
Response: Fixed-support TIAs are not fixed-price development
contracts by another name. Procurement contracts are used to acquire
goods and services for the Government. TIAs are assistance instruments
that DoD Components use to invest in dual-use research that is of
mutual interest to recipients, due to the commercial potential of the
research, and to the DoD, due to its defense potential. The recipient's
interest is one reason that 50% cost sharing, to the extent
practicable, is a statutory condition for any TIA under the authority
of 10 U.S.C. 2371 and is a matter of policy for all other TIAs (see
Sec. 37.215 of the rule).
With substantial cost sharing, a fixed-support TIA is a viable
alternative instrument that a DoD Component may offer to a prospective
recipient accustomed to commercial practices, if it cannot accept all
of the administrative
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requirements associated with an expenditure-based instrument. The use
of a fixed-support TIA properly is a matter of negotiation between the
DoD agreements officer and the recipient. The agreements officer should
agree to a fixed-support TIA only if he or she is sufficiently
confident in estimated project costs to be sure that the recipient's
cost sharing will be at least the minimum amount desired by the Federal
Government, even if the actual costs are at the low end of the original
estimates. There is no obligation for the recipient to accept this type
of TIA and it should not do so unless it believes that the benefits
justify any risk it perceives of an increased cost share, if actual
costs are at the high end of the original estimates. The proposed rule
did not intend for agreements officers to pressure potential recipients
to accept fixed-support TIAs against their better judgment.
Nonetheless, on the basis of the concern expressed in the comment,
we added a new paragraph (c) to Sec. 37.560 to make it clear that the
agreements officer may not use a shortage of Federal Government funding
for the program as a reason to try to persuade a recipient to accept a
fixed-support TIA, rather than an expenditure-based instrument, or to
accept responsibility for a greater share of the total project costs
than it otherwise is willing to offer.
Competition (Subpart D)
Comment: One commenter noted that the proposed part 37 strongly
supports the use of competitive procedures but does not completely
prohibit sole source awards. The commenter recommended that the rule
explain what documentation is necessary if a sole source award of a TIA
is contemplated.
Response: No change. In Sec. 37.1020, which addresses what the
agreements officer must document in the award file, paragraph (b) calls
for documentation describing the award process and explaining how the
agreements officer and program officials solicited and evaluated
proposals and selected the one supported through the TIA. This includes
documentation for a sole source award.
Comment: Two commenters said that the proposed Sec. 37.215, which
discusses the requirement for recipient cost sharing, also acknowledges
that lesser contributions may be deemed ``practicable.'' Nevertheless,
the commenters said, Sec. 37.415 should call for agreements officers
to include language in solicitations putting potential proposers on
notice about the statutory requirement for them to provide, to the
extent practicable, 50% cost share.
Response: Agree. We added a new paragraph (a) to Sec. 37.415.
Comment: One commenter questioned whether five years should be the
limit on the period for which the Government will protect proposals and
other proprietary information submitted by proposers, as provided in
the proposed Sec. Sec. 37.420 and 37.900. The commenter said that the
five-year period should be the basic level of protection provided to
all proposers under the regulations. The commenter added that such
information should be protected under the Freedom of Information Act
(FOIA) for as long as it retains its value as confidential business
information, the release of which could cause harm to a proposer.
Response: We revised Sec. 37.420 to explain that certain
information may be protected for longer periods if it meets any of the
criteria for exemptions under the FOIA. For information that does not
meet any of those criteria, Sec. 37.420 cites a five-year period
because that is the period for which 10 U.S.C. 2371 provides additional
authority to protect information submitted by proposers. With that
change, there is no need to revise Sec. 37.900 because it already
refers to Sec. 37.420 for the substantive coverage on this subject.
Pre-Award Business Evaluation (Subpart E)
Comment: One commenter did not totally agree with the discussion of
direct and indirect costs in the proposed Sec. 37.570 and questioned
whether a Cost Accounting Standards (CAS) noncompliance would
necessarily be involved. The commenter noted that a for-profit firm
generally recovers Independent Research and Development (IR&D) costs as
part of the General and Administrative (G&A) cost pool, but said that
those costs are not all indirect costs. The commenter said that the
basic unit for IR&D is the project, in accordance with CAS Sec.
9904.420 (``Accounting for Independent Research and Development and Bid
and Proposal Costs,'' in chapter 99 of 48 CFR) and that all direct
costs of the project are charged directly to the project. The commenter
added that: (1) A contract and an IR&D project are set up similarly in
most accounting systems, as far as job numbers and how the work is
charged; (2) indirect charges are applied to the project's direct labor
and material costs, but no G&A is applied because IR&D project costs
are recovered in a G&A pool; and (3) a credit is applied to the pool if
the Government pays part of a cost, reducing the amount in the pool to
be recovered.
Response: We revised Sec. 37.570 to remove the references to
indirect cost. We also revised the section to require agreements
officers to alert the participant to the potential for a CAS violation,
as well as the Administrative Contracting Officer with cognizance over
the participant's Federal procurement contracts, if the participant is
subject to CAS and is proposing to account differently for its own and
the Federal Government's share of project costs.
Comment: One commenter said that the proposed section 37.575
addressed agreements officers' responsibilities for determining
milestone payment amounts but also should require a determination that
the milestone amounts are fair and reasonable estimates for the efforts
to be carried out. The commenter further recommended revising the
section to recognize that future milestone amounts might be adjusted
for reasons other than specified cost-share percentages (e.g., if
expenditures are significantly more than expected).
Response: We agree that this section needs clarification.
Discussion with the commenter, a DoD Component, revealed that the use
of the word ``budget'' in the first sentence of the section caused some
confusion because it can be interpreted in different ways (e.g., to
mean the budget of the DoD program or the proposed budget for the
research project). Rather than defining ``budget,'' we revised the
first sentence of paragraph 37.575(a) to say that the agreements
officer must assess the reasonableness of the estimated ``amount,''
rather than ``budget,'' for reaching each milestone. In response to
this comment, we also revised paragraph 37.1010(e) to tell agreements
officers that the payment provision for a TIA using the milestone
payment method must tell the recipient that post-award administrators
may adjust amounts of future milestone payments if a project's
expenditures fall too far below the projections that were the basis for
setting the amounts.
Award Terms Affecting Participants' Financial, Property, and Purchasing
Systems (Subpart F)
Comment: One commenter recommended increasing the $300,000
threshold in the proposed Sec. 37.645 for audits of for-profit firms
to at least $500,000 to ensure consistency with other oversight
thresholds in the Department of Defense.
Response: We based the proposed threshold of $300,000 on the
government-wide threshold under the Single Audit Act (31 U.S.C. 7500 et
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seq.), as implemented by OMB Circular A-133. That government-wide
policy applies to audits of State and local governments and other
nonprofit recipients of Federal assistance and cost-type procurement
contracts. The OMB just increased that threshold to $500,000. We
increased the threshold for for-profit recipients in this rule to
$500,000 to parallel the OMB change, so that the requirement for for-
profit participants is consistent with requirements for the other types
of organizations that also may participate in the performance of
research projects under TIAs.
Award Terms Related to Other Administrative Requirements (Subpart G)
Comment: One commenter noted that the proposed rule contained
general guidance for agreements officers to consider on the scope of
intellectual property (IP) rights, but recommended adding a paragraph
37.840(c). The new paragraph would say that agreements officers should
consider the core principles in the DoD document entitled
``Intellectual Property: Navigating Through Commercial Waters'' when
dealing with industry regarding IP and that any overall IP strategy the
agreements officer develops for a TIA should be consistent with the
core principles and guidance in that document. The commenter noted that
the document focused on procurement contracts subject to the Federal
Acquisition Regulation, but thought that it provided background on IP
issues and stakeholder positions, as well as a consistent agency
position.
Response: No change. As noted by the commenter, the document
entitled ``Intellectual Property: Navigating Through Commercial
Waters'' is written specifically for procurement contracts. Moreover,
we prepared the guidance for agreements officers in Sec. Sec. 37.840
through 37.875 to contain the substance of that document's five core
principles, in language more appropriate for research projects carried
out under TIAs.
Comment: One commenter disagreed with the language in the proposed
paragraph 37.875(b)(2). This paragraph about foreign access to
technology says that a TIA must provide that any transfer of the
exclusive right to use or sell technology in the United States must,
unless the Federal Government grants a waiver, require that products
embodying the technology or produced through the use of the technology
will be manufactured substantially in the United States. The commenter
stated that the agreement should not impose conditions in this area
beyond the requirement to comply with U.S. export laws, regulations and
policies, as described in paragraph 37.875(b)(1).
Response: No change. The substance of paragraph (b)(2) parallels a
national policy that is codified in what is known as the Bayh-Dole Act
(35 U.S.C. chapter 18). That act governs patent rights in inventions
made under Federally supported research or development performed by
small businesses or nonprofit organizations under grants, cooperative
agreements, or procurement contracts. One section of the act (35 U.S.C.
204) establishes the preference for substantial domestic manufacture in
conjunction with any transfer of the exclusive right to use or sell an
invention in the United States.
The same policy makes sense for access to technology generated
under TIAs. As we seek to enhance national security by increasing DoD
reliance on the commercial sectors of the U.S. technology and
industrial bases, a legitimate concern is that we not preclude, through
exclusive licensing, domestic sources that can provide ready and
reliable access to defense technology. We do retain in paragraph (b)(2)
the same flexibility as the Bayh-Dole Act to waive the requirement for
substantial manufacture in individual cases where doing so is
warranted.
Executing the Award (Subpart H)
Comment: One commenter recommended that the rule require the
agreements officer to include documentation in the award file of any
fixed-support TIA to describe the process and methods used to estimate
expenditures, the recipient's minimum cost share, and the fixed level
of Federal support. The purpose of this documentation would be to
ensure that information is available to measure DoD Component's program
implementation and use of funds.
Response: We revised paragraph 37.1020(d) to include the additional
documentation requirement.
Executive Order 12866
This regulatory action is not a significant regulatory action, as
defined by Executive Order 12866.
Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))
This regulatory action will not have a significant adverse impact
on a substantial number of small entities. Under part 37, small
entities are subject either to requirements that parallel government-
wide requirements that OMB Circular A-110 establishes for other
assistance awards, or to less burdensome requirements that enable firms
from the commercial marketplace to participate in DoD research.
Unfunded Mandates Act of 1995 (Sec. 202, Pub. L. 104-4)
This regulatory action does not contain a Federal mandate that will
result in the expenditure by State, local, and tribal governments, in
aggregate, or by the private sector of $100 million or more in any one
year.
Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35)
This regulatory action will not impose any additional reporting or
recordkeeping requirements under the Paperwork Reduction Act.
Participant reporting and recordkeeping requirements in part 37 either
are parallel to, or less burdensome than, government-wide requirements
already established in OMB Circular A-110.
Federalism (Executive Order 13132)
This regulatory action does not have Federalism implications, as
set forth in Executive Order 13132. It will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
List of Subjects
32 CFR Part 21
Grant programs, Grants administration.
32 CFR Part 22
Accounting, Grant programs, Grants administration, Reporting and
recordkeeping requirements.
32 CFR Part 32
Accounting, Colleges and universities, Grant programs, Grants
administration, Hospitals, Nonprofit organizations, Reporting and
recordkeeping requirements.
32 CFR Part 34
Accounting, Business and industry, Grant programs, Grants
administration, Reporting and recordkeeping requirements.
32 CFR Part 37
Accounting, Administrative practice and procedure, Grant programs,
Grants administration, Reporting and recordkeeping requirements.
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Dated: July 16, 2003.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
0
Accordingly, Title 32 of the Code of Federal Regulations, chapter I,
subchapter C is amended as follows.
0
1. Part 21 is revised to read as follows:
PART 21--DoD GRANTS AND AGREEMENTS--GENERAL MATTERS
Subpart A--Introduction
Sec.
21.100 What are the purposes of this part?
Subpart B--Defense Grant and Agreement Regulatory System
21.200 What is the Defense Grant and Agreement Regulatory System
(DGARS)?
21.205 What types of instruments are covered by the DGARS?
21.210 What are the purposes of the DGARS?
21.215 Who is responsible for the DGARS?
21.220 What publications are in the DGARS?
Subpart C--The DoD Grant and Agreement Regulations
21.300 What instruments are subject to the DoD Grant and Agreement
Regulations (DoDGARs)?
21.305 What is the purpose of the DoDGARs?
21.310 Who ensures DoD Component compliance with the DoDGARs?
21.315 May DoD Components issue supplemental policies and procedures
to implement the DoDGARs?
21.320 Are there areas in which DoD Components must establish
policies and procedures to implement the DoDGARs?
21.325 Do acquisition regulations also apply to DoD grants and
agreements?
21.330 How are the DoDGARs published and maintained?
21.335 Who can authorize deviations from the DoDGARs?
21.340 What are the procedures for requesting and documenting
deviations?
Subpart D--Authorities and Responsibilities for Making and
Administering Assistance Awards
21.400 To what instruments does this subpart apply?
21.405 What is the purpose of this subpart?
21.410 Must a DoD Component have statutory authority to make an
assistance award?
21.415 Must the statutory authority specifically mention the use of
grants or other assistance instruments?
21.420 Under what types of statutory authorities do DoD Components
award assistance instruments?
21.425 How does a DoD Component's authority flow to awarding and
administering activities?
21.430 What are the responsibilities of the head of the awarding or
administering activity?
21.435 Must DoD Components formally select and appoint grants
officers and agreements officers?
21.440 What are the standards for selecting and appointing grants
officers and agreements officers?
21.445 What are the requirements for a grants officer's or
agreements officer's statement of appointment?
21.450 What are the requirements for a termination of a grants
officer's or agreements officer's appointment?
21.455 Who can sign, administer, or terminate assistance
instruments?
21.460 What is the extent of grants officers' and agreements
officers' authority?
21.465 What are grants officers' and agreements officers'
responsibilities?
Subpart E--Information Reporting on Awards Subject to 31 U.S.C. Chapter
61
21.500 What is the purpose of this subpart?
21.505 What is the Catalog of Federal Domestic Assistance (CFDA)?
21.510 Why does the DoD report information to the CFDA?
21.515 Who reports the information for the CFDA?
21.520 What are the purposes of the Defense Assistance Awards Data
System (DAADS)?
21.525 Who issues policy guidance for the DAADS?
21.530 Who operates the DAADS?
21.535 Do DoD Components have central points for collecting DAADS
data?
21.540 What are the duties of the DoD Components' central points for
the DAADS?
21.545 Must DoD Components report every obligation to the DAADS?
21.550 Must DoD Components relate reported actions to listings in
the CFDA?
21.555 When and how must DoD Components report to the DAADS?
21.560 Must DoD Components assign numbers uniformly to awards?
Subpart F--Definitions
21.605 Acquisition.
21.610 Agreements officer.
21.615 Assistance.
21.620 Award.
21.625 Contract.
21.630 Contracting activity.
21.635 Contracting officer.
21.640 Cooperative agreement.
21.645 Deviation.
21.650 DoD Components.
21.655 Grant.
21.660 Grants officer.
21.665 Nonprocurement instrument.
21.670 Procurement contract.
21.675 Recipient.
21.680 Technology investment agreements.
Appendix A to Part 21--Instruments to Which DoDGARs Portions Apply
Authority: 5 U.S.C. 301 and 10 U.S.C. 113.
Subpart A--Introduction
Sec. 21.100 What are the purposes of this part?
This part of the DoD Grant and Agreement Regulations:
(a) Provides general information about the Defense Grant and
Agreement Regulatory System (DGARS).
(b) Sets forth general policies and procedures related to DoD
Components' overall management of functions related to assistance and
certain other nonprocurement instruments subject to the DGARS (see
Sec. 21.205(b)).
Subpart B--Defense Grant and Agreement Regulatory System
Sec. 21.200 What is the Defense Grant and Agreement Regulatory System
(DGARS)?
The Defense Grant and Agreement Regulatory System (DGARS) is the
system of regulatory policies and procedures for the award and
administration of DoD Components' assistance and other nonprocurement
awards. DoD Directive 3210.6\1\ established the DGARS.
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\1\ Electronic copies may be obtained at the Washington
Headquarters Services Internet site http://www.dtic.mil/whs/directives.
Paper copies may be obtained, at cost, from the National
Technical Information Service, 5285 Port Royal Road, Springfield, VA
22161.
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Sec. 21.205 What types of instruments are covered by the DGARS?
The Defense Grant and Agreement Regulatory System (DGARS) applies
to the following types of funding instruments awarded by DoD
Components:
(a) All grants, cooperative agreements, and technology investment
agreements.
(b) Other nonprocurement instruments, as needed to implement
statutes, Executive orders, or other Federal Governmentwide rules that
apply to those other nonprocurement instruments, as well as to grants
and cooperative agreements.
Sec. 21.210 What are the purposes of the DGARS?
The purposes of the DGARS are to provide uniform policies and
procedures for DoD Components' awards, in order to meet DoD needs for:
(a) Efficient program execution, effective program oversight, and
proper stewardship of Federal funds.
(b) Compliance with relevant statutes; Executive orders; and
applicable guidance, such as Office of Management and Budget (OMB)
circulars.
(c) Collection from DoD Components, retention, and dissemination of
management and fiscal data related to awards.
Sec. 21.215 Who is responsible for the DGARS?
The Director of Defense Research and Engineering, or his or her
designee, develops and implements DGARS
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policies and procedures. He or she does so by issuing and maintaining
the DoD publications that comprise the DGARS.
Sec. 21.220 What publications are in the DGARS?
A DoD publication (DoD 3210.6-R \2\) entitled ``The DoD Grant and
Agreement Regulations'' is the principal element of the DGARS. The
Director of Defense Research and Engineering also may publish DGARS
policies and procedures in DoD instructions and other DoD publications,
as appropriate.
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\2\ See footnote 1 to Sec. 21.200.
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Subpart C--The DoD Grant and Agreement Regulations
Sec. 21.300 What instruments are subject to the DoD Grant and
Agreement Regulations (DoDGARs)?
(a) The types of instruments that are subject to the DoDGARs vary
from one portion of the DoDGARs to another. The types of instruments
include grants, cooperative agreements, and technology investment
agreements. Some portions of the DoDGARs apply to other types of
assistance or nonprocurement instruments. The term ``awards,'' as
defined in subpart D of this part, is used in this part to refer
collectively to all of the types of instruments that are subject to one
or more portions of the DoDGARs.
(b) Note that each portion of the DoDGARs identifies the types of
instruments to which it applies. However, grants officers and
agreements officers must exercise caution when determining the
applicability of some Governmentwide rules that are included within the
DoDGARs, because a term may be defined differently in a Governmentwide
rule than it is defined elsewhere in the DoDGARs. One example is part
33 of the DoDGARs (32 CFR part 33), which contains administrative
requirements for awards to State and local governments. That DoDGARs
part is the DoD's codification of the Governmentwide rule implementing
OMB Circular A-102.\3\ Part 33 states that it applies to grants, but
defines the term ``grant'' to include cooperative agreements and other
forms of financial assistance.
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\3\ Electronic copies may be obtained at the Internet site
http://www.whitehouse.gov/OMB. For paper copies, contact the Office
of Management and Budget, EOP Publications, 725 17th St., NW., New
Executive Office Building, Washington, DC 20503.
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(c) For convenience, the table in Appendix A to this part provides
an overview of the applicability of the various portions of the
DoDGARs.
Sec. 21.305 What is the purpose of the DoDGARs?
The DoD Grant and Agreement Regulations provide uniform policies
and procedures for the award and administration of DoD Components'
awards. The DoDGARs are the primary DoD regulations for achieving the
DGARS purposes described in Sec. 21.210.
Sec. 21.310 Who ensures DoD Component compliance with the DoDGARs?
The Head of each DoD Component that makes or administers awards, or
his or her designee, is responsible for ensuring compliance with the
DoDGARs within that DoD Component.
Sec. 21.315 May DoD Components issue supplemental policies and
procedures to implement the DoDGARs?
Yes, Heads of DoD Components or their designees may issue
regulations, procedures, or instructions to implement the DGARS or
supplement the DoDGARs to satisfy needs that are specific to the DoD
Component, as long as the regulations, procedures, or instructions do
not impose additional costs or administrative burdens on recipients or
potential recipients.
Sec. 21.320 Are there areas in which DoD Components must establish
policies and procedures to implement the DoDGARs?
Yes, Heads of DoD Components or their designees must establish
policies and procedures in areas where uniform policies and procedures
throughout the DoD Component are required, such as for:
(a) Requesting class deviations from the DoDGARs (see Sec. Sec.
21.335(b) and 21.340(a)) or exemptions from the provisions of 31 U.S.C.
6301 through 6308, that govern the appropriate use of contracts,
grants, and cooperative agreements (see 32 CFR 22.220).
(b) Designating one or more Grant Appeal Authorities to resolve
claims, disputes, and appeals (see 32 CFR 22.815).
(c) Reporting data on assistance awards and programs, as required
by 31 U.S.C. chapter 61 (see subpart E of this part).
(d) Prescribing requirements for use and disposition of real
property acquired under awards, if the DoD Component makes any awards
to institutions of higher education or to other nonprofit organizations
under which real property is acquired in whole or in part with Federal
funds (see 32 CFR 32.32).
Sec. 21.325 Do acquisition regulations also apply to DoD grants and
agreements?
Unless the DoDGARs specify that they apply, policies and procedures
in the following acquisition regulations that apply to procurement
contracts do not apply to grants, cooperative agreements, technology
investment agreements, or to other assistance or nonprocurement awards:
(a) The Federal Acquisition Regulation (FAR)(48 CFR parts 1-53).
(b) The Defense Federal Acquisition Regulation Supplement
(DFARS)(48 CFR parts 201-270).
(c) DoD Component supplements to the FAR and DFARS.
Sec. 21.330 How are the DoDGARs published and maintained?
(a) The DoD publishes the DoDGARs in chapter I, subchapter C, Title
32 of the Code of Federal Regulations (CFR) and in a separate internal
DoD document (DoD 3210.6-R). The DoD document is divided into parts,
subparts, and sections, to parallel the CFR publication. Cross-
references within the DoDGARs are stated as CFR citations (e.g., a
reference to Sec. 21.215 in part 21 would be to 32 CFR 21.215).
(b) The DoD publishes updates to the DoDGARs in the Federal
Register. When finalized, the DoD also posts the updates to the
internal DoD document on the World Wide Web at http://www.dtic.mil/whs/directives
.
(c) A standing working group recommends revisions to the DoDGARs to
the Director of Defense Research and Engineering (DDR&E). The DDR&E,
Director of Defense Procurement, and each Military Department must be
represented on the working group. Other DoD Components that make or
administer awards may also nominate representatives. The working group
meets when necessary.
Sec. 21.335 Who can authorize deviations from the DoDGARs?
(a) The Head of the DoD Component or his or her designee may
authorize individual deviations from the DoDGARs, which are deviations
that affect only one award, if the deviations are not prohibited by
statute, executive order or regulation.
(b) The Director of Defense Research and Engineering (DDR&E) or his
or her designee must approve in advance any class deviation that
affects more than one award. Note that OMB concurrence also is required
for class deviations from two parts of the DoDGARs, 32 CFR parts 32 and
33, in accordance with 32 CFR 32.4 and 33.6, respectively.
Sec. 21.340 What are the procedures for requesting and documenting
deviations?
(a) DoD Components must submit copies of justifications and agency
approvals for individual deviations and written requests for class
deviations to:
[[Page 47155]]
Deputy Director of Defense Research and Engineering, ATTN: Basic
Research, 3080 Defense Pentagon, Washington, DC 20301-3080.
(b) Grants officers and agreements officers must maintain copies of
requests and approvals for individual and class deviations in award
files.
Subpart D--Authorities and Responsibilities for Making and
Administering Assistance Awards
Sec. 21.400 To what instruments does this subpart apply?
This subpart applies to grants, cooperative agreements, and
technology investment agreements, which are legal instruments used to
reflect assistance relationships between the United States Government
and recipients.
Sec. 21.405 What is the purpose of this subpart?
This subpart describes the sources and flow of authority to make or
administer assistance awards, and assigns the broad responsibilities
associated with DoD Components' use of those instruments.
Sec. 21.410 Must a DoD Component have statutory authority to make an
assistance award?
Yes, the use of an assistance instrument to carry out a program
requires authorizing legislation. That is unlike the use of a
procurement contract, for which Federal agencies have inherent,
Constitutional authority.
Sec. 21.415 Must the statutory authority specifically mention the use
of grants or other assistance instruments?
No, the statutory authority described in Sec. 21.410 need not
specifically say that the purpose of the program is assistance or
mention the use of any type of assistance instrument. However, the
intent of the statute must support a judgment that the use of an
assistance instrument is appropriate. For example, a DoD Component may
judge that the principal purpose of a program for which it has
authorizing legislation is assistance, rather than acquisition. The DoD
Component would properly use an assistance instrument to carry out that
program, in accordance with 31 U.S.C. chapter 63.
Sec. 21.420 Under what types of statutory authorities do DoD
Components award assistance instruments?
DoD Components may use assistance instruments under a number of
statutory authorities that fall into three categories:
(a) Authorities that statutes provide to the Secretary of Defense.
These authorities generally are delegated by the Secretary of Defense
to Heads of DoD Components, usually through DoD directives,
instructions, or policy memoranda that are not part of the Defense
Grant and Agreement Regulatory System. Examples of statutory
authorities in this category are:
(1) Authority under 10 U.S.C. 2391 to award grants or cooperative
agreements to help State and local governments alleviate serious
economic impacts of defense program changes (e.g., base openings and
closings, contract changes, and personnel reductions and increases).
(2) Authority under 10 U.S.C. 2413 to enter into cooperative
agreements with entities that furnish procurement technical assistance
to businesses.
(b) Authorities that statutes may provide directly to Heads of DoD
Components. When a statute authorizes the Head of a DoD Component to
use a funding instrument to carry out a program with a principal
purpose of assistance, use of that authority requires no delegation by
the Secretary of Defense. For example, 10 U.S.C. 2358 authorizes the
Secretaries of the Military Departments, in addition to the Secretary
of Defense, to perform research and development projects through grants
and cooperative agreements. Similarly, 10 U.S.C. 2371 provides
authority for the Secretaries of the Military Departments and Secretary
of Defense to carry out basic, applied, or advanced research projects
using assistance instruments other than grants and cooperative
agreements. A Military Department's use of the authority of 10 U.S.C.
2358 or 10 U.S.C. 2371 therefore requires no delegation by the
Secretary of Defense.
(c) Authorities that arise indirectly as the result of statute. For
example, authority to use an assistance instrument may result from:
(1) A federal statute authorizing a program that is consistent with
an assistance relationship (i.e., the support or stimulation of a
public purpose, rather than the acquisition of a good or service for
the direct benefit of the Department of Defense). In accordance with 31
U.S.C. chapter 63, such a program would appropriately be carried out
through the use of grants or cooperative agreements. Depending upon the
nature of the program (e.g., research) and whether the program statute
includes authority for any specific types of instruments, there also
may be authority to use other assistance instruments.
(2) Exemptions requested by the Department of Defense and granted
by the Office of Management and Budget under 31 U.S.C. 6307, as
described in 32 CFR 22.220.
Sec. 21.425 How does a DoD Component's authority flow to awarding and
administering activities?
The Head of a DoD Component, or his or her designee, may delegate
to the heads of contracting activities (HCAs) within the Component,
that Component's authority to make and administer awards, to appoint
grants officers and agreements officers (see Sec. Sec. 21.435 through
21.450), and to broadly manage the DoD Component's functions related to
assistance instruments. The HCA is the same official (or officials)
designated as the head of the contracting activity for procurement
contracts, as defined at 48 CFR 2.101. The intent is that overall
management responsibilities for a DoD Component's functions related to
nonprocurement instruments be assigned only to officials that have
similar responsibilities for procurement contracts.
Sec. 21.430 What are the responsibilities of the head of the awarding
or administering activity?
When designated by the Head of the DoD Component or his or her
designee (see 32 CFR 21.425), the head of the awarding or administering
activity (i.e., the HCA) is responsible for the awards made by or
assigned to that activity. He or she must supervise and establish
internal policies and procedures for that activity's awards.
Sec. 21.435 Must DoD Components formally select and appoint grants
officers and agreements officers?
Yes, each DoD Component that awards grants or enters into
cooperative agreements must have a formal process (see Sec. 21.425)
for selecting and appointing grants officers and for terminating their
appointments. Similarly, each DoD Component that awards or administers
technology investment agreements must have a process for selecting and
appointing agreements officers and for terminating their appointments.
Sec. 21.440 What are the standards for selecting and appointing
grants officers and agreements officers?
In selecting grants officers and agreements officers, DoD
Components must use the following minimum standards:
(a) In selecting a grants officer, the appointing official must
judge whether the candidate has the necessary experience, training,
education, business acumen, judgment, and knowledge of assistance
instruments and contracts to function effectively as a grants officer.
The appointing official also must take those attributes of the
[[Page 47156]]
candidate into account when deciding the complexity and dollar value of
the grants and cooperative agreements to be assigned.
(b) In selecting an agreements officer, the appointing official
must consider all of the same factors as in paragraph (a) of this
section. In addition, the appointing official must consider the
candidate's ability to function in the less structured environment of
technology investment agreements, where the rules provide more latitude
and the individual must have a greater capacity for exercising
judgment. Agreements officers therefore should be individuals who have
demonstrated expertise in executing complex assistance and acquisition
instruments.
Sec. 21.445 What are the requirements for a grants officer's or
agreements officer's statement of appointment?
A statement of a grants officer's or agreements officer's
appointment:
(a) Must be in writing.
(b) Must clearly state the limits of the individual's authority,
other than limits contained in applicable laws or regulations.
Information on those limits of a grants officer's or agreements
officer's authority must be readily available to the public and agency
personnel.
(c) May, if the individual is a contracting officer, be
incorporated into his or her statement of appointment as a contracting
officer (i.e., there does not need to be a separate written statement
of appointment for assistance instruments).
Sec. 21.450 What are the requirements for a termination of a grants
officer's or agreements officer's appointment?
A termination of a grants officer's or agreements officer's
authority:
(a) Must be in writing, unless the written statement of appointment
provides for automatic termination.
(b) May not be retroactive.
(c) May be integrated into a written termination of the
individual's appointment as a contracting officer, as appropriate.
Sec. 21.455 Who can sign, administer, or terminate assistance
instruments?
Only grants officers are authorized to sign, administer, or
terminate grants or cooperative agreements (other than technology
investment agreements) on behalf of the Department of Defense.
Similarly, only agreements officers may sign, administer, or terminate
technology investment agreements.
Sec. 21.460 What is the extent of grants officers' and agreements
officers' authority?
Grants officers and agreements officers may bind the Government
only to the extent of the authority delegated to them in their written
statements of appointment (see Sec. 21.445).
Sec. 21.465 What are grants officers' and agreements officers'
responsibilities?
Grants officers and agreements officers should be allowed wide
latitude to exercise judgment in performing their responsibilities,
which are to ensure that:
(a) Individual awards are used effectively in the execution of DoD
programs, and are made and administered in accordance with applicable
laws, Executive orders, regulations, and DoD policies.
(b) Sufficient funds are available for obligation.
(c) Recipients of awards receive impartial, fair, and equitable
treatment.
Subpart E--Information Reporting on Awards Subject to 31 U.S.C.
Chapter 61
Sec. 21.500 What is the purpose of this subpart?
This subpart prescribes policies and procedures for compiling and
reporting data related to DoD awards and programs that are subject to
information reporting requirements of 31 U.S.C. chapter 61. That
chapter of the U.S. Code requires the Office of Management and Budget
to maintain a Governmentwide information system to collect data on
Federal agencies' domestic assistance awards and programs.
Sec. 21.505 What is the Catalog of Federal Domestic Assistance
(CFDA)?
The Catalog of Federal Domestic Assistance (CFDA) is a
Governmentwide compilation of information about domestic assistance
programs. It covers all domestic assistance programs and activities,
regardless of the number of awards made under the program, the total
dollar value of assistance provided, or the duration. In addition to
programs using grants and agreements, covered programs include those
providing assistance in other forms, such as payments in lieu of taxes
or indirect assistance resulting from Federal operations.
Sec. 21.510 Why does the DoD report information to the CFDA?
The Federal Program Information Act (31 U.S.C. 6101 through 6106),
as implemented through OMB Circular A-89,\4\ requires the Department of
Defense and other Federal agencies to provide certain information about
their domestic assistance programs to the OMB and the General Services
Administration (GSA). The GSA makes this information available to the
public by publishing it in the Catalog of Federal Domestic Assistance
(CFDA) and maintaining the Federal Assistance Programs Retrieval
System, a computerized data base of the information.
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\4\ See footnote 3 to Sec. 21.300(b).
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Sec. 21.515 Who reports the information for the CFDA?
(a) Each DoD Component that provides domestic financial assistance
must:
(1) Report to the Director of Information, Operations and Reports,
Washington Headquarters Services (DIOR, WHS) all new programs and
changes as they occur or as the DoD Component submits its annual
updates to existing CFDA information.
(2) Identify to the DIOR, WHS a point-of-contact who will be
responsible for reporting the program information and for responding to
inquiries related to it.
(b) The DIOR, WHS is the Department of Defense's single office for
collecting, compiling and reporting such program information to the OMB
and GSA.
Sec. 21.520 What are the purposes of the Defense Assistance Awards
Data System (DAADS)?
Data from the Defense Assistance Awards Data System (DAADS) are
used to provide:
(a) DoD inputs to meet statutory requirements for Federal
Governmentwide reporting of data related to obligations of funds by
assistance instrument.
(b) A basis for meeting Governmentwide requirements to report to
the Federal Assistance Awards Data System (FAADS) maintained by the
Department of Commerce and for preparing other recurring and special
reports to the President, the Congress, the General Accounting Office,
and the public.
(c) Information to support policy formulation and implementation
and to meet management oversight requirements related to the use of
awards.
Sec. 21.525 Who issues policy guidance for the DAADS?
The Deputy Director, Defense Research and Engineering (DDDR&E), or
his or her designee, issues necessary policy guidance for the Defense
Assistance Awards Data System.
[[Page 47157]]
Sec. 21.530 Who operates the DAADS?
The Director of Information Operations and Reports, Washington
Headquarters Services (DIOR, WHS), consistent with guidance issued by
the DDDR&E:
(a) Processes DAADS information on a quarterly basis and prepares
recurring and special reports using such information.
(b) Prepares, updates, and disseminates instructions for reporting
information to the DAADS. The instructions are to specify procedures,
formats, and editing processes to be used by DoD Components, including
record layout, submission deadlines, media, methods of submission, and
error correction schedules.
Sec. 21.535 Do DoD Components have central points for collecting
DAADS data?
Each DoD Component must have a central point for collecting DAADS
information from contracting activities within that DoD Component. The
central points are as follows:
(a) For the Army: As directed by the U.S. Army Contracting Support
Agency.
(b) For the Navy: As directed by the Office of Naval Research.
(c) For the Air Force: As directed by the Office of the Secretary
of the Air Force, Acquisition Contracting Policy and Implementation
Division (SAF/AQCP).
(d) For the Office of the Secretary of Defense, Defense Agencies,
and DoD Field Activities: Each Defense Agency must identify a central
point for collecting and reporting DAADS information to the DIOR, WHS,
at the address given in Sec. 21.555(a). DIOR, WHS serves as the
central point for offices and activities within the Office of the
Secretary of Defense and for DoD Field Activities.
Sec. 21.540 What are the duties of the DoD Components' central points
for the DAADS?
The office that serves, in accordance with Sec. 21.535, as the
central point for collecting DAADS information from contracting
activities within each DoD Component must:
(a) Establish internal procedures to ensure reporting by
contracting activities that make awards subject to 31 U.S.C. chapter
61.
(b) Collect information required by DD Form 2566,\5\ ``DoD
Assistance Award Action Report,'' from those contracting activities,
and report it to DIOR, WHS, in accordance with Sec. Sec. 21.545
through 21.555.
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\5\ Department of Defense forms are available at Internet site
http://www.dior.whs.mil/ICDHOME/FORMTAB.HTM.
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(c) Submit to the DIOR, WHS, any recommended changes to the DAADS.
Sec. 21.545 Must DoD Components report every obligation to the DAADS?
Yes, DoD Components' central points must collect and report the
data required by the DD Form 2566 for each individual action that
involves the obligation or deobligation of Federal funds for an award
that is subject to 31 U.S.C. chapter 61.
Sec. 21.550 Must DoD Components relate reported actions to listings
in the CFDA?
Yes, DoD Components' central points must report each action as an
obligation or deobligation under a specific programmatic listing in the
Catalog of Federal Domestic Assistance (CFDA, see Sec. 21.505). The
programmatic listing to be shown is the one that provided the funds
being obligated or deobligated. For example, if a grants officer or
agreements officer in one DoD Component obligates appropriations of a
second DoD Component's programmatic listing, the grants officer or
agreements officer must show the CFDA programmatic listing of the
second DoD Component on the DD Form 2566.
Sec. 21.555 When and how must DoD Components report to the DAADS?
DoD Components' central points must report:
(a) On a quarterly basis to DIOR, WHS. For the first three quarters
of the Federal fiscal year, the data are due by close-of-business (COB)
on the 15th day after the end of the quarter (i.e., first-quarter data
are due by COB on January 15th, second-quarter data by COB April 15th,
and third-quarter data by COB July 15th). Fourth-quarter data are due
by COB October 25th, the 25th day after the end of the quarter. If any
due date falls on a weekend or holiday, the data are due on the next
regular workday. The mailing address for DIOR, WHS is 1215 Jefferson
Davis Highway, Suite 1204, Arlington, VA 22202-4302.
(b) On a floppy diskette or by other means permitted either by the
instructions described in Sec. 21.530(b) or by agreement with the
DIOR, WHS. The data must be reported in the format specified in the
instructions.
Sec. 21.560 Must DoD Components assign numbers uniformly to awards?
Yes, DoD Components must assign identifying numbers to all awards
subject to this subpart, including grants, cooperative agreements, and
technology investment agreements. The uniform numbering system
parallels the procurement instrument identification (PII) numbering
system specified in 48 CFR 204.70 (in the ``Defense Federal Acquisition
Regulation Supplement''), as follows:
(a) The first six alphanumeric characters of the assigned number
must be identical to those specified by 48 CFR 204.7003(a)(1) to
identify the DoD Component and contracting activity.
(b) The seventh and eighth positions must be the last two digits of
the fiscal year in which the number is assigned to the grant,
cooperative agreement, or other nonprocurement instrument.
(c) The 9th position must be a number:
(1) ``1'' for grants.
(2) ``2'' for cooperative agreements, including technology
investment agreements that are cooperative agreements (see Appendix B
to 32 CFR part 37).
(3) ``3'' for other nonprocurement instruments, including
technology investment agreements that are not cooperative agreements.
(d) The 10th through 13th positions must be the serial number of
the instrument. DoD Components and contracting activities need not
follow any specific pattern in assigning these numbers and may create
multiple series of letters and numbers to meet internal needs for
distinguishing between various sets of awards.
Subpart F--Definitions
Sec. 21.605 Acquisition.
The acquiring (by purchase, lease, or barter) of property or
services for the direct benefit or use of the United States Government
(see more detailed definition at 48 CFR 2.101). In accordance with 31
U.S.C. 6303, procurement contracts are the appropriate legal
instruments for acquiring such property or services.
Sec. 21.610 Agreements officer.
An official with the authority to enter into, administer, and/or
terminate technology investment agreements.
Sec. 21.615 Assistance.
The transfer of a thing of value to a recipient to carry out a
public purpose of support or stimulation authorized by a law of the
United States (see 31 U.S.C. 6101(3)). Grants, cooperative agreements,
and technology investment agreements are examples of legal instruments
used to provide assistance.
Sec. 21.620 Award.
A grant, cooperative agreement, technology investment agreement, or
other nonprocurement instrument subject to one or more parts of the DoD
[[Page 47158]]
Grant and Agreement Regulations (see appendix A to this part).
Sec. 21.625 Contract.
See the definition for procurement contract in this subpart.
Sec. 21.630 Contracting activity.
An activity to which the Head of a DoD Component has delegated
broad authority regarding acquisition functions, pursuant to 48 CFR
1.601.
Sec. 21.635 Contracting officer.
A person with the authority to enter into, administer, and/or
terminate contracts and make related determinations and findings. A
more detailed definition of the term appears at 48 CFR 2.101.
Sec. 21.640 Cooperative agreement.
A legal instrument which, consistent with 31 U.S.C. 6305, is used
to enter into the same kind of relationship as a grant (see definition
``grant''), except that substantial involvement is expected between the
Department of Defense and the recipient when carrying out the activity
contemplated by the cooperative agreement. The term does not include
``cooperative research and development agreements'' as defined in 15
U.S.C. 3710a.
Sec. 21.645 Deviation.
The issuance or use of a policy or procedure that is inconsistent
with the DoDGARs.
Sec. 21.650 DoD Components.
The Office of the Secretary of Defense, the Military Departments,
the Defense Agencies, and DoD Field Activities.
Sec. 21.655 Grant.
A legal instrument which, consistent with 31 U.S.C. 6304, is used
to enter into a relationship:
(a) Of which the principal purpose is to transfer a thing of value
to the recipient to carry out a public purpose of support or
stimulation authorized by a law of the United States, rather than to
acquire property or services for the Department of Defense's direct
benefit or use.
(b) In which substantial involvement is not expected between the
Department of Defense and the recipient when carrying out the activity
contemplated by the grant.
Sec. 21.660 Grants officer.
An official with the authority to enter into, administer, and/or
terminate grants or cooperative agreements.
Sec. 21.665 Nonprocurement instrument.
A legal instrument other than a procurement contract. Examples
include instruments of financial assistance, such as grants or
cooperative agreements, and those of technical assistance, which
provide services in lieu of money.
Sec. 21.670 Procurement contract.
A legal instrument which, consistent with 31 U.S.C. 6303, reflects
a relationship between the Federal Government and a State, a local
government, or other recipient when the principal purpose of the
instrument is to acquire property or services for the direct benefit or
use of the Federal Government. See the more detailed definition for
contract at 48 CFR 2.101.
Sec. 21.675 Recipient.
An organization or other entity receiving an award from a DoD
Component.
Sec. 21.680 Technology investment agreements.
A special class of assistance instruments used to increase
involvement of commercial firms in defense research programs and for
other purposes related to integrating the commercial and defense
sectors of the nation's technology and industrial base. Technology
investment agreements include one kind of cooperative agreement with
provisions tailored for involving commercial firms, as well as one kind
of other assistance transaction. Technology investment agreements are
described more fully in 32 CFR part 37.
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PART 22--[AMENDED]
0
2. The authority citation for part 22 continues to read as follows:
Authority: 5 U.S.C. 301 and 10 U.S.C. 113.
Sec. 22.105 [Amended]
0
3. Section 22.105 is amended by removing ``32 CFR 21.130'' in the first
sentence and adding ``32 CFR part 21, subpart F'' in its place.
Sec. 22.210 [Amended]
0
4. Section 22.210 is amended by removing ``32 CFR 21.205(b)'' in
paragraph (a)(1) and adding ``32 CFR 21.410 through 21.420'' in its
place.
Sec. 22.220 [Amended]
0
5. Section 22.220 is amended by removing ``32 CFR 21.115(b)(1)'' in
paragraph (a)(1) and adding ``32 CFR 21.320(a)'' in its place.
Sec. 22.605 [Amended]
0
6. Section 22.605 is amended by removing ``32 CFR part 21, subpart C''
in paragraph (b) and adding ``32 CFR part 21, subpart E'' in its place.
PART 32--[AMENDED]
0
7. The authority citation for part 32 continues to read as follows:
Authority: 5 U.S.C. 301 and 10 U.S.C. 113.
Sec. 32.4 [Amended]
0
8. Section 32.4 is amended by:
0
a. Removing ``32 CFR 21.125(a) and (c)'' in paragraph (a) and adding
``32 CFR 21.335(a) and 21.340'' in its place; and
0
b. Removing ``32 CFR 21.125(b) and (c)'' in paragraph (c)(2) and adding
``32 CFR 21.335(b) and 21.340'' in its place.
Sec. 32.11 [Amended]
0
9. Section 32.11 is amended by removing ``32 CFR 21.205(a) and'' in
paragraph (a)(2).
PART 34--[AMENDED]
0
10. The authority citation for part 34 continues to read as follows:
Authority: 5 U.S.C. 301 and 10 U.S.C. 113.
0
11. The definition of ``award'' in Sec. 34.2 is revised to read as
follows:
Sec. 34.2 Definitions.
* * * * *
Award. A grant or a cooperative agreement other than a technology
investment agreement (TIA). TIAs are covered by part 37 of the DoDGARs
(32 CFR part 37). Portions of this part may apply to a TIA, but only to
the extent that 32 CFR part 37 makes them apply.
* * * * *
Sec. 34.3 [Amended]
0
12. Section 34.3 is amended by:
0
a. Removing ``32 CFR 21.125(a)'' in paragraph (a) and adding ``32 CFR
21.335(a) and 21.340'' in its place; and
0
b. Removing ``32 CFR 21.125(b) and (c)'' in paragraph (c) and adding
``32 CFR 21.335(b) and 21.340'' in its place.
0
13. Part 37 is added to subchapter C to read as follows:
PART 37--TECHNOLOGY INVESTMENT AGREEMENTS
Subpart A--General
Sec.
37.100 What does this part do?
37.105 Does this part cover all types of instruments that 10 U.S.C.
2371 authorizes?
37.110 What type of instruments are technology investment agreements
(TIAs)?
37.115 For what purposes are TIAs used?
37.120 Can my organization award or administer TIAs?
37.125 May I award or administer TIAs if I am authorized to award or
administer other assistance instruments?
37.130 Which other parts of the DoD Grant and Agreement Regulations
apply to TIAs?
Subpart B--Appropriate Use of Technology Investment Agreements
37.200 What are my responsibilities as an agreements officer for
ensuring the appropriate use of TIAs?
37.205 What judgments must I make about the nature of the project?
37.210 To what types of recipients may I award a TIA?
37.215 What must I conclude about the recipient's commitment and
cost sharing?
37.220 How involved should the Government program official be in the
project?
37.225 What judgment must I make about the benefits of using a TIA?
37.230 May I use a TIA if a participant is to receive fee or profit?
Subpart C--Expenditure-Based and Fixed-Support Technology Investment
Agreements
37.300 What is the difference between an expenditure-based and
fixed-support TIA?
37.305 When may I use a fixed-support TIA?
37.310 When would I use an expenditure-based TIA?
37.315 What are the advantages of using a fixed-support TIA?
Subpart D--Competition Phase
37.400 Must I use competitive procedures to award TIAs?
37.405 What must my announcement or solicitation include?
37.410 Should my announcement or solicitation state that TIAs may be
awarded?
37.415 Should I address cost sharing in the announcement or
solicitation?
37.420 Should I tell proposers that we will not disclose information
that they submit?
Subpart E--Pre-Award Business Evaluation
37.500 What must my pre-award business evaluation address?
37.505 What resources are available to assist me during the pre-
award business evaluation?
Recipient Qualification
37.510 What are my responsibilities for determining that a recipient
is qualified?
37.515 Must I do anything additional to determine the qualification
of a consortium?
Total Funding
37.520 What is my responsibility for determining that the total
project funding is reasonable?
Cost Sharing
37.525 What is my responsibility for determining the value and
reasonableness of the recipient's cost sharing contribution?
37.530 What criteria do I use in deciding whether to accept a
recipient's cost sharing?
37.535 How do I value cost sharing related to real property or
equipment?
37.540 May I accept fully depreciated real property or equipment as
cost sharing?
37.545 May I accept costs of prior research as cost sharing?
37.550 May I accept intellectual property as cost sharing?
37.555 How do I value a recipient's other contributions?
Fixed-Support or Expenditure-Based Approach
37.560 Must I be able to estimate project expenditures precisely in
order to justify use of a fixed-support TIA?
37.565 May I use a hybrid instrument that provides fixed support for
only a portion of a project?
Accounting, Payments, and Recovery of Funds
37.570 What must I do if a CAS-covered participant accounts
differently for its own and the Federal Government shares of project
costs?
37.575 What are my responsibilities for determining milestone
payment amounts?
37.580 What is recovery of funds and when should I consider
including it in my TIA?
Subpart F--Award Terms Affecting Participants' Financial, Property, and
Purchasing Systems
37.600 Which administrative matters are covered in this subpart?
37.605 What is the general policy on participants' financial,
property, and purchasing systems?
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37.610 Must I tell participants what requirements they are to flow
down for subrecipients' systems?
Financial Matters
37.615 What standards do I include for financial systems of for-
profit firms?
37.620 What financial management standards do I include for
nonprofit participants?
37.625 What cost principles or standards do I require for for-profit
participants?
37.630 Must I require a for-profit firm to use Federally approved
indirect cost rates?
37.635 What cost principles do I require a nonprofit participant to
use?
37.640 Must I include a provision for audits of for-profit
participants?
37.645 Must I require periodic system audits, as well as award-
specific audits, of for-profit participants?
37.650 Who must I identify as the auditor for a for-profit
participant?
37.655 Must I specify the frequency of IPAs' periodic audits of for-
profit participants?
37.660 What else must I specify concerning audits of for-profit
participants by IPAs?
37.665 Must I require nonprofit participants to have periodic
audits?
37.670 Must I require participants to flow down audit requirements
to subrecipients?
37.675 Must I report when I enter into a TIA allowing a for-profit
firm to use an IPA?
37.680 Must I require a participant to report when it enters into a
subaward allowing a for-profit firm to use an IPA?
Property
37.685 May I allow for-profit firms to purchase real property and
equipment with project funds?
37.690 How are nonprofit participants to manage real property and
equipment?
37.695 What are the requirements for Federally owned property?
37.700 What are the requirements for supplies?
Purchasing
37.705 What standards do I include for purchasing systems of for-
profit firms?
37.710 What standards do I include for purchasing systems of
nonprofit organizations?
Subpart G--Award Terms Related to Other Administrative Matters
37.800 Which administrative matters are covered in this subpart?
Payments
37.805 If I am awarding a TIA, what payment methods may I specify?
37.810 What should my TIA's provisions specify for the method and
frequency of recipients' payment requests?
37.815 May the Government withhold payments?
37.820 Must I require a recipient to return interest on advance
payments?
Revision of Budget and Program Plans
37.825 Must I require the recipient to obtain prior approval from
the Government for changes in plans?
37.830 May I let a recipient charge pre-award costs to the
agreement?
Program Income
37.835 What requirements do I include for program income?
Intellectual Property
37.840 What general approach should I take in negotiating data and
patent rights?
37.845 What data rights should I obtain?
37.850 Should I require recipients to mark data?
37.855 How should I handle protected data?
37.860 What rights should I obtain for inventions?
37.865 Should my patent provision include march-in rights?
37.870 Should I require recipients to mark documents related to
inventions?
37.875 Should my TIA include a provision concerning foreign access
to technology?
Financial and Programmatic Reporting
37.880 What requirements must I include for periodic reports on
program and business status?
37.885 May I require updated program plans?
37.890 Must I require a final performance report?
37.895 How is the final performance report to be sent to the Defense
Technical Information Center?
37.900 May I tell a participant that information in financial and
programmatic reports will not be publicly disclosed?
37.905 Must I make receipt of the final performance report a
condition for final payment?
Records Retention and Access Requirements
37.910 How long must I require participants to keep records related
to the TIA?
37.915 What requirement for access to a for-profit participant's
records do I include in a TIA?
37.920 What requirement for access to a nonprofit participant's
records do I include in a TIA?
Termination and Enforcement
37.925 What requirements do I include for termination and
enforcement?
Subpart H--Executing the Award
37.1000 What are my responsibilities at the time of award?
The Award Document
37.1005 What are my general responsibilities concerning the award
document?
37.1010 What substantive issues should my award document address?
37.1015 How do I decide who must sign the TIA if the recipient is an
unincorporated consortium?
Reporting Information About the Award
37.1020 What must I document in my award file?
37.1025 Must I report information to the Defense Assistance Awards
Data System?
37.1030 What information must I report to the Defense Technical
Information Center?
37.1035 How do I know if my TIA uses the 10 U.S.C. 2371 authority
and I must report additional data under Sec. 37.1030(b)?
Sec. 37.1040 When and how do I report information required by Sec.
37.1035?
Distributing Copies of the Award Document
37.1045 To whom must I send copies of the award document?
Subpart I--Post-Award Administration
37.1100 What are my responsibilities generally as an administrative
agreements officer for a TIA?
37.1105 What additional duties do I have as the administrator of a
TIA with advance payments or payable milestones?
37.1110 What other responsibilities related to payments do I have?
37.1115 What are my responsibilities related to participants' single
audits?
37.1120 When and how may I request an award-specific audit?
Subpart J--Definitions of Terms Used in this Part
37.1205 Advance.
37.1210 Advanced research.
37.1215 Agreements officer.
37.1220 Applied research.
37.1225 Articles of collaboration.
37.1230 Assistance.
37.1235 Award-specific audit.
37.1240 Basic research.
37.1245 Cash contributions.
37.1250 Commercial firm.
37.1255 Consortium.
37.1260 Cooperative agreement.
37.1265 Cost sharing.
37.1270 Data.
37.1275 DoD Component.
37.1280 Equipment.
37.1285 Expenditure-based award.
37.1290 Expenditures or outlays.
37.1295 Grant.
37.1300 In-kind contributions.
37.1305 Institution of higher education.
37.1310 Intellectual property.
37.1315 Nonprofit organization.
37.1320 Participant.
37.1325 Periodic audit.
37.1330 Procurement contract.
37.1335 Program income.
37.1340 Program official.
37.1345 Property.
37.1350 Real property.
37.1355 Recipient.
37.1360 Research.
37.1365 Supplies.
37.1370 Termination.
37.1375 Technology investment agreements.
Appendix A to Part 37--What is the Civil-Military Integration Policy
that is the Basis for Technology Investment Agreements?
Appendix B to Part 37--What Type of Instrument is a TIA and What
Statutory Authorities Does it Use?
Appendix C to Part 37--What is the Desired Coverage for Periodic
Audits of For-Profit Participants to be Audited by IPAs?
Appendix D to Part 37--What Common National Policy Requirements May
Apply and Need to Be Included in TIAs?
[[Page 47162]]
Appendix E to Part 37--What Provisions May a Participant Need to
Include when Purchasing Goods or Services Under a TIA?
Authority: 5 U.S.C. 301 and 10 U.S.C. 113.
Subpart A--General
Sec. 37.100 What does this part do?
This part establishes uniform policies and procedures for the DoD
Components' award and administration of technology investment
agreements (TIAs).
Sec. 37.105 Does this part cover all types of instruments that 10
U.S.C. 2371 authorizes?
No, this part covers only TIAs, some of which use the authority of
10 U.S.C. 2371 (see appendix B to this part). This part does not cover
assistance instruments other than TIAs that use the authority of 10
U.S.C. 2371. It also does not cover acquisition agreements for
prototype projects that use 10 U.S.C. 2371 authority augmented by the
authority in section 845 of Public Law 103-160, as amended.
Sec. 37.110 What type of instruments are technology investment
agreements (TIAs)?
TIAs are assistance instruments used to stimulate or support
research. As discussed in appendix B to this part, a TIA may be either
a kind of cooperative agreement or a type of assistance transaction
other than a grant or cooperative agreement.
Sec. 37.115 For what purposes are TIAs used?
The ultimate goal for using TIAs, like other assistance instruments
used in defense research programs, is to foster the best technologies
for future defense needs. TIAs differ from and complement other
assistance instruments available to agreements officers, in that TIAs
address the goal by fostering civil-military integration (see appendix
A to this part). TIAs therefore are designed to:
(a) Reduce barriers to commercial firms' participation in defense
research, to give the Department of Defense (DoD) access to the
broadest possible technology and industrial base.
(b) Promote new relationships among performers in both the defense
and commercial sectors of that technology and industrial base.
(c) Stimulate performers to develop, use, and disseminate improved
practices.
Sec. 37.120 Can my organization award or administer TIAs?
Your office may award or administer TIAs if it has a delegation of
the authorities in 10 U.S.C. 2371, as well as 10 U.S.C. 2358. If your
office is in a Military Department, it must have a delegation of the
authority of the Secretary of that Military Department under those
statutes. If your office is in a Defense Agency, it must have a
delegation of the authority of the Secretary of Defense under 10 U.S.C.
2358 and 2371. Your office needs those authorities to be able to:
(a) Enter into cooperative agreements to stimulate or support
research, using the authority of 10 U.S.C. 2358, as well as assistance
transactions other than grants or cooperative agreements, using the
authority of 10 U.S.C. 2371. The reason that both authorities are
needed is that a TIA, depending upon its patent rights provision (see
appendix B to this part), may be either a cooperative agreement or a
type of assistance transaction other than a grant or cooperative
agreement.
(b) Recover funds from a recipient and reuse the funds for program
purposes, as authorized by 10 U.S.C. 2371 and described in Sec.
37.580.
(c) Exempt certain information received from proposers from
disclosure under the Freedom of Information Act, as authorized by 10
U.S.C. 2371 and described in Sec. 37.420.
Sec. 37.125 May I award or administer TIAs if I am authorized to
award or administer other assistance instruments?
(a) You must have specific authorization to award or administer
TIAs. Being authorized to award or administer grants and cooperative
agreements is not sufficient; a grants officer is an agreements officer
only if the statement of appointment also authorizes the award or
administration of TIAs.
(b) You receive that authorization in the same way that you receive
authority to award other assistance instruments, as described in 32 CFR
21.425 and 21.435 through 21.445.
Sec. 37.130 Which other parts of the DoD Grant and Agreement
Regulations apply to TIAs?
(a) TIAs are explicitly covered in this part and part 21 of the DoD
Grant and Agreement Regulations (DoDGARs). Part 21 (32 CFR part 21)
addresses deviation procedures and other general matters that relate to
the DoDGARs, to DoD Components' authorities and responsibilities for
assistance instruments, and to requirements for reporting information
about assistance awards.
(b) Two additional parts of the DoDGARs apply to TIAs, although
they do not mention TIAs explicitly. They are:
(1) Part 25 (32 CFR part 25), on debarment, suspension, and drug-
free workplace requirements, which applies because it covers
nonprocurement instruments in general; and
(2) Part 28 (32 CFR part 28), on lobbying restrictions, which
applies by law (31 U.S.C. 1352) to TIAs that are cooperative agreements
and as a matter of DoD policy to all other TIAs.
(c) Portions of four other DoDGARs parts apply to TIAs only as
cited by reference in this part. Those parts of the DoDGARs are parts
22, 32, 33, and 34 (32 CFR parts 22, 32, 33, and 34).
Subpart B--Appropriate Use of Technology Investment Agreements
Sec. 37.200 What are my responsibilities as an agreements officer for
ensuring the appropriate use of TIAs?
You must ensure that you use TIAs only in appropriate situations.
To do so, you must conclude that the use of a TIA is justified based
on:
(a) The nature of the project, as discussed in Sec. 37.205;
(b) The type of recipient, addressed in Sec. 37.210;
(c) The recipient's commitment and cost sharing, as described in
Sec. 37.215;
(d) The degree of involvement of the Government program official,
as discussed in Sec. 37.220; and
(e) Your judgment that the use of a TIA could benefit defense
research objectives in ways that likely would not happen if another
type of assistance instrument were used. Your answers to the four
questions in Sec. 37.225 should be the basis for your judgment.
Sec. 37.205 What judgments must I make about the nature of the
project?
You must:
(a) Conclude that the principal purpose of the project is
stimulation or support of research (i.e., assistance), rather than
acquiring goods or services for the benefit of the Government (i.e.,
acquisition);
(b) Decide that the basic, applied, or advanced research project is
relevant to the policy objective of civil-military integration (see
appendix A of this part); and
(c) Ensure that, to the maximum extent practicable, any TIA that
uses the authority of 10 U.S.C. 2371 (see appendix B of this part) does
not support research that duplicates other research being conducted
under existing programs carried out by the Department of Defense. This
is a statutory requirement of 10 U.S.C. 2371.
(d) When your TIA is a type of assistance transaction other than a
grant or cooperative agreement, satisfy the condition in 10 U.S.C. 2371
to judge that the use of a standard grant or cooperative agreement for
the research
[[Page 47163]]
project is not feasible or appropriate. As discussed in appendix B to
this part:
(1) This situation arises if your TIA includes a patent provision
that is less restrictive than is possible under the Bayh-Dole statute
(because the patent provision is what distinguishes a TIA that is a
cooperative agreement from a TIA that is an assistance transaction
other than a grant or cooperative agreement).
(2) You satisfy the requirement to judge that a standard
cooperative agreement is not feasible or appropriate when you judge
that execution of the research project warrants a less restrictive
patent provision than is possible under Bayh-Dole.
Sec. 37.210 To what types of recipients may I award a TIA?
(a) As a matter of DoD policy, you may award a TIA only when one or
more for-profit firms are to be involved either in the:
(1) Performance of the research project; or
(2) The commercial application of the research results. In that
case, you must determine that the nonprofit performer has at least a
tentative agreement with specific for-profit partners who plan on being
involved when there are results to transition. You should review the
agreement between the nonprofit and for-profit partners, because the
for-profit partners' involvement is the basis for using a TIA rather
than another type of assistance instrument.
(b) Consistent with the goals of civil-military integration, TIAs
are most appropriate when one or more commercial firms (as defined at
Sec. 37.1250) are to be involved in the project.
(c) You are encouraged to make awards to consortia (a consortium
may include one or more for-profit firms, as well as State or local
government agencies, institutions of higher education, or other
nonprofit organizations). The reasons are that:
(1) When multiple performers are participating as a consortium,
they are more equal partners in the research performance than usually
is the case with a prime recipient and subawards. All of them therefore
are more likely to be directly involved in developing and revising
plans for the research effort, reviewing technical progress, and
overseeing financial and other business matters. That feature makes
consortia well suited to building new relationships among performers in
the defense and commercial sectors of the technology and industrial
base, a principal objective for the use of TIAs.
(2) In addition, interactions among the participants within a
consortium potentially provide a self-governance mechanism. The
potential for additional self-governance is particularly good when a
consortium includes multiple for-profit participants that normally are
competitors within an industry.
(d) TIAs also may be used for carrying out research performed by
single firms or multiple performers in prime award-subaward
relationships. In awarding TIAs in those cases, however, you should
consider providing for greater involvement of the program official or a
way to increase self-governance (e.g., a prime award with multiple
subawards arranged so as to give the subrecipients more insight into
and authority and responsibility for programmatic and business aspects
of the overall project than they usually have).
Sec. 37.215 What must I conclude about the recipient's commitment and
cost sharing?
(a) You should judge that the recipient has a strong commitment to
and self-interest in the success of the project. You should find
evidence of that commitment and interest in the proposal, in the
recipient's management plan, or through other means. A recipient's
self-interest might be driven, for example, by a research project's
potential for fostering technology to be incorporated into products and
processes for the commercial marketplace.
(b) You must seek cost sharing. The purpose of cost share is to
ensure that the recipient incurs real risk that gives it a vested
interest in the project's success; the willingness to commit to
meaningful cost sharing therefore is one good indicator of a
recipient's self-interest. The requirements are that:
(1) To the maximum extent practicable, the non-Federal parties
carrying out a research project under a TIA are to provide at least
half of the costs of the project. Obtaining this cost sharing, to the
maximum extent practicable, is a statutory condition for any TIA under
the authority of 10 U.S.C. 2371, and is a matter of DoD policy for all
other TIAs.
(2) The parties must provide the cost sharing from non-Federal
resources that are available to them unless there is specific authority
to use other Federal resources for that purpose (see Sec. 37.530(f)).
(c) You may consider whether cost sharing is impracticable in a
given case, unless there is a non-waivable, statutory requirement for
cost sharing that applies to the particular program under which the
award is to be made. Before deciding that cost sharing is
impracticable, you should carefully consider whether there are other
factors that demonstrate the recipient's self-interest in the success
of the current project.
Sec. 37.220 How involved should the Government program official be in
the project?
(a) TIAs are used to carry out cooperative relationships between
the Federal Government and the recipient, which requires a greater
level of involvement of the Government program official in the
execution of the research than the usual oversight of a research grant
or procurement contract. For example, program officials will
participate in recipients' periodic reviews of research progress and
will be substantially involved with the recipients in the resulting
revisions of plans for future effort. That increased programmatic
involvement before and during program execution with a TIA can reduce
the need for some Federal financial requirements that are problematic
for commercial firms.
(b) Some aspects of their involvement require program officials to
have greater knowledge about and participation in business matters that
traditionally would be your exclusive responsibility as the agreements
officer. TIAs therefore also require closer cooperation between program
officials and you, as the one who decides business matters.
Sec. 37.225 What judgment must I make about the benefits of using a
TIA?
Before deciding that a TIA is appropriate, you also must judge that
using a TIA could benefit defense research objectives in ways that
likely would not happen if another type of assistance instrument were
used (e.g., a cooperative agreement subject to all of the requirements
of 32 CFR part 34). You, in conjunction with Government program
officials, must consider the questions in paragraphs (a) through (d) of
this section, to help identify the benefits that may justify using a
TIA and reducing some of the usual requirements. In accordance with
Sec. 37.1030, you will report your answers to these questions to help
the DoD measure the Department-wide benefits of using TIAs and meet
requirements to report to the Congress. Note that you must give full
concise answers only to questions that relate to the benefits that you
perceive for using the TIA, rather than another type of funding
instrument, for the particular research project. A simple ``no'' or
``not applicable'' is a sufficient response for other questions. The
questions are:
(a) Will the use of a TIA permit the involvement in the research of
any
[[Page 47164]]
commercial firms or business units of firms that would not otherwise
participate in the project? If so:
(1) What are the expected benefits of those firms' or divisions'
participation (e.g., is there a specific technology that could be
better, more readily available, or less expensive)?
(2) Why would they not participate if an instrument other than a
TIA were used? You should identify specific provisions of the TIA or
features of the TIA award process that enable their participation.
(b) Will the use of a TIA allow the creation of new relationships
among participants at the prime or subtier levels, among business units
of the same firm, or between non-Federal participants and the Federal
Government that will help the DoD get better technology in the future?
If so:
(1) Why do these new relationships have the potential for helping
the DoD get technology in the future that is better, more affordable,
or more readily available?
(2) Are there provisions of the TIA or features of the TIA award
process that enable these relationships to form? If so, you should be
able to identify specifically what they are. If not, you should be able
to explain specifically why you think that the relationships could not
be created if an assistance instrument other than a TIA were used.
(c) Will the use of a TIA allow firms or business units of firms
that traditionally accept Government awards to use new business
practices in the execution of the research that will help us get better
technology, help us get new technology more quickly or less
expensively, or facilitate partnering with commercial firms? If so:
(1) What specific benefits will the DoD potentially get from the
use of these new practices? You should be able to explain specifically
why you foresee a potential for those benefits.
(2) Are there provisions of the TIA or features of the TIA award
process that enable the use of the new practices? If so, you should be
able to identify those provisions or features and explain why you think
that the practices could not be used if the award were made using an
assistance instrument other than a TIA.
(d) Are there any other benefits of the use of a TIA that could
help the Department of Defense better meet its objectives in carrying
out the research project? If so, you should be able to identify
specifically what they are, how they can help meet defense objectives,
what features of the TIA or award process enable the DoD to realize
them, and why the benefits likely would not be realized if an
assistance instrument other than a TIA were used.
Sec. 37.230 May I use a TIA if a participant is to receive fee or
profit?
In accordance with 32 CFR 22.205(b), you may not use a TIA if any
participant is to receive fee or profit. Note that this policy extends
to all performers of the research project carried out under the TIA,
including any subawards for substantive program performance, but it
does not preclude participants' or subrecipients' payment of reasonable
fee or profit when making purchases from suppliers of goods (e.g.,
supplies and equipment) or services needed to carry out the research.
Subpart C--Expenditure-Based and Fixed-Support Technology
Investment Agreements
Sec. 37.300 What is the difference between an expenditure-based and
fixed-support TIA?
The fundamental difference between an expenditure-based and fixed-
support TIA is that:
(a) For an expenditure-based TIA, the amounts of interim payments
or the total amount ultimately paid to the recipient are based on the
amounts the recipient expends on project costs. If a recipient
completes the project specified at the time of award before it expends
all of the agreed-upon Federal funding and recipient cost sharing, the
Federal Government may recover its share of the unexpended balance of
funds or, by mutual agreement with the recipient, amend the agreement
to expand the scope of the research project. An expenditure-based TIA
therefore is analogous to a cost-type procurement contract or grant.
(b) For a fixed-support TIA, the amount of assistance established
at the time of award is not meant to be adjusted later if the research
project is carried out to completion. In that sense, a fixed-support
TIA is somewhat analogous to a fixed-price procurement contract
(although ``price,'' a concept appropriate to a procurement contract
for buying a good or service, is not appropriate for a TIA or other
assistance instrument for stimulation or support of a project).
Sec. 37.305 When may I use a fixed-support TIA?
You may use a fixed-support TIA if:
(a) The agreement is to support or stimulate research with outcomes
that are well defined, observable, and verifiable;
(b) You can reasonably estimate the resources required to achieve
those outcomes well enough to ensure the desired level of cost sharing
(see example in Sec. 37.560(b)); and
(c) Your TIA does not require a specific amount or percentage of
recipient cost sharing. In cases where the agreement does require a
specific amount or percentage of cost sharing, a fixed-support TIA is
not practicable because the agreement has to specify cost principles or
standards for costs that may be charged to the project; require the
recipient to track the costs of the project; and provide access for
audit to allow verification of the recipient's compliance with the
mandatory cost sharing. You therefore must use an expenditure-based TIA
if you:
(1) Have a non-waivable requirement (e.g., in statute) for a
specific amount or percentage of recipient cost sharing; or
(2) Have otherwise elected to include in the TIA a requirement for
a specific amount or percentage of cost sharing.
Sec. 37.310 When would I use an expenditure-based TIA?
In general, you must use an expenditure-based TIA under conditions
other than those described in Sec. 37.305. Reasons for any exceptions
to this general rule must be documented in the award file and must be
consistent with the policy in Sec. 37.230 that precludes payment of
fee or profit to participants.
Sec. 37.315 What are the advantages of using a fixed-support TIA?
In situations where the use of fixed-support TIAs is permissible
(see Sec. Sec. 37.305 and 37.310), their use may encourage some
commercial firms' participation in the research. With a fixed-support
TIA, you can eliminate or reduce some post-award requirements that
sometimes are cited as disincentives for those firms to participate.
For example, a fixed-support TIA need not:
(a) Specify minimum standards for the recipient's financial
management system.
(b) Specify cost principles or standards stating the types of costs
the recipient may charge to the project.
(c) Provide for financial audits by Federal auditors or independent
public accountants of the recipient's books and records.
(d) Set minimum standards for the recipient's purchasing system.
(e) Require the recipient to prepare financial reports for
submission to the Federal Government.
[[Page 47165]]
Subpart D--Competition Phase
Sec. 37.400 Must I use competitive procedures to award TIAs?
DoD policy is to award TIAs using merit-based, competitive
procedures, as described in 32 CFR 22.315:
(a) In every case where required by statute; and
(b) To the maximum extent practicable in all other cases.
Sec. 37.405 What must my announcement or solicitation include?
Your announcement, to be considered as part of a competitive
procedure, must include the basic information described in 32 CFR
22.315(a). Additional elements for you to consider in the case of a
program that may use TIAs are described in Sec. Sec. 37.410 through
37.420.
Sec. 37.410 Should my announcement or solicitation state that TIAs
may be awarded?
Yes, once you consider the factors described in subpart B of this
part and decide that TIAs are among the types of instruments that you
may award pursuant to a solicitation, it is important for you to state
that fact in the solicitation. You also should state that TIAs are more
flexible than traditional Government funding instruments and that
provisions are negotiable in areas such as audits and intellectual
property rights that may cause concern for commercial firms. Doing so
should increase the likelihood that commercial firms will be willing to
submit proposals.
Sec. 37.415 Should I address cost sharing in the announcement or
solicitation?
To help ensure a competitive process that is fair and equitable to
all potential proposers, you should state clearly in the solicitation:
(a) That, to the maximum extent practicable, the non-Federal
parties carrying out a research project under a TIA are to provide at
least half of the costs of the project (see Sec. 37.215(b)).
(b) The types of cost sharing that are acceptable;
(c) How any in-kind contributions will be valued, in accordance
with Sec. Sec. 37.530 through 37.555; and
(d) Whether you will give any consideration to alternative
approaches a proposer may offer to demonstrate its strong commitment to
and self-interest in the project's success, in accordance with Sec.
37.215.
Sec. 37.420 Should I tell proposers that we will not disclose
information that they submit?
Your solicitation should tell potential proposers that:
(a) For all TIAs, information described in paragraph (b) of this
section is exempt from disclosure requirements of the Freedom of
Information Act (FOIA)(codified at 5 U.S.C. 552) for a period of five
years after the date on which the DoD Component receives the
information from them.
(b) As provided in 10 U.S.C. 2371, disclosure is not required, and
may not be compelled, under FOIA during that period if:
(1) A proposer submits the information in a competitive or
noncompetitive process that could result in their receiving a
cooperative agreement for basic, applied, or advanced research under
the authority of 10 U.S.C. 2358 or any other type of transaction
authorized by 10 U.S.C. 2371 (as explained in appendix B to this part,
that includes all TIAs); and
(2) The type of information is among the following types that are
exempt:
(i) Proposals, proposal abstracts, and supporting documents; and
(ii) Business plans and technical information submitted on a
confidential basis.
(c) If proposers desire to protect business plans and technical
information for five years from FOIA disclosure requirements, they must
mark them with a legend identifying them as documents submitted on a
confidential basis. After the five-year period, information may be
protected for longer periods if it meets any of the criteria in 5
U.S.C. 552(b) (as implemented by the DoD in subpart C of 32 CFR part
286) for exemption from FOIA disclosure requirements.
Subpart E--Pre-Award Business Evaluation
Sec. 37.500 What must my pre-award business evaluation address?
(a) You must determine the qualification of the recipient, as
described in Sec. Sec. 37.510 and 37.515.
(b) As the business expert working with the program official, you
also must address the financial aspects of the proposed agreement. You
must:
(1) Determine that the total amount of funding for the proposed
effort is reasonable, as addressed in Sec. 37.520.
(2) Assess the value and determine the reasonableness of the
recipient's proposed cost sharing contribution, as discussed in
Sec. Sec. 37.525 through 37.555.
(3) If you are contemplating the use of a fixed-support rather than
expenditure-based TIA, ensure that its use is justified, as explained
in Sec. Sec. 37.560 and 37.565.
(4) Address issues of inconsistent cost accounting by traditional
Government contractors, should they arise, as noted in Sec. 37.570.
(5) Determine amounts for milestone payments, if you use them, as
discussed in Sec. 37.575.
Sec. 37.505 What resources are available to assist me during the pre-
award business evaluation?
Administrative agreements officers of the Defense Contract
Management Agency and the Office of Naval Research can share lessons
learned from administering other TIAs. Program officials can be a
source of information when you are determining the reasonableness of
proposed funding (e.g., on labor rates, as discussed in Sec. 37.520)
or establishing observable and verifiable technical milestones for
payments (see Sec. 37.575). Auditors at the Defense Contract Audit
Agency can act in an advisory capacity to help you determine the
reasonableness of proposed amounts, including values of in-kind
contributions toward cost sharing.
Recipient Qualification
Sec. 37.510 What are my responsibilities for determining that a
recipient is qualified?
Prior to award of a TIA, your responsibilities for determining that
the recipient is qualified are the same as those of a grants officer
who is awarding a grant or cooperative agreement. Those
responsibilities are described in subpart D of 32 CFR part 22. When the
recipient is a consortium that is not formally incorporated, you have
the additional responsibility described in Sec. 37.515.
Sec. 37.515 Must I do anything additional to determine the
qualification of a consortium?
(a) When the prospective recipient of a TIA is a consortium that is
not formally incorporated, your determination that the recipient meets
the standard at 32 CFR 22.415(a) requires that you, in consultation
with legal counsel, review the management plan in the consortium's
collaboration agreement. The purpose of your review is to ensure that
the management plan is sound and that it adequately addresses the
elements necessary for an effective working relationship among the
consortium members. An effective working relationship is essential to
increase the research project's chances of success.
(b) The collaboration agreement, commonly referred to as the
articles of collaboration, is the document that sets out the rights and
responsibilities of each consortium member. It binds the individual
consortium members together, whereas the TIA binds the
[[Page 47166]]
Government and the consortium as a group (or the Government and a
consortium member on behalf of the consortium, as explained in Sec.
37.1015). The document should discuss, among other things, the
consortium's:
(1) Management structure.
(2) Method of making payments to consortium members.
(3) Means of ensuring and overseeing members' efforts on the
project.
(4) Provisions for members' cost sharing contributions.
(5) Provisions for ownership and rights in intellectual property
developed previously or under the agreement.
Total Funding
Sec. 37.520 What is my responsibility for determining that the total
project funding is reasonable?
In cooperation with the program official, you must assess the
reasonableness of the total estimated budget to perform the research
that will be supported by the agreement. Additional guidance follows
for:
(a) Labor. Much of the budget likely will involve direct labor and
associated indirect costs, which may be represented together as a
``loaded'' labor rate. The program official is an essential advisor on
reasonableness of the overall level of effort and its composition by
labor category. You also may rely on your experience with other awards
as the basis for determining reasonableness. If you have any unresolved
questions, two of the ways that you might find helpful in establishing
reasonableness are to:
(1) Consult the administrative agreements officers or auditors
identified in Sec. 37.505.
(2) Compare loaded labor rates of for-profit firms that do not have
expenditure-based Federal procurement contracts or assistance awards
with a standard or average for the particular industry. Note that the
program official may have knowledge about customary levels of direct
labor charges in the particular industry that is involved. You may be
able to compare associated indirect charges with Government-approved
indirect cost rates that exist for many nonprofit and for-profit
organizations that have Federal procurement contracts or assistance
awards (note the requirement in Sec. 37.630 for a for-profit
participant to use Federally approved provisional indirect cost rates,
if it has them).
(b) Real property and equipment. In almost all cases, the project
costs may include only depreciation or use charges for real property
and equipment of for-profit participants, in accordance with Sec.
37.685. Remember that the budget for an expenditure-based TIA may not
include depreciation of a participant's property as a direct cost of
the project if that participant's practice is to charge the
depreciation of that type of property as an indirect cost, as many
organizations do.
Cost Sharing
Sec. 37.525 What is my responsibility for determining the value and
reasonableness of the recipient's cost sharing contribution?
You must:
(a) Determine that the recipient's cost sharing contributions meet
the criteria for cost sharing and determine values for them, in
accordance with Sec. Sec. 37.530 through 37.555. In doing so, you
must:
(1) Ensure that there are affirmative statements from any third
parties identified as sources of cash contributions.
(2) Include in the award file an evaluation that documents how you
determined the values of the recipient's contributions to the funding
of the project.
(b) Judge that the recipient's cost sharing contribution, as a
percentage of the total budget, is reasonable. To the maximum extent
practicable, the recipient must provide at least half of the costs of
the project, in accordance with Sec. 37.215.
Sec. 37.530 What criteria do I use in deciding whether to accept a
recipient's cost sharing?
You may accept any cash or in-kind contributions that meet all of
the following criteria:
(a) In your judgment, they represent meaningful cost sharing that
demonstrates the recipient's commitment to the success of the research
project. Cash contributions clearly demonstrate commitment and they are
strongly preferred over in-kind contributions.
(b) They are necessary and reasonable for accomplishment of the
research project's objectives.
(c) They are costs that may be charged to the project under Sec.
37.625 and Sec. 37.635, as applicable to the participant making the
contribution.
(d) They are verifiable from the recipient's records.
(e) They are not included as cost sharing contributions for any
other Federal award.
(f) They are not paid by the Federal Government under another
award, except:
(1) Costs that are authorized by Federal statute to be used for
cost sharing; or
(2) Independent research and development (IR&D) costs, as described
at 32 CFR 34.13(a)(5)(ii), that meet all of the criteria in paragraphs
(a) through (e) of this section. IR&D is acceptable as cost sharing,
even though it may be reimbursed by the Government through other
awards. It is standard business practice for all for-profit firms,
including commercial firms, to recover their research and development
(R&D) costs (which for Federal procurement contracts is recovered as
IR&D) through prices charged to their customers. Thus, the cost
principles at 48 CFR part 31 allow a for-profit firm that has
expenditure-based, Federal procurement contracts to recover through
those procurement contracts the allocable portion of its R&D costs
associated with a technology investment agreement.
Sec. 37.535 How do I value cost sharing related to real property or
equipment?
You rarely should accept values for cost sharing contributions of
real property or equipment that are in excess of depreciation or
reasonable use charges, as discussed in Sec. 37.685 for for-profit
participants. You may accept the full value of a donated capital asset
if the real property or equipment is to be dedicated to the project and
you expect that it will have a fair market value that is less than
$5,000 at the project's end. In those cases, you should value the
donation at the lesser of:
(a) The value of the property as shown in the recipient's
accounting records (i.e., purchase price less accumulated
depreciation); or
(b) The current fair market value. You may accept the use of any
reasonable basis for determining the fair market value of the property.
If there is a justification to do so, you may accept the current fair
market value even if it exceeds the value in the recipient's records.
Sec. 37.540 May I accept fully depreciated real property or equipment
as cost sharing?
You should limit the value of any contribution of a fully
depreciated asset to a reasonable use charge. In determining what is
reasonable, you must consider:
(a) The original cost of the asset;
(b) Its estimated remaining useful life at the time of your
negotiations;
(c) The effect of any increased maintenance charges or decreased
performance due to age; and
(d) The amount of depreciation that the participant previously
charged to Federal awards.
Sec. 37.545 May I accept costs of prior research as cost sharing?
No, you may not count any participant's costs of prior research as
a cost sharing contribution. Only the
[[Page 47167]]
additional resources that the recipient will provide to carry out the
current project (which may include pre-award costs for the current
project, as described in Sec. 37.830) are to be counted.
Sec. 37.550 May I accept intellectual property as cost sharing?
(a) In most instances, you should not count costs of patents and
other intellectual property (e.g., copyrighted material, including
software) as cost sharing, because:
(1) It is difficult to assign values to these intangible
contributions;
(2) Their value usually is a manifestation of prior research costs,
which are not allowed as cost share under Sec. 37.545; and
(3) Contributions of intellectual property rights generally do not
represent the same cost of lost opportunity to a recipient as
contributions of cash or tangible assets. The purpose of cost share is
to ensure that the recipient incurs real risk that gives it a vested
interest in the project's success.
(b) You may include costs associated with intellectual property if
the costs are based on sound estimates of market value of the
contribution. For example, a for-profit firm may offer the use of
commercially available software for which there is an established
license fee for use of the product. The costs of the development of the
software would not be a reasonable basis for valuing its use.
Sec. 37.555 How do I value a recipient's other contributions?
For types of participant contributions other than those addressed
in Sec. Sec. 37.535 through 37.550, the general rule is that you are
to value each contribution consistently with the cost principles or
standards in Sec. 37.625 and Sec. 37.635 that apply to the
participant making the contribution. When valuing services and property
donated by parties other than the participants, you may use as guidance
the provisions of 32 CFR 34.13(b)(2) through (5).
Fixed-Support or Expenditure-Based Approach
Sec. 37.560 Must I be able to estimate project expenditures precisely
in order to justify use of a fixed-support TIA?
(a) To use a fixed-support TIA, rather than an expenditure-based
TIA, you must have confidence in your estimate of the expenditures
required to achieve well-defined outcomes. Therefore, you must work
carefully with program officials to select outcomes that, when the
recipient achieves them, are reliable indicators of the amount of
effort the recipient expended. However, your estimate of the required
expenditures need not be a precise dollar amount, as illustrated by the
example in paragraph (b) of this section, if:
(1) The recipient is contributing a substantial share of the costs
of achieving the outcomes, which must meet the criteria in Sec.
37.305(a); and
(2) You are confident that the costs of achieving the outcomes will
be at least a minimum amount that you can specify and the recipient is
willing to accept the possibility that its cost sharing percentage
ultimately will be higher if the costs exceed that minimum amount.
(b) To illustrate the approach, consider a project for which you
are confident that the recipient will have to expend at least $800,000
to achieve the specified outcomes. You must determine, in conjunction
with program officials, the minimum level of recipient cost sharing
that you want to negotiate, based on the circumstances, to demonstrate
the recipient's commitment to the success of the project. For purposes
of this illustration, let that minimum recipient cost sharing be 40% of
the total project costs. In that case, the Federal share should be no
more than 60% and you could set a fixed level of Federal support at
$480,000 (60% of $800,000). With that fixed level of Federal support,
the recipient would be responsible for the balance of the costs needed
to complete the project.
(c) Note, however, that the level of recipient cost sharing you
negotiate is to be based solely on the level needed to demonstrate the
recipient's commitment. You may not use a shortage of Federal
Government funding for the program as a reason to try to persuade a
recipient to accept a fixed-support TIA, rather than an expenditure-
based instrument, or to accept responsibility for a greater share of
the total project costs than it otherwise is willing to offer. If you
lack sufficient funding to provide an appropriate Federal Government
share for the entire project, you instead should rescope the effort
covered by the agreement to match the available funding.
Sec. 37.565 May I use a hybrid instrument that provides fixed support
for only a portion of a project?
Yes, for a research project that is to be carried out by a number
of participants, you may award a TIA that provides for some
participants to perform under fixed-support arrangements and others to
perform under expenditure-based arrangements. This approach may be
useful, for example, if a commercial firm that is a participant will
not accept an agreement with all of the post-award requirements of an
expenditure-based award. Before using a fixed-support arrangement for
that firm's portion of the project, you must judge that it meets the
criteria in Sec. 37.305.
Accounting, Payments, and Recovery of Funds
Sec. 37.570 What must I do if a CAS-covered participant accounts
differently for its own and the Federal Government shares of project
costs?
(a) If a participant has Federal procurement contracts that are
subject to the Cost Accounting Standards (CAS) in part 30 of the
Federal Acquisition Regulation (FAR) and the associated FAR Appendix
(48 CFR part 30 and 48 CFR 9903.201-1, respectively), you must alert
the participant during the pre-award negotiations to the potential for
a CAS violation, as well as the cognizant administrative contracting
officer (ACO) for the participant's procurement contracts, if you learn
that the participant plans to account differently for its own share and
the Federal Government's share of project costs under the TIA. This may
arise, for example, if a for-profit firm or other organization subject
to the FAR cost principles in 48 CFR parts 31 and 231 proposes to
charge:
(1) Its share of project costs as independent research and
development (IR&D) costs to enable recovery of the costs through
Federal Government procurement contracts, as allowed under the FAR cost
principles; and
(2) The Federal Government's share to the project, rather than as
IR&D costs.
(b) The reason for alerting the participant and the ACO is that the
inconsistent charging of the two shares could cause a noncompliance
with Cost Accounting Standard (CAS) 402. Noncompliance with CAS 402 is
a potential issue only for a participant that has CAS-covered Federal
procurement contracts (note that CAS requirements do not apply to a
for-profit participant's TIAs).
(c) For for-profit participants with CAS-covered procurement
contracts, the cognizant ACO in most cases will be an individual within
the Defense Contract Management Agency (DCMA). You can identify a
cognizant ACO at the DCMA by querying the contract administration team
locator that matches contractors with their ACOs (currently on the
World Wide Web at http://alerts.dcmdw.dcma.mil/support, a site that
also can be accessed through the DCMA home page at http://www.dcma.mil
).
[[Page 47168]]
Sec. 37.575 What are my responsibilities for determining milestone
payment amounts?
(a) If you select the milestone payment method (see Sec. 37.805),
you must assess the reasonableness of the estimated amount for reaching
each milestone. This assessment enables you to set the amount of each
milestone payment to approximate the Federal share of the anticipated
resource needs for carrying out that phase of the research effort.
(b) The Federal share at each milestone need not be the same as the
Federal share of the total project. For example, you might deliberately
set payment amounts with a larger Federal share for early milestones if
a project involves a start-up company with limited resources.
(c) For an expenditure-based TIA, if you have minimum percentages
that you want the recipient's cost sharing to be at the milestones, you
should indicate those percentages in the agreement or in separate
instructions to the post-award administrative agreements officer. That
will help the administrative agreements officer decide when a project's
expenditures have fallen too far below the original projections,
requiring adjustments of future milestone payment amounts (see Sec.
37.1105(c)).
(d) For fixed-support TIAs, the milestone payments should be
associated with the well-defined, observable and verifiable technical
outcomes (e.g., demonstrations, tests, or data analysis) that you
establish for the project in accordance with Sec. Sec. 37.305(a) and
37.560(a).
Sec. 37.580 What is recovery of funds and when should I consider
including it in my TIA?
(a) Recovery of funds refers to the use of the authority in 10
U.S.C. 2371 to include a provision in certain types of agreements,
including TIAs, that require a recipient to make payments to the
Department of Defense or another Federal agency as a condition of the
agreement. Recovery of funds is a good tool in the right circumstances,
at the discretion of the agreements officer and the awarding
organization, but its purpose is not to augment program budgets. It may
be used to recover funds provided to a recipient through a TIA or
another Federal procurement or assistance instrument, and the recovery
should not exceed the amounts provided. Recovery of funds is distinct
from program income, as described in Sec. 37.835.
(b) In accordance with 10 U.S.C. 2371, as implemented by policy
guidance from the Office of the Under Secretary of Defense
(Comptroller), the payment amounts may be credited to an existing
account of the Department of Defense and used for the same program
purposes as other funds in that account.
(c) Before you use the authority to include a provision for
recovery of funds, note that 10 U.S.C. 2371 requires you to judge that
it would not be feasible or appropriate to use for the research project
a standard grant or cooperative agreement (in this instance, a
``standard cooperative agreement'' means a cooperative agreement
without a provision for recovery of funds). You satisfy that 10 U.S.C.
2371 requirement when you judge that execution of the research project
warrants inclusion of a provision for recovery of funds.
Subpart F--Award Terms Affecting Participants' Financial, Property,
and Purchasing Systems
Sec. 37.600 Which administrative matters are covered in this subpart?
This subpart addresses ``systemic'' administrative matters that
place requirements on the operation of a participant's financial
management, property management, or purchasing system. Each
participant's systems are organization-wide and do not vary with each
agreement. Therefore, all TIAs should address systemic requirements in
a uniform way for each type of participant organization.
Sec. 37.605 What is the general policy on participants' financial,
property, and purchasing systems?
The general policy for expenditure-based TIAs is to avoid
requirements that would force participants to use different financial
management, property management, and purchasing systems than they
currently use for:
(a) Expenditure-based Federal procurement contracts and assistance
awards in general, if they receive them; or
(b) Commercial business, if they have no expenditure-based Federal
procurement contracts and assistance awards.
Sec. 37.610 Must I tell participants what requirements they are to
flow down for subrecipients' systems?
If it is an expenditure-based award, your TIA must require
participants to flow down the same financial management, property
management, and purchasing systems requirements to a subrecipient that
would apply if the subrecipient were a participant. For example, a for-
profit participant would flow down to a university subrecipient the
requirements that apply to a university participant. Note that this
policy applies to subawards for substantive performance of portions of
the research project supported by the TIA, and not to participants'
purchases of goods or services needed to carry out the research.
Financial Matters
Sec. 37.615 What standards do I include for financial systems of for-
profit firms?
(a) To avoid causing needless changes in participants' financial
management systems, your expenditure-based TIAs will make for-profit
participants that currently perform under other expenditure-based
Federal procurement contracts or assistance awards subject to the same
standards for financial management systems that apply to those other
awards. Therefore, if a for-profit participant has expenditure-based
DoD assistance awards other than TIAs, your TIAs are to apply the
standards in 32 CFR 34.11. You may grant an exception and allow a for-
profit participant that has other expenditure-based Federal Government
awards to use an alternative set of standards that meets the minimum
criteria in paragraph (b) of this section, if there is a compelling
programmatic or business reason to do so. For each case in which you
grant an exception, you must document the reason in the award file.
(b) For an expenditure-based TIA, you are to allow and encourage
each for-profit participant that does not currently perform under
expenditure-based Federal procurement contracts or assistance awards
(other than TIAs) to use its existing financial management system as
long as the system, as a minimum:
(1) Complies with Generally Accepted Accounting Principles.
(2) Effectively controls all project funds, including Federal funds
and any required cost share. The system must have complete, accurate,
and current records that document the sources of funds and the purposes
for which they are disbursed. It also must have procedures for ensuring
that project funds are used only for purposes permitted by the
agreement (see Sec. 37.625).
(3) Includes, if advance payments are authorized under Sec.
37.805, procedures to minimize the time elapsing between the payment of
funds by the Government and the firm's disbursement of the funds for
program purposes.
Sec. 37.620 What financial management standards do I include for
nonprofit participants?
So as not to force system changes for any State, local government,
institution
[[Page 47169]]
of higher education, or other nonprofit organization, your expenditure-
based TIA's requirements for the financial management system of any
nonprofit participant are the same as those that apply to the
participant's other Federal assistance awards. Specifically, the
requirements are those in:
(a) 32 CFR 33.20 for State and local governments; and
(b) 32 CFR 32.21(b) for other nonprofit organizations, with the
exception of Government-owned, contractor-operated (GOCO) facilities
and Federally Funded Research and Development Centers (FFRDCs) that are
excepted from the definition of ``recipient'' in 32 CFR part 32.
Although it should occur infrequently, if a nonprofit GOCO or FFRDC is
a participant, you must specify appropriate standards that conform as
much as practicable with requirements in that participant's other
Federal awards.
Sec. 37.625 What cost principles or standards do I require for for-
profit participants?
(a) So as not to require any firm to needlessly change its cost-
accounting system, your expenditure-based TIAs are to apply the
Government cost principles in 48 CFR parts 31 and 231 to for-profit
participants that currently perform under expenditure-based Federal
procurement contracts or assistance awards (other than TIAs) and
therefore have existing systems for identifying allowable costs under
those principles. If there are programmatic or business reasons to do
otherwise, you may grant an exception from this requirement and use
alternative standards as long as the alternative satisfies the
conditions described in paragraph (b) of this section; if you do so,
you must document the reasons in your award file.
(b) For other for-profit participants, you may establish
alternative standards in the agreement as long as that alternative
provides, as a minimum, that Federal funds and funds counted as
recipients' cost sharing will be used only for costs that:
(1) A reasonable and prudent person would incur in carrying out the
research project contemplated by the agreement. Generally, elements of
cost that appropriately are charged are those identified with research
and development activities under the Generally Accepted Accounting
Principles (see Statement of Financial Accounting Standards Number 2,
``Accounting for Research and Development Costs,'' October 1974 \1\).
Moreover, costs must be allocated to DoD and other projects in
accordance with the relative benefits the projects receive. Costs
charged to DoD projects must be given consistent treatment with costs
allocated to the participants' other research and development
activities (e.g., activities supported by the participants themselves
or by non-Federal sponsors).
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\1\ Copies may be obtained from the Financial Accounting
Standards Board (FASB), 401 Merritt 7, P.O. Box 5116, Norwalk, CT
06856-5116. Information about ordering also may be found at the
Internet site http://www.fasb.org or by telephoning the FASB at
(800) 748-0659.
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(2) Are consistent with the purposes stated in the governing
Congressional authorizations and appropriations. You are responsible
for ensuring that provisions in the award document address any
requirements that result from authorizations and appropriations.
Sec. 37.630 Must I require a for-profit firm to use Federally
approved indirect cost rates?
In accordance with the general policy in Sec. 37.605, you must
require a for-profit participant that has Federally approved indirect
cost rates for its Federal procurement contracts to use those rates to
accumulate and report costs under an expenditure-based TIA. This
includes both provisional and final rates that are approved up until
the time that the TIA is closed out. You may grant an exception from
this requirement if there are programmatic or business reasons to do
otherwise (e.g., the participant offers you a lower rate). If you grant
an exception, the participant must accumulate and report the costs
using an accounting system and practices that it uses for other
customers (e.g., its commercial customers). Also, you must document the
reason for the exception in your award file.
Sec. 37.635 What cost principles do I require a nonprofit participant
to use?
So as not to force financial system changes for any nonprofit
participant, your expenditure-based TIA will provide that costs to be
charged to the research project by any nonprofit participant must be
determined to be allowable in accordance with:
(a) OMB Circular A-87,\2\ if the participant is a State or local
governmental organization.
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\2\ Electronic copies may be obtained at Internet site http://www.whitehouse.gov/OMB.
For paper copies, contact the Office of
Management and Budget, EOP Publications, 725 17th St. NW., New
Executive Office Building, Washington, DC 20503.
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(b) OMB Circular A-21,\3\ if the participant is an institution of
higher education.
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\3\ See footnote 2 to Sec. 37.635(a).
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(c) 45 CFR part 74, appendix E, if the participant is a hospital.
(d) OMB Circular A-122, if the participant is any other type of
nonprofit organization (the cost principles in 48 CFR parts 31 and 231
are to be used by any nonprofit organization that is identified in
Circular A-122 as being subject to those cost principles).
Sec. 37.640 Must I include a provision for audits of for-profit
participants?
If your TIA is an expenditure-based award, you must include in it
an audit provision that addresses, for each for-profit participant:
(a) Whether the for-profit participant must have periodic audits,
in addition to any award-specific audits, as described in Sec. 37.645.
Note that the DCAA or the Office of the Inspector General, DoD (OIG,
DoD), can provide advice on the types and scope of audits that may be
needed in various circumstances.
(b) Whether the DCAA or an independent public accountant (IPA) will
perform required audits, as discussed in Sec. 37.650.
(c) How frequently any periodic audits are to be performed,
addressed in Sec. 37.655.
(d) Other matters described in Sec. 37.660, such as audit
coverage, allowability of audit costs, auditing standards, and remedies
for noncompliance.
Sec. 37.645 Must I require periodic audits, as well as award-specific
audits, of for-profit participants?
You need to consider requirements for both periodic audits and
award-specific audits (as defined in Sec. 37.1325 and Sec. 37.1235,
respectively). The way that your expenditure-based TIA addresses the
two types of audits will vary, depending upon the type of for-profit
participant.
(a) For for-profit participants that are audited by the DCAA or
other Federal auditors, as described in Sec. Sec. 37.650(b) and
37.655, you need not add specific requirements for periodic audits
because the Federal audits should be sufficient to address whatever may
be needed. Your inclusion in the TIA of the standard access-to-records
provision for those for-profit participants, as discussed in Sec.
37.915(a), gives the necessary access in the event that you or
administrative agreements officers later need to request audits to
address award-specific issues that arise.
(b) For each other for-profit participant, you:
(1) Should require that the participant have an independent auditor
(i.e., the DCAA or an independent public accountant) conduct periodic
audits of
[[Page 47170]]
its systems if it expends $500,000 or more per year in TIAs and other
Federal assistance awards. A prime reason for including this
requirement is that the Federal Government, for an expenditure-based
award, necessarily relies on amounts reported by the participant's
systems when it sets payment amounts or adjusts performance outcomes.
The periodic audit provides some assurance that the reported amounts
are reliable.
(2) Must ensure that the award provides an independent auditor the
access needed for award-specific audits, to be performed at the request
of the cognizant administrative agreements officer if issues arise that
require audit support. However, consistent with the government-wide
policies on single audits that apply to nonprofit participants (see
Sec. 37.665), you should rely on periodic audits to the maximum extent
possible to resolve any award-specific issues.
Sec. 37.650 Who must I identify as the auditor for a for-profit
participant?
The auditor that you will identify in the expenditure-based TIA to
perform periodic and award-specific audits of a for-profit participant
depends on the circumstances, as follows:
(a) You may provide that an IPA will be the auditor for a for-
profit participant that does not meet the criteria in paragraph (b) of
this section, but only if the participant will not agree to give the
DCAA access to the necessary books and records for audit purposes. Note
that the allocable portion of the costs of the IPA's audit may be
reimbursable under the TIA, as described in Sec. 37.660(b). The IPA
should be the one that the participant uses to perform other audits
(e.g., of its financial statement), to minimize added burdens and
costs. You must document in the award file the participant's
unwillingness to give the DCAA access. The DCAA is to be the auditor if
the participant grants the necessary access.
(b) Except as provided in paragraph (c) of this section, you must
identify the DCAA as the auditor for any for-profit participant that is
subject to DCAA audits because it is currently performing under a
Federal award that is subject to the:
(1) Cost principles in 48 CFR part 31 of the Federal Acquisition
Regulation (FAR) and 48 CFR part 231 of the Defense FAR Supplement; or
(2) Cost Accounting Standards in 48 CFR chapter 99.
(c) If there are programmatic or business reasons that justify the
use of an auditor other than the DCAA for a for-profit participant that
meets the criteria in paragraph (b) of this section, you may provide
that an IPA will be the auditor for that participant if you obtain
prior approval from the Office of the Inspector General, DoD. You must
submit requests for prior approval to the Assistant Inspector General
(Auditing), 400 Army-Navy Drive, Arlington, VA 22202. Your request must
include the name and address of the business unit(s) for which IPAs
will be used. It also must explain why you judge that the participant
will not give the DCAA the necessary access to records for audit
purposes (e.g., you may submit a statement to that effect from the
participant). The OIG, DoD, will respond within five working days of
receiving the request for prior approval, either by notifying you of
the decision (approval or disapproval) or giving you a date by which
they will notify you of the decision.
Sec. 37.655 Must I specify the frequency of IPAs' periodic audits of
for-profit participants?
If your expenditure-based TIA provides for periodic audits of a
for-profit participant by an IPA, you must specify the frequency for
those audits. You should consider having an audit performed during the
first year of the award, when the participant has its IPA do its next
financial statement audit, unless the participant already had a systems
audit due to other Federal awards within the past two years. The
frequency thereafter may vary depending upon the dollars the
participant is expending annually under the award, but it is not
unreasonable to require an updated audit every two to three years to
reverify that the participant's systems are reliable (the audit then
would cover the two or three-year period between audits). The DCAA is a
source of advice on audit frequencies if your TIA provides for audits
by IPAs.
Sec. 37.660 What else must I specify concerning audits of for-profit
participants by IPAs?
If your expenditure-based TIA provides for audits of a for-profit
participant by an IPA, you also must specify:
(a) What periodic audits are to cover. It is important that you
specify audit coverage that is only as broad as needed to provide
reasonable assurance of the participant's compliance with award terms
that have a direct and material effect on the research project.
Appendix C to this part provides guidance to for-profit participants
and their IPAs that you may use for this purpose. The DCAA and the OIG,
DoD, also can provide advice to help you set appropriate limits on
audit objectives and scope.
(b) Who will pay for periodic and award-specific audits. The
allocable portion of the costs of any audits by IPAs may be
reimbursable under the TIA. The costs may be direct charges or
allocated indirect costs, consistent with the participant's accounting
system and practices.
(c) The auditing standards that the IPA will use. Unless you
receive prior approval from the OIG, DoD, to do otherwise, you must
provide that the IPA will perform the audits in accordance with the
Generally Accepted Government Auditing Standards.\4\
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\4\ The electronic document may be accessed at www.gao.gov.
Printed copies may be purchased from the U.S. Government Printing
Office; for ordering information, call (202) 512-1800 or access the
Internet site at www.gpo.gov.
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(d) The available remedies for noncompliance. The agreement must
provide that the participant may not charge costs to the award for any
audit that the agreements officer, with the advice of the OIG, DoD,
determines was not performed in accordance with the Generally Accepted
Government Auditing Standards or other terms of the agreement. It also
must provide that the Government has the right to require the
participant to have the IPA take corrective action and, if corrective
action is not taken, that the agreements officer has recourse to any of
the remedies for noncompliance identified in 32 CFR 34.52(a).
(e) The remedy if it later is found that the participant, at the
time it entered into the TIA, was performing on a procurement contract
or other Federal award subject to the Cost Accounting Standards at 48
CFR part 30 and the cost principles at 48 CFR part 31. Unless the OIG,
DoD, approves an exception (see Sec. 37.650(c)), the TIA's terms must
provide that the DCAA will perform the audits for the agreement if it
later is found that the participant, at the time the TIA was awarded,
was performing under awards described in Sec. 37.650(b) that gave the
DCAA audit access to the participant's books and records.
(f) Where the IPA is to send audit reports. The agreement must
provide that the IPA is to submit audit reports to the administrative
agreements officer and the OIG, DoD. It also must require that the IPA
report instances of fraud directly to the OIG, DoD.
(g) The retention period for the IPA's working papers. You must
specify that the IPA is to retain working papers for a period of at
least three years after the final payment, unless the working papers
relate to an audit whose findings
[[Page 47171]]
are not fully resolved within that period or to an unresolved claim or
dispute (in which case, the IPA must keep the working papers until the
matter is resolved and final action taken).
(h) Who will have access to the IPA's working papers. The agreement
must provide for Government access to working papers.
Sec. 37.665 Must I require nonprofit participants to have periodic
audits?
Yes, expenditure-based TIAs are assistance instruments subject to
the Single Audit Act (31 U.S.C. 7501-7507), so nonprofit participants
are subject to their usual requirements under that Act and OMB Circular
A-133.\5\ Specifically, the requirements are those in:
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\5\ See footnote 2 to Sec. 37.635(a).
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(a) 32 CFR 33.26 for State and local governments; and
(b) 32 CFR 32.26 for other nonprofit organizations. Note that those
requirements also are appropriate for Government-owned, contractor-
operated (GOCO) facilities and Federally Funded Research and
Development Centers (FFRDCs) that are excluded from the definition of
``recipient'' in 32 CFR part 32, because nonprofit GOCOs and FFRDCs are
subject to the Single Audit Act.
Sec. 37.670 Must I require participants to flow down audit
requirements to subrecipients?
(a) Yes, in accordance with Sec. 37.610, your expenditure-based
TIA must require participants to flow down the same audit requirements
to a subrecipient that would apply if the subrecipient were a
participant.
(b) For example, a for-profit participant that is audited by the
DCAA:
(1) Would flow down to a university subrecipient the Single Audit
Act requirements that apply to a university participant.
(2) Could enter into a subaward allowing a for-profit participant,
under the circumstances described in Sec. 37.650(a), to use an IPA to
do its audits.
(c) This policy applies to subawards for substantive performance of
portions of the research project supported by the TIA, and not to
participants' purchases of goods or services needed to carry out the
research.
Sec. 37.675 Must I report when I enter into a TIA allowing a for-
profit firm to use an IPA?
Yes, you must include that information with the data you provide
for your DoD Component's annual submission to the Defense Technical
Information Center (DTIC), as provided in Sec. 37.1030(c).
Sec. 37.680 Must I require a participant to report when it enters
into a subaward allowing a for-profit firm to use an IPA?
Yes, your expenditure-based TIA must require participants to report
to you when they enter into any subaward allowing a for-profit
subawardee to use an IPA, as described in Sec. 37.670(b)(2). You must
provide that information about the new subaward under the TIA for your
DoD Component's annual submission to the DTIC, even though the TIA may
have been reported in a prior year and does not itself have to be
reported again.
Property
Sec. 37.685 May I allow for-profit firms to purchase real property
and equipment with project funds?
(a) With the two exceptions described in paragraph (b) of this
section, you must require a for-profit firm to purchase real property
or equipment with its own funds that are separate from the research
project. You should allow the firm to charge to an expenditure-based
TIA only depreciation or use charges for real property or equipment
(and your cost estimate for a fixed-support TIA only would include
those costs). Note that the firm must charge depreciation consistently
with its usual accounting practice. Many firms treat depreciation as an
indirect cost. Any firm that usually charges depreciation indirectly
for a particular type of property must not charge depreciation for that
property as a direct cost to the TIA.
(b) In two situations, you may grant an exception and allow a for-
profit firm to use project funds, which includes both the Federal
Government and recipient shares, to purchase real property or equipment
(i.e., to charge to the project the full acquisition cost of the
property). The two circumstances, which should be infrequent for
equipment and extremely rare for real property, are those in which you
either:
(1) Judge that the real property or equipment will be dedicated to
the project and have a current fair market value that is less than
$5,000 by the time the project ends; or
(2) Give prior approval for the firm to include the full
acquisition cost of the real property or equipment as part of the cost
of the project (see Sec. 37.535).
(c) If you grant an exception in either of the circumstances
described in paragraphs (b)(1) and (2) of this section, you must make
the real property or equipment subject to the property management
standards in 32 CFR 34.21(b) through (d). As provided in those
standards, the title to the real property or equipment will vest
conditionally in the for-profit firm upon acquisition. Your TIA,
whether it is a fixed-support or expenditure-based award, must specify
that any item of equipment that has a fair market value of $5,000 or
more at the conclusion of the project also will be subject to the
disposition process in 32 CFR 34.21(e), whereby the Federal Government
will recover its interest in the property at that time.
Sec. 37.690 How are nonprofit participants to manage real property
and equipment?
For nonprofit participants, your TIA's requirements for vesting of
title, use, management, and disposition of real property or equipment
acquired under the award are the same as those that apply to the
participant's other Federal assistance awards. Specifically, the
requirements are those in:
(a) 32 CFR 33.31 and 33.32, for participants that are States and
local governmental organizations.
(b) 32 CFR 32.32 and 32.33, for other nonprofit participants, with
the exception of nonprofit GOCOs and FFRDCs that are exempted from the
definition of ``recipient'' in 32 CFR part 32. Although it should occur
infrequently, if a nonprofit GOCO or FFRDC is a participant, you must
specify appropriate standards that conform as much as practicable with
requirements in that participant's other Federal awards. Note also
that:
(1) If the TIA is a cooperative agreement (see appendix B to this
part), 31 U.S.C. 6306 provides authority to vest title to tangible
personal property in a nonprofit institution of higher education or in
a nonprofit organization whose primary purpose is conducting scientific
research, without further obligation to the Federal Government; and
(2) Your TIA therefore must specify any conditions on the vesting
of title to real property or equipment acquired by any such nonprofit
participant, or the title will vest in the participant without further
obligation to the Federal Government, as specified in 32 CFR
32.33(b)(3).
Sec. 37.695 What are the requirements for Federally owned property?
If you provide Federally owned property to any participant for the
performance of research under a TIA, you must require that participant
to account for, use, and dispose of the property in accordance with:
(a) 32 CFR 34.22, if the participant is a for-profit firm.
(b) 32 CFR 33.32(f), if the participant is a State or local
governmental organization. Note that 32 CFR 33.32(f)
[[Page 47172]]
requires you to provide additional information to the participant on
the procedures for managing the property.
(c) 32 CFR 32.33(a) and 32.34(f), if the participant is a nonprofit
organization other than a GOCO or FFRDC (requirements for nonprofit
GOCOs and FFRDCs should conform with the property standards that apply
to their Federal procurement contracts).
Sec. 37.700 What are the requirements for supplies?
Your expenditure-based TIA's provisions should permit participants
to use their existing procedures to account for and manage supplies. A
fixed-support TIA should not include requirements to account for or
manage supplies.
Purchasing
Sec. 37.705 What standards do I include for purchasing systems of
for-profit firms?
(a) If your TIA is an expenditure-based award, it should require
for-profit participants that currently perform under DoD assistance
instruments subject to the purchasing standards in 32 CFR 34.31 to use
the same requirements for TIAs, unless there are programmatic or
business reasons to do otherwise (in which case you must document the
reasons in the award file).
(b) You should allow other for-profit participants under
expenditure-based TIAs to use their existing purchasing systems, as
long as they flow down the applicable requirements in Federal statutes,
Executive orders or Governmentwide regulations (see appendix E to this
part for a list of those requirements).
(c) If your TIA is a fixed-support award, you need only require
for-profit participants to flow down the requirements listed in
appendix F to this part.
Sec. 37.710 What standards do I include for purchasing systems of
nonprofit organizations?
(a) So as not to force system changes for any nonprofit
participant, your expenditure-based TIA will provide that each
nonprofit participant's purchasing system comply with:
(1) 32 CFR 33.36, if the participant is a State or local
governmental organization.
(2) 32 CFR 32.40 through 32.49 if the participant is a nonprofit
organization other than a GOCO or FFRDC that is excepted from the
definition of ``recipient'' in 32 CFR part 32. Although it should occur
infrequently, if a nonprofit GOCO or FFRDC is a participant, you must
specify appropriate standards that conform as much as practicable with
requirements in that participant's other Federal awards.
(b) If your TIA is a fixed-support award, you need only require
nonprofit participants to flow down the requirements listed in appendix
E to this part.
Subpart G--Award Terms Related to Other Administrative Matters
Sec. 37.800 Which administrative matters are covered in this subpart?
This subpart addresses ``non-systemic'' administrative matters that
do not impose organization-wide requirements on a participant's
financial management, property management, or purchasing system.
Because an organization does not have to redesign its systems to
accommodate award-to-award variations in these requirements, a TIA that
you award may differ from other TIAs in the non-systemic requirements
that it specifies for a given participant, based on the circumstances
of the particular research project. To eliminate needless
administrative complexity, you should handle some non-systemic
requirements, such as the payment method, in a uniform way for the
agreement as a whole.
Payments
Sec. 37.805 If I am awarding a TIA, what payment methods may I
specify?
Your TIA may provide for:
(a) Reimbursement, as described in 32 CFR 34.12(a)(1), if it is an
expenditure-based award.
(b) Advance payments, as described in 32 CFR 34.12(a)(2), subject
to the conditions in 32 CFR 34.12(b)(2)(i) through (iii).
(c) Payments based on payable milestones. These are payments made
according to a schedule that is based on predetermined measures of
technical progress or other payable milestones. This approach relies
upon the fact that, as research progresses throughout the term of the
agreement, observable activity will be taking place. The recipient is
paid upon the accomplishment of the predetermined measure of progress.
Fixed-support TIAs must use this payment method and each measure of
progress appropriately would be one of the well-defined outcomes that
you identify in the agreement (this does not preclude use of an initial
advance payment, if there is no alternative to meeting immediate cash
needs). There are cash management considerations when this payment
method is used as a means of financing for an expenditure-based TIA
(see Sec. 37.575 and Sec. 37.1105).
Sec. 37.810 What should my TIA's provisions specify for the method
and frequency of recipients' payment requests?
The procedure and frequency for payment requests depend upon the
payment method, as follows:
(a) For either reimbursements or advance payments, your TIA must
allow recipients to submit requests for payment at least monthly. You
may authorize the recipients to use the forms or formats described in
32 CFR 34.12(d).
(b) If the payments are based on payable milestones, the recipient
will submit a report or other evidence of accomplishment to the program
official at the completion of each predetermined activity. The
agreement administrator may approve payment to the recipient after
receiving validation from the program manager that the milestone was
successfully reached.
Sec. 37.815 May the Government withhold payments?
Your TIA must provide that the administrative agreements officer
may withhold payments in the circumstances described in 32 CFR
34.12(g), but not otherwise.
Sec. 37.820 Must I require a recipient to return interest on advance
payments?
If your expenditure-based TIA provides for either advance payments
or payable milestones, the agreement must require the recipient to:
(a) Maintain in an interest-bearing account any advance payments or
milestone payment amounts received in advance of needs to disburse the
funds for program purposes unless:
(1) The recipient receives less than $120,000 in Federal grants,
cooperative agreements, and TIAs per year;
(2) The best reasonably available interest-bearing account would
not be expected to earn interest in excess of $1,000 per year on the
advance or milestone payments; or
(3) The depository would require an average or minimum balance so
high that it would not be feasible within the expected Federal and non-
Federal cash resources for the project.
(b) Remit annually the interest earned to the administrative
agreements officer.
Revision of Budget and Program Plans
Sec. 37.825 Must I require the recipient to obtain prior approval
from the Government for changes in plans?
If it is an expenditure-based award, your agreement must require
the recipient to obtain the agreement administrator's prior approval if
there is to be a change in plans that results in a need for additional
Federal funding (this is unnecessary for a fixed-support
[[Page 47173]]
TIA because the recipient is responsible for additional costs of
achieving the outcomes). Other than that, the program official's
substantial involvement in the project should ensure that the
Government has advance notice of changes in plans.
Sec. 37.830 May I let a recipient charge pre-award costs to the
agreement?
Pre-award costs, as long as they are otherwise allowable costs of
the project, may be charged to an expenditure-based TIA only with the
specific approval of the agreements officer. All pre-award costs are
incurred at the recipient's risk (i.e., no DoD Component is obligated
to reimburse the costs if for any reason the recipient does not receive
an award or if the award is less than anticipated and inadequate to
cover the costs).
Program Income
Sec. 37.835 What requirements do I include for program income?
Your TIA should apply the standards of 32 CFR 34.14 for program
income that may be generated. Note the need to specify whether the
recipient is to have any obligation to the Federal Government with
respect to program income generated after the end of the project period
(the period, as established in the award document, during which Federal
support is provided). Doing so is especially important if the TIA
includes a provision for the recipient to return any amounts to the
Federal Government (see Sec. 37.580).
Intellectual Property
Sec. 37.840 What general approach should I take in negotiating data
and patent rights?
(a) You should confer with program officials and legal counsel to
develop an overall strategy for intellectual property that takes into
account inventions and data that may result from the project and future
needs the Government may have for rights in them. The strategy should
take into account any intellectual property the Government is
furnishing and any pre-existing proprietary information that the
recipient is furnishing, as well as data and inventions that may be
generated under the award (recognizing that new data and inventions may
be less valuable without pre-existing information). All pre-existing
intellectual property, both the Government's and the recipient's,
should be marked to give notice of its status.
(b) Because TIAs entail substantial cost sharing by recipients, you
must use discretion in negotiating Government rights to data and
patentable inventions resulting from research under the agreements. The
considerations in Sec. Sec. 37.845 through 37.875 are intended to
serve as guidelines, within which you necessarily have considerable
latitude to negotiate provisions appropriate to a wide variety of
circumstances that may arise. Your goal should be a good balance
between DoD interests in:
(1) Gaining access to the best technologies for defense needs,
including technologies available in the commercial marketplace, and
promoting commercialization of technologies resulting from the
research. Either of these interests may be impeded if you negotiate
excessive rights for the Government. One objective of TIAs is to help
incorporate defense requirements into the development of what
ultimately will be commercially available technologies, an objective
that is best served by reducing barriers to commercial firms'
participation in the research. In that way, the commercial technology
and industrial base can be a source of readily available, reliable, and
affordable components, subsystems, computer software, and other
technological products and manufacturing processes for military
systems.
(2) Providing adequate protection of the Government's investment,
which may be weakened if the Government's rights are inadequate. You
should consider whether the Government may require access to data or
inventions for Governmental purposes, such as a need to develop
defense-unique products or processes that the commercial marketplace
likely will not address.
Sec. 37.845 What data rights should I obtain?
(a) You should seek to obtain what you, with the advice of legal
counsel, judge is needed to ensure future Government use of technology
that emerges from the research, as long as doing so is consistent with
the balance between DoD interests described in Sec. 37.840(b). You
should consider data in which you wish to obtain license rights and
data that you may wish to be delivered; since TIAs are assistance
instruments rather than acquisition instruments, however, it is not
expected that data would be delivered in most cases. What generally is
needed is an irrevocable, world-wide license for the Government to use,
modify, reproduce, release, or disclose for Governmental purposes the
data that are generated under TIAs (including any data, such as
computer software, in which a recipient may obtain a copyright). A
Governmental purpose is any activity in which the United States
Government participates, but a license for Governmental purposes does
not include the right to use, or have or permit others to use, modify,
reproduce, release, or disclose data for commercial purposes.
(b) You may negotiate licenses of different scope than described in
paragraph (a) of this section when necessary to accomplish program
objectives or to protect the Government's interests. Consult with legal
counsel before negotiating a license of different scope.
(c) In negotiating data rights, you should consider the rights in
background data that are necessary to fully utilize technology that is
expected to result from the TIA, in the event the recipient does not
commercialize the technology or chooses to protect any invention as a
trade secret rather than by a patent. If a recipient intends to protect
any invention as a trade secret, you should consult with your
intellectual property counsel before deciding what information related
to the invention the award should require the recipient to report.
Sec. 37.850 Should I require recipients to mark data?
To protect the recipient's interests in data, your TIA should
require the recipient to mark any particular data that it wishes to
protect from disclosure with a legend identifying the data as licensed
data subject to use, release, or disclosure restrictions.
Sec. 37.855 How should I handle protected data?
Prior to releasing or disclosing data marked with a restrictive
legend (as described in Sec. 37.850) to third parties, you should
require those parties to agree in writing that they will:
(a) Use the data only for governmental purposes; and
(b) Not release or disclose the data without the permission of the
licensor (i.e., the recipient).
Sec. 37.860 What rights should I obtain for inventions?
(a) You should negotiate rights in inventions that represent a good
balance between the Government's interests (see Sec. 37.840(b)) and
the recipient's interests. As explained in appendix B to this part:
(1) You have the flexibility to negotiate patent rights provisions
that vary from what the Bayh-Dole statute (Chapter 18 of Title 35,
U.S.C.) requires in many situations. You have that flexibility because
TIAs include not only cooperative agreements, but also assistance
transactions other than grants or cooperative agreements.
(2) Your TIA becomes an assistance instrument other than a grant or
[[Page 47174]]
cooperative agreement if its patent rights provision varies from what
Bayh-Dole requires in your situation. However, you need not consider
that difference in the type of transaction until the agreement is
finalized, and it should not affect the provision you negotiate.
(b) As long as it is consistent with the balance between DoD
interests described in Sec. 37.840(b) and the recipient's interests,
you should seek to obtain for the Government, when an invention is
conceived or first actually reduced to practice under a TIA, a
nonexclusive, nontransferrable, irrevocable, paid-up license to
practice the invention, or to have it practiced, for or on behalf of
the United States throughout the world. The license is for Governmental
purposes, and does not include the right to practice the invention for
commercial purposes.
(c) To provide for the license described in paragraph (b) of this
section, your TIA generally would include the patent-rights clause that
37 CFR 401.14 specifies to implement the Bayh-Dole statute's
requirements. Note that:
(1) The clause is designed specifically for grants, contracts, and
cooperative agreements awarded to small businesses and nonprofit
organizations, the types of funding instruments and recipients to which
the entire Bayh-Dole statute applies. As explained in appendix B to
this part, only two Bayh-Dole requirements (in 35 U.S.C. sections
202(c)(4) and 203) apply to cooperative agreements with other
performers, by virtue of an amendment to Bayh-Dole at 35 U.S.C. 210(c).
(2) You may use the same clause, suitably modified, in cooperative
agreements with performers other than small businesses and nonprofit
organizations. Doing so is consistent with a 1983 Presidential
memorandum that calls for giving other performers rights in inventions
from Federally supported research that are at least as great as the
rights that Bayh-Dole gives to small businesses and nonprofit
organizations (see appendix B to this part for details). That
Presidential memorandum is incorporated by reference in Executive Order
12591 (52 FR 13414, 3 CFR, 1987 Comp., p. 220), as amended by Executive
Order 12618 (52 FR 48661, 3 CFR, 1987 Comp., p. 262).
(3) The clause provides for flow-down of Bayh-Dole patent-rights
provisions to subawards with small businesses and nonprofit
organizations.
(4) There are provisions in 37 CFR part 401 stating when you must
include the clause (37 CFR 401.3) and, in cases when it is required,
how you may modify and tailor it (37 CFR 401.5).
(d) You may negotiate Government rights of a different scope than
the standard patent-rights provision described in paragraph (c) of this
section when necessary to accomplish program objectives and foster the
Government's interests. If you do so:
(1) With the help of the program manager and legal counsel, you
must decide what best represents a reasonable arrangement considering
the circumstances, including past investments, contributions under the
current TIA, and potential commercial markets. Taking past investments
as an example, you should consider whether the Government or the
recipient has contributed more substantially to the prior research and
development that provides the foundation for the planned effort. If the
predominant past contributor to the particular technology has been:
(i) The Government, then the TIA's patent-rights provision should
be at or close to the standard Bayh-Dole provision.
(ii) The recipient, then a less restrictive patent provision may be
appropriate, to allow the recipient to benefit more directly from its
investments.
(2) You should keep in mind that obtaining a nonexclusive license
at the time of award, as described in paragraph (b) of this section, is
valuable if the Government later requires access to inventions to
enable development of defense-unique products or processes that the
commercial marketplace is not addressing. If you do not obtain a
license at the time of award, you should consider alternative
approaches to ensure access, such as negotiating a priced option for
obtaining nonexclusive licenses in the future to inventions that are
conceived or reduced to practice under the TIA.
(3) You also may consider whether you want to provide additional
flexibility by giving the recipient more time than the standard patent-
rights provision does to:
(i) Notify the Government of an invention, from the time the
inventor discloses it within the for-profit firm.
(ii) Inform the Government whether it intends to take title to the
invention.
(iii) Commercialize the invention, before the Government license
rights in the invention become effective.
Sec. 37.865 Should my patent provision include march-in rights?
Your TIA's patent rights provision should include the Bayh-Dole
march-in rights clause at paragraph (j)(1) of 37 CFR 401.14, or an
equivalent clause, concerning actions that the Government may take to
obtain the right to use subject inventions, if the recipient fails to
take effective steps to achieve practical application of the subject
inventions within a reasonable time. The march-in provision may be
modified to best meet the needs of the program. However, only
infrequently should the march-in provision be entirely removed (e.g.,
you may wish to do so if a recipient is providing most of the funding
for a research project, with the Government providing a much smaller
share).
Sec. 37.870 Should I require recipients to mark documents related to
inventions?
To protect the recipient's interest in inventions, your TIA should
require the recipient to mark documents disclosing inventions it
desires to protect by obtaining a patent. The recipient should mark the
documents with a legend identifying them as intellectual property
subject to public release or public disclosure restrictions, as
provided in 35 U.S.C. 205.
Sec. 37.875 Should my TIA include a provision concerning foreign
access to technology?
(a) Consistent with the objective of enhancing the national
security by increasing DoD reliance on the U.S. commercial technology
and industrial bases, you must include a provision in the TIA that
addresses foreign access to technology developed under the TIA.
(b) The provision must provide, as a minimum, that any transfer of
the:
(1) Technology must be consistent with the U.S. export laws,
regulations and policies (e.g., the International Traffic in Arms
Regulation at chapter I, subchapter M, title 22 of the CFR (22 CFR
parts 120 through 130), the DoD Industrial Security Regulation in DoD
5220.22-R,\6\ and the Department of Commerce Export Regulation at
chapter VII, subchapter C, title 15 of the CFR (15 CFR parts 730
through 774), as applicable.
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\6\ Electronic copies may be obtained at the Washington
Headquarters Services Internet site http://www.dtic.mil/whs/directives.
Paper copies may be obtained, at cost, from the National
Technical Information Service, 5285 Port Royal Road, Springfield, VA
22161.
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(2) Exclusive right to use or sell the technology in the United
States must, unless the Government grants a waiver, require that
products embodying the technology or produced through the use of the
technology will be manufactured substantially in the United States. The
provision may further provide that:
(i) In individual cases, the Government may waive the requirement
[[Page 47175]]
of substantial manufacture in the United States upon a showing by the
recipient that reasonable but unsuccessful efforts have been made to
transfer the technology under similar terms to those likely to
manufacture substantially in the United States or that under the
circumstances domestic manufacture is not commercially feasible.
(ii) In those cases, the DoD Component may require a refund to the
Government of some or all the funds paid under the TIA for the
development of the transferred technology.
(c) You may, but are not required to, seek to negotiate a domestic
manufacture condition for transfers of nonexclusive rights to use or
sell the technology in the United States, to parallel the one described
for exclusive licenses in paragraph (b)(2) of this section, if you
judge that nonexclusive licenses for foreign manufacture could
effectively preclude the establishment of domestic sources of the
technology for defense purposes.
Financial and Programmatic Reporting
Sec. 37.880 What requirements must I include for periodic reports on
program and business status?
Your TIA must include either:
(a) The requirements in 32 CFR 32.51 and 32.52 for status reports
on programmatic performance and, if it is an expenditure-based award,
on financial performance; or
(b) Alternative requirements that, as a minimum, include periodic
reports addressing program and, if it is an expenditure-based award,
business status. You must require submission of the reports at least
annually, and you may require submission as frequently as quarterly
(this does not preclude a recipient from electing to submit more
frequently than quarterly the financial information that is required to
process payment requests if the award is an expenditure-based TIA that
uses reimbursement or advance payments under Sec. 37.810(a)). The
requirements for the content of the reports are as follows:
(1) The program portions of the reports must address progress
toward achieving program performance goals, including current issues,
problems, or developments.
(2) The business portions of the reports, applicable only to
expenditure-based awards, must provide summarized details on the status
of resources (federal funds and non-federal cost sharing), including an
accounting of expenditures for the period covered by the report. The
report should compare the resource status with any payment and
expenditure schedules or plans provided in the original award; explain
any major deviations from those schedules; and discuss actions that
will be taken to address the deviations. You may require a recipient to
separately identify in these reports the expenditures for each
participant in a consortium and for each programmatic milestone or
task, if you, after consulting with the program official, judge that
those additional details are needed for good stewardship.
Sec. 37.885 May I require updated program plans?
In addition to reports on progress to date, your TIA may include a
provision requiring the recipient to annually prepare updated technical
plans for the future conduct of the research effort. If your TIA does
include a requirement for annual program plans, you also must require
the recipient to submit the annual program plans to the agreements
officer responsible for administering the TIA.
Sec. 37.890 Must I require a final performance report?
You need not require a final performance report that addresses all
major accomplishments under the TIA. If you do not do so, however,
there must be an alternative that satisfies the requirement in DoD
Instruction 3200.14\7\ to document all DoD Science and Technology
efforts and disseminate the results through the Defense Technical
Information Center (DTIC). An example of an alternative would be
periodic reports throughout the performance of the research that
collectively cover the entire project.
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\7\ See footnote 6 to Sec. 37.875(b)(1).
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Sec. 37.895 How is the final performance report to be sent to the
Defense Technical Information Center?
(a) Whether your TIA requires a final performance report or uses an
alternative means under Sec. 37.890,\8\ you may include an award term
or condition or otherwise instruct the recipient to submit the
documentation, electronically if available, either:
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\8\ Additional information on electronic submission to the DTIC
can be found online, currently at http://www.dtic.mil/dtic/submitting/elec_subm.html
.
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(1) Directly to the DTIC; or
(2) To the office that is administering the award (for subsequent
transmission to the DTIC).
(b) If you specify that the recipient is to submit the report
directly to the DTIC, you also:
(1) Must instruct the recipient to include a fully completed
Standard Form 298, ``Report Documentation Page,'' with each document,
so that the DTIC can recognize the document as being related to the
particular award and properly record its receipt; and
(2) Should advise the recipient to provide a copy of the completed
Standard Form 298 to the agreements officer responsible for
administering the TIA.
Sec. 37.900 May I tell a participant that information in financial
and programmatic reports will not be publicly disclosed?
You may tell a participant that:
(a) We may exempt from disclosure under the Freedom of Information
Act (FOIA) a trade secret or commercial and financial information that
a participant provides after the award, if the information is
privileged or confidential information. The DoD Component that receives
the FOIA request will review the information in accordance with DoD
procedures at 32 CFR 286.23(h) (and any DoD Component supplementary
procedures) to determine whether it is privileged or confidential
information under the FOIA exemption at 5 U.S.C. 552(b)(4), as
implemented by the DoD at 32 CFR 286.12(d).
(b) If the participant also provides information in the course of a
competition prior to award, there is a statutory exemption for five
years from FOIA disclosure requirements for certain types of
information submitted at that time (see Sec. 37.420).
Sec. 37.905 Must I make receipt of the final performance report a
condition for final payment?
If a final report is required, your TIA should make receipt of the
report a condition for final payment. If the payments are based on
payable milestones, the submission and acceptance of the final report
by the Government representative will be incorporated as an event that
is a prerequisite for one of the payable milestones.
Records Retention and Access Requirements
Sec. 37.910 How long must I require participants to keep records
related to the TIA?
Your TIA must require participants to keep records related to the
TIA (for which the agreement provides Government access under Sec.
37.915) for a period of three years after submission of the final
financial status report for an expenditure-based TIA or final
programmatic status report for a fixed-support TIA, with the following
exceptions:
(a) The participant must keep records longer than three years after
submission of the final financial status report if the
[[Page 47176]]
records relate to an audit, claim, or dispute that begins but does not
reach its conclusion within the 3-year period. In that case, the
participant must keep the records until the matter is resolved and
final action taken.
(b) Records for any real property or equipment acquired with
project funds under the TIA must be kept for three years after final
disposition.
Sec. 37.915 What requirement for access to a for-profit participant's
records do I include in a TIA?
(a) If a for-profit participant currently grants access to its
records to the DCAA or other Federal Government auditors, your TIA must
include for that participant the standard access-to-records
requirements at 32 CFR 34.42(e). If the agreement is a fixed-support
TIA, the language in 32 CFR 34.42(e) may be modified to provide access
to records concerning the recipient's technical performance, without
requiring access to the recipient's financial or other records. Note
that any need to address access to technical records in this way is in
addition to, not in lieu of, the need to address rights in data (see
Sec. 37.845).
(b) For other for-profit participants that do not currently give
the Federal Government direct access to their records and are not
willing to grant full access to records pertinent to the award, there
is no set requirement to include a provision in your TIA for Government
access to records. If the audit provision of an expenditure-based TIA
gives an IPA access to the recipient's financial records for audit
purposes, the Federal Government must have access to the IPA's reports
and working papers and you need not include a provision requiring
direct Government access to the recipient's financial records. For both
fixed-support and expenditure-based TIAs, you may wish to negotiate
Government access to recipient records concerning technical
performance. Should you negotiate a provision giving access only to
specific Government officials (e.g., the agreements officer), rather
than a provision giving Government access generally, it is important to
let participants know that the OIG, DoD, has a statutory right of
access to records and other materials to which other DoD Component
officials have access.
Sec. 37.920 What requirement for access to a nonprofit participant's
records do I include in a TIA?
Your TIA must include for any nonprofit participant the standard
access-to-records requirement at:
(a) 32 CFR 33.42(e), for a participant that is a State or local
governmental organization.
(b) 32 CFR 32.53(e), for a participant that is a nonprofit
organization. The same requirement applies to any nonprofit GOCO or
FFRDC, even though nonprofit GOCOs and FFRDCs are exempted from the
definition of ``recipient'' in 32 CFR part 32.
Termination and Enforcement
Sec. 37.925 What requirements do I include for termination and
enforcement?
Your TIA must apply the standards of 32 CFR 34.51 for termination,
32 CFR 34.52 for enforcement, and your organization's procedures
implementing 32 CFR 22.815 for disputes and appeals.
Subpart H--Executing the Award
Sec. 37.1000 What are my responsibilities at the time of award?
At the time of the award, you must:
(a) Ensure that the award document contains the appropriate terms
and conditions and is signed by the appropriate parties, in accordance
with Sec. Sec. 37.1005 through 37.1015.
(b) Document your analysis of the agreement in the award file, as
discussed in Sec. 37.1020.
(c) Provide information about the award to offices responsible for
reporting, as described in Sec. Sec. 37.1025 through 37.1035.
(d) Distribute copies of the award document, as required by Sec.
37.1045.
The Award Document
Sec. 37.1005 What are my general responsibilities concerning the
award document?
You are responsible for ensuring that the award document is
complete and accurate. Your objective is to create a document that:
(a) Addresses all issues;
(b) States requirements directly. It is not helpful to readers to
incorporate statutes or rules by reference, without sufficient
explanation of the requirements. You generally should not incorporate
clauses from the Federal Acquisition Regulation (48 CFR parts 1-53) or
Defense Federal Acquisition Regulation Supplement (48 CFR parts 201-
253), because those provisions are designed for procurement contracts
that are used to acquire goods and services, rather than for TIAs or
other assistance instruments.
(c) Is written in clear and concise language, to minimize potential
ambiguity.
Sec. 37.1010 What substantive issues should my award document
address?
You necessarily will design and negotiate a TIA individually to
meet the specific requirements of the particular project, so the
complete list of substantive issues that you will address in the award
document may vary. Every award document must address:
(a) Project scope. The scope is an overall vision statement for the
project, including a discussion of the project's purpose, objectives,
and detailed military and commercial goals. It is a critical provision
because it provides a context for resolving issues that may arise
during post-award administration. In a fixed-support TIA, you also must
clearly specify the well-defined outcomes that reliably indicate the
amount of effort expended and serve as the basis for the level of the
fixed support (see Sec. Sec. 37.305 and 37.560(a)).
(b) Project management. You should describe the nature of the
relationship between the Federal Government and the recipient; the
relationship among the participants, if the recipient is an
unincorporated consortium; and the overall technical and administrative
management of the project. TIAs are used to carry out collaborative
relationships between the Federal Government and the recipient.
Consequently, there must be substantial involvement of the DoD program
official (see Sec. 37.220) and usually the administrative agreements
officer. The program official provides technical insight, which differs
from the usual technical oversight of a project. The management
provision also should discuss how you and the recipient will make any
modifications to the TIA.
(c) Termination, enforcement, and disputes. Your TIA must provide
for termination, enforcement remedies, and disputes and appeals
procedures, in accordance with Sec. 37.925.
(d) Funding. You must:
(1) Show the total amount of the agreement and the total period of
performance.
(2) If the TIA is an expenditure-based award, state the
Government's and recipient's agreed-upon cost shares. The award
document should identify values for any in-kind contributions,
determined in accordance with Sec. Sec. 37.530 through 37.555, to
preclude later disagreements about them.
(3) Specify the amount of Federal funds obligated and the
performance period for those obligated funds.
(4) State, if the agreement is to be incrementally funded, that the
Government's obligation for additional funding is contingent upon the
availability of funds and that no legal obligation on the part of the
Government exists until additional funds are made available and the
agreement is amended. You also must include a prior approval
requirement for
[[Page 47177]]
changes in plans requiring additional Government funding, in accordance
with Sec. 37.825.
(e) Payment. You must choose the payment method and tell the
recipient how, when, and where to submit payment requests, as discussed
in Sec. Sec. 37.805 through 37.815. Your payment method must take into
account sound cash management practices by avoiding unwarranted cash
advances. For an expenditure-based TIA, your payment provision must
require the return of interest should excess cash balances occur, in
accordance with Sec. 37.820. For any TIA using the milestone payment
method described in Sec. 37.805(c), you must include language
notifying the recipient that post-award administrators may adjust
amounts of future milestone payments if a project's expenditures fall
too far below the projections that were the basis for setting the
amounts (see Sec. 37.575(c) and Sec. 37.1105(c)).
(f) Records retention and access to records. You must include the
records retention requirement at Sec. 37.910. You also must provide
for access to for-profit and nonprofit participants' records, in
accordance with Sec. 37.915 and Sec. 37.920.
(g) Patents and data rights. In designing the patents and data
rights provision, you must set forth the minimum required Federal
Government rights in intellectual property generated under the award
and address related matters, as provided in Sec. Sec. 37.840 through
37.875. It is important to define all essential terms in the patent
rights provision.
(h) Foreign access to technology. You must include a provision, in
accordance with Sec. 37.875, concerning foreign access and domestic
manufacture of products using technology generated under the award.
(i) Title to, management of, and disposition of tangible property.
Your property provisions for for-profit and nonprofit participants must
be in accordance with Sec. Sec. 37.685 through 37.700.
(j) Financial management systems. For an expenditure-based award,
you must specify the minimum standards for financial management systems
of both for-profit and nonprofit participants, in accordance with
Sec. Sec. 37.615 and 37.620.
(k) Allowable costs. If the TIA is an expenditure-based award, you
must specify the standards that both for-profit and nonprofit
participants are to use to determine which costs may be charged to the
project, in accordance with Sec. Sec. 37.625 through 37.635, as well
as Sec. 37.830.
(l) Audits. If your TIA is an expenditure-based award, you must
include an audit provision for both for-profit and nonprofit
participants and subrecipients, in accordance with Sec. Sec. 37.640
through 37.670 and Sec. 37.680.
(m) Purchasing system standards. You should include a provision
specifying the standards in Sec. Sec. 37.705 and 37.710 for purchasing
systems of for-profit and nonprofit participants, respectively.
(n) Program income. You should specify requirements for program
income, in accordance with Sec. 37.835.
(o) Financial and programmatic reporting. You must specify the
reports that the recipient is required to submit and tell the recipient
when and where to submit them, in accordance with Sec. Sec. 37.880
through 37.905.
(p) Assurances for applicable national policy requirements. You
must incorporate assurances of compliance with applicable requirements
in Federal statutes, Executive orders, or regulations (except for
national policies that require certifications). Appendix D to this part
contains a list of commonly applicable requirements that you need to
augment with any specific requirements that apply in your particular
circumstances (e.g., general provisions in the appropriations act for
the specific funds that you are obligating).
(q) Other routine matters. The agreement should address any other
issues that need clarification, including who in the Government will be
responsible for post-award administration and the statutory authority
or authorities for entering into the TIA (see appendix B to this part
for a discussion of statutory authorities). In addition, the agreement
must specify that it takes precedence over any inconsistent terms and
conditions in collateral documents such as attachments to the TIA or
the recipient's articles of collaboration.
Sec. 37.1015 How do I decide who must sign the TIA if the recipient
is an unincorporated consortium?
(a) If the recipient is a consortium that is not formally
incorporated and the consortium members prefer to have the agreement
signed by all of them individually, you may execute the agreement in
that manner.
(b) If they wish to designate one consortium member to sign the
agreement on behalf of the consortium as a whole, you should not decide
whether to execute the agreement in that way until you review the
consortium's articles of collaboration with legal counsel.
(1) The purposes of the review are to:
(i) Determine whether the articles properly authorize one
participant to sign on behalf of the other participants and are binding
on all consortium members with respect to the research project; and
(ii) Assess the risk that otherwise could exist when entering into
an agreement signed by a single member on behalf of a consortium that
is not a legal entity. For example, you should assess whether the
articles of collaboration adequately address consortium members' future
liabilities related to the research project (i.e., whether they will
have joint and severable liability).
(2) After the review, in consultation with legal counsel, you
should determine whether it is better to have all of the consortium
members sign the agreement individually or to allow them to designate
one member to sign on all members' behalf.
Reporting Information About the Award
Sec. 37.1020 What must I document in my award file?
You should include in your award file an agreements analysis in
which you:
(a) Briefly describe the program and detail the specific military
and commercial benefits that should result from the project supported
by the TIA. If the recipient is a consortium that is not formally
incorporated, you should attach a copy of the signed articles of
collaboration.
(b) Describe the process that led to the award of the TIA,
including how you and program officials solicited and evaluated
proposals and selected the one supported through the TIA.
(c) Explain how you decided that a TIA was the most appropriate
instrument, in accordance with the factors in Subpart B of this part.
Your explanation must include your answers to the relevant questions in
Sec. 37.225(a) through (d).
(d) Explain how you valued the recipient's cost sharing
contributions, in accordance with Sec. Sec. 37.530 through 37.555. For
a fixed-support TIA, you must document the analysis you did (see Sec.
37.560) to set the fixed level of Federal support; the documentation
must explain how you determined the recipient's minimum cost share and
show how you estimated the expenditures required to achieve the project
outcomes.
(e) Document the results of your negotiation, addressing all
significant issues in the TIA's provisions. For example, this includes
specific explanations if you:
(1) Specify requirements for a participant's systems that vary from
the standard requirements in Sec. Sec. 37.615(a), 37.625(a), 37.630,
or 37.705(a) in cases where those sections provide flexibility for you
to do so.
[[Page 47178]]
(2) Provide that any audits are to be performed by an IPA, rather
than the DCAA, where permitted under Sec. 37.650. Your documentation
must include:
(i) The names and addresses of business units for which IPAs will
be the auditors;
(ii) Estimated amounts of Federal funds expected under the award
for those business units; and
(iii) The basis (e.g., a written statement from the recipient) for
your judging that the business units do not currently perform under
types of awards described in Sec. 37.650(b)(1) and (2) and are not
willing to grant the DCAA audit access.
(3) Include an intellectual property provision that varies from
Bayh-Dole requirements.
(4) Determine that cost sharing is impracticable.
Sec. 37.1025 Must I report information to the Defense Assistance
Awards Data System?
Yes, you must give the necessary information about the award to the
office in your organization that is responsible for preparing DD Form
2566, ``DoD Assistance Award Action Report,'' reports for the Defense
Assistance Award Data System, to ensure timely and accurate reporting
of data required by 31 U.S.C. 6101-6106 (see 32 CFR part 21, subpart
E).
Sec. 37.1030 What information must I report to the Defense Technical
Information Center?
(a) For any TIA, you must give your answers to the questions in
Sec. 37.225(a) through (d) to the office in your DoD Component that is
responsible for providing data on TIAs to the DTIC. Contact DTIC staff
either by electronic mail at aq@dtic.mil, by telephone at 1-800-225-
3842, or at DTIC-OCA, 8725 John J. Kingman Rd., Suite 0944, Fort
Belvoir, VA 22060-6218, if you are unsure about the responsible office
in your DoD Component. The DTIC compiles the information to help the
Department of Defense measure the Department-wide benefits of using
TIAs and assess the instruments' value in helping to meet the policy
objectives described in Sec. 37.205(b) and appendix A to this part.
(b) If the TIA uses the authority of 10 U.S.C. 2371, as described
in Sec. 37.1035, your information submission for the DTIC under
paragraph (a) of this section must include the additional data required
for the DoD's annual report to Congress.
(c) If, as permitted under Sec. 37.650, the TIA includes a
provision allowing a for-profit participant to have audits performed by
an IPA, rather than the DCAA, you must report that fact with the other
information you submit about the TIA. Note that you also must include
information about any use of IPAs permitted by subawards that
participants make to for-profit firms, as provided in Sec. 37.670.
Information about a subaward under the TIA must be reported even if you
receive the information in a subsequent year, when information about
the TIA itself does not need to be reported.
(d) The requirements in this section to report information to the
DTIC should not be confused with the post-award requirement to forward
copies of technical reports to the DTIC, as described at Sec. Sec.
37.890 and 37.895. The reporting requirements in this section are
assigned the Report Control Symbol DD-AT&L(A) 1936.
Sec. 37.1035 How do I know if my TIA uses the 10 U.S.C. 2371
authority and I must report additional data under Sec. 37.1030(b)?
As explained in appendix B to this part, a TIA uses the authority
of 10 U.S.C. 2371 and therefore must be included in the DoD's annual
report to Congress on the use of 10 U.S.C. 2371 authorities if it:
(a) Is an assistance transaction other than a grant or cooperative
agreement, by virtue of its patent rights provision; or
(b) Includes a provision to recover funds from a recipient, as
described at Sec. 37.580.
Sec. 37.1040 When and how do I report information required by Sec.
37.1035?
Information that you report, in accordance with Sec. 37.1030, to
the office that your DoD Component designates as the central point for
reporting to the DTIC must be:
(a) Submitted by the dates that your central point establishes
(which is consistent with the schedule DTIC specifies to DoD
Components).
(b) In the format that your central point provides (which is
consistent with the format that the DTIC specifies to DoD Components).
Distributing Copies of the Award Document
Sec. 37.1045 To whom must I send copies of the award document?
You must send a copy of the award document to the:
(a) Recipient. You must include on the first page of the
recipient's copy a prominent notice about the current DoD requirements
for payment by electronic funds transfer (EFT).
(b) Office you designate to administer the TIA. You are strongly
encouraged to delegate post-award administration to the regional office
of the Defense Contract Management Agency or Office of Naval Research
that administers awards to the recipient. When delegating, you should
clearly indicate on the cover sheet or first page of the award document
that the award is a TIA, to help the post-award administrator
distinguish it from other types of assistance instruments.
(c) Finance and accounting office designated to make the payments
to the recipient.
Subpart I--Post-Award Administration
Sec. 37.1100 What are my responsibilities generally as an
administrative agreements officer for a TIA?
As the administrative agreements officer for a TIA, you have the
responsibilities that your office agreed to accept in the delegation
from the office that made the award. Generally, you will have the same
responsibilities as a post-award administrator of a grant or
cooperative agreement, as described in 32 CFR 22.715. Responsibilities
for TIAs include:
(a) Advising agreements officers before they award TIAs on how to
establish award terms and conditions that better meet research
programmatic needs, facilitate effective post-award administration, and
ensure good stewardship of Federal funds.
(b) Participating as the business partner to the DoD program
official to ensure the Government's substantial involvement in the
research project. This may involve attendance with program officials at
kickoff meetings or post-award conferences with recipients. It also may
involve attendance at the consortium management's periodic meetings to
review technical progress, financial status, and future program plans.
(c) Tracking and processing of reports required by the award terms
and conditions, including periodic business status reports,
programmatic progress reports, and patent reports.
(d) Handling payment requests and related matters. For a TIA using
advance payments, that includes reviews of progress to verify that
there is continued justification for advancing funds, as discussed in
Sec. 37.1105(b). For a TIA using milestone payments, it includes
making any needed adjustments in future milestone payment amounts, as
discussed in Sec. 37.1105(c).
(e) Coordinating audit requests and reviewing audit reports for
both single audits of participants' systems and any award-specific
audits that may be needed, as discussed in Sec. Sec. 37.1115 and
37.1120.
[[Page 47179]]
(f) Responding, after coordination with program officials, to
recipient requests for permission to sell or exclusively license
intellectual property to entities that do not agree to manufacture
substantially in the United States, as described in Sec. 37.875(b).
Before you grant approval for any technology, you must secure assurance
that the Government will be able to use the technology (e.g., a
reasonable license for Government use, if the recipient is selling the
technology) or seek reimbursement of the Government's investments.
(g) Notifying the agreements officer who made the award if a
participant informs you about a subaward allowing a for-profit
subrecipient to have audits performed by an IPA, rather than the DCAA.
You should alert the awarding official that he or she must report the
information, as required by Sec. 37.1030(c).
Sec. 37.1105 What additional duties do I have as the administrator of
a TIA with advance payments or payable milestones?
Your additional post-award responsibilities as an administrative
agreements officer for an expenditure-based TIA with advance payments
or payable milestones are to ensure good cash management. To do so, you
must:
(a) For any expenditure-based TIA with advance payments or payable
milestones, forward to the responsible payment office any interest that
the recipient remits in accordance with Sec. 37.820(b). The payment
office will return the amounts to the Department of the Treasury's
miscellaneous receipts account.
(b) For any expenditure-based TIA with advance payments, consult
with the program official and consider whether program progress
reported in periodic reports, in relation to reported expenditures, is
sufficient to justify your continued authorization of advance payments
under Sec. 37.805(b).
(c) For any expenditure-based TIA using milestone payments, work
with the program official at the completion of each payable milestone
or upon receipt of the next business status report to:
(1) Compare the total amount of project expenditures, as recorded
in the payable milestone report or business status report, with the
projected budget for completing the milestone; and
(2) Adjust future payable milestones, as needed, if expenditures
lag substantially behind what was originally projected and you judge
that the recipient is receiving Federal funds sooner than necessary for
program purposes. Before making adjustments, you should consider how
large a deviation is acceptable at the time of the milestone. For
example, suppose that the first milestone payment for a TIA you are
administering is $50,000, and that the awarding official set the amount
based on a projection that the recipient would have to expend $100,000
to reach the milestone (i.e., the original plan was for the recipient's
share at that milestone to be 50% of project expenditures). If the
milestone payment report shows $90,000 in expenditures, the recipient's
share at this point is 44% ($40,000 out of the total $90,000 expended,
with the balance provided by the $50,000 milestone payment of Federal
funds). For this example, you should adjust future milestones if you
judge that a 6% difference in the recipient's share at the first
milestone is too large, but not otherwise. Remember that milestone
payment amounts are not meant to track expenditures precisely at each
milestone and that a recipient's share will increase as it continues to
perform research and expend funds, until it completes another milestone
to trigger the next Federal payment.
Sec. 37.1110 What other responsibilities related to payments do I
have?
If you are the administrative agreements officer, you have the
responsibilities described in 32 CFR 22.810(c), regardless of the
payment method. You also must ensure that you do not withhold payments,
except in one of the circumstances described in 32 CFR 34.12(g).
Sec. 37.1115 What are my responsibilities related to participants'
single audits?
For audits of for-profit participant's systems, under Sec. Sec.
37.640 through 37.660, you are the focal point within the Department of
Defense for ensuring that participants submit audit reports and for
resolving any findings in those reports. Nonprofit participants send
their single audit reports to a Governmentwide clearinghouse. For those
participants, the Office of the Assistant Inspector General (Auditing)
should receive any DoD-specific findings from the clearinghouse and
refer them to you for resolution, if you are the appropriate official
to do so.
Sec. 37.1120 When and how may I request an award-specific audit?
Guidance on when and how you should request additional audits for
expenditure-based TIAs is identical to the guidance for grants officers
in 32 CFR 34.16(d). If you require an award-specific examination or
audit of a for-profit participant's records related to a TIA, you must
use the auditor specified in the award terms and conditions, which
should be the same auditor who performs periodic audits of the
participant. The DCAA and the OIG, DoD, are possible sources of advice
on audit-related issues, such as appropriate audit objectives and
scope.
Subpart J--Definitions of Terms Used in This Part
Sec. 37.1205 Advance.
A payment made to a recipient before the recipient disburses the
funds for program purposes. Advance payments may be based upon
recipients' requests or predetermined payment schedules.
Sec. 37.1210 Advanced research.
Research that creates new technology or demonstrates the viability
of applying existing technology to new products and processes in a
general way. Advanced research is most closely analogous to
precompetitive technology development in the commercial sector (i.e.,
early phases of research and development on which commercial
competitors are willing to collaborate, because the work is not so
coupled to specific products and processes that the results of the work
must be proprietary). It does not include development of military
systems and hardware where specific requirements have been defined. It
is typically funded in Research, Development, Test and Evaluation
programs within Budget Activity 3, Advanced Technology Development.
Sec. 37.1215 Agreements officer.
An official with the authority to enter into, administer, and/or
terminate TIAs (see Sec. 37.125).
Sec. 37.1220 Applied research.
Efforts that attempt to determine and exploit the potential of
scientific discoveries or improvements in technology such as new
materials, devices, methods and processes. It typically is funded in
Research, Development, Test and Evaluation programs within Budget
Activity 2, Applied Research (also known informally as research
category 6.2) programs. Applied research normally follows basic
research but may not be fully distinguishable from the related basic
research. The term does not include efforts whose principal aim is the
design, development, or testing of specific products, systems or
processes to be considered for sale or acquisition; these efforts are
within the definition of ``development.''
Sec. 37.1225 Articles of collaboration.
An agreement among the participants in a consortium that is not
formally incorporated as a legal entity, by which they establish their
relative rights and responsibilities (see Sec. 37.515).
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Sec. 37.1230 Assistance.
The transfer of a thing of value to a recipient to carry out a
public purpose of support or stimulation authorized by a law of the
United States (see 31 U.S.C. 6101(3)). Grants, cooperative agreements,
and technology investment agreements are examples of legal instruments
used to provide assistance.
Sec. 37.1235 Award-specific audit.
An audit of a single TIA, usually done at the cognizant agreements
officer's request, to help resolve issues that arise during or after
the performance of the research project. An award-specific audit of an
individual award differs from a periodic audit of a participant (as
defined in Sec. 37.1325).
Sec. 37.1240 Basic research.
Efforts directed toward increasing knowledge and understanding in
science and engineering, rather than the practical application of that
knowledge and understanding. It typically is funded within Research,
Development, Test and Evaluation programs in Budget Activity 1, Basic
Research (also known informally as research category 6.1).
Sec. 37.1245 Cash contributions.
A recipient's cash expenditures made as contributions toward cost
sharing, including expenditures of money that third parties contributed
to the recipient.
Sec. 37.1250 Commercial firm.
A for-profit firm or segment of a for-profit firm (e.g., a division
or other business unit) that does a substantial portion of its business
in the commercial marketplace.
Sec. 37.1255 Consortium.
A group of research-performing organizations that either is
formally incorporated or that otherwise agrees to jointly carry out a
research project (see definition of ``articles of collaboration,'' in
Sec. 37.1225).
Sec. 37.1260 Cooperative agreement.
A legal instrument which, consistent with 31 U.S.C. 6305, is used
to enter into the same kind of relationship as a grant (see definition
of ``grant,'' in Sec. 37.1295), except that substantial involvement is
expected between the Department of Defense and the recipient when
carrying out the activity contemplated by the cooperative agreement.
The term does not include ``cooperative research and development
agreements'' as defined in 15 U.S.C. 3710a.
Sec. 37.1265 Cost sharing.
A portion of project costs that are borne by the recipient or non-
Federal third parties on behalf of the recipient, rather than by the
Federal Government.
Sec. 37.1270 Data.
Recorded information, regardless of form or method of recording.
The term includes technical data, which are data of a scientific or
technical nature, and computer software. It does not include financial,
cost, or other administrative information related to the administration
of a TIA.
Sec. 37.1275 DoD Component.
The Office of the Secretary of Defense, a Military Department, a
Defense Agency, or a DoD Field Activity.
Sec. 37.1280 Equipment.
Tangible property, other than real property, that has a useful life
of more than one year and an acquisition cost of $5,000 or more per
unit.
Sec. 37.1285 Expenditure-based award.
A Federal Government contract or assistance award for which the
amounts of interim payments or the total amount ultimately paid (i.e.,
the sum of interim payments and final payment) are subject to
redetermination or adjustment, based on the amounts expended by the
recipient in carrying out the purposes for which the award was made.
Most Federal Government grants and cooperative agreements are
expenditure-based awards.
Sec. 37.1290 Expenditures or outlays.
Charges made to the project or program. They may be reported either
on a cash or accrual basis, as shown in the following table:
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Sec. 37.1295 Grant.
A legal instrument which, consistent with 31 U.S.C. 6304, is used
to enter into a relationship:
(a) The principal purpose of which is to transfer a thing of value
to the recipient to carry out a public purpose of support or
stimulation authorized by a law of the United States, rather than to
acquire property or services for the Department of Defense's direct
benefit or use.
(b) In which substantial involvement is not expected between the
Department of Defense and the recipient when carrying out the activity
contemplated by the grant.
Sec. 37.1300 In-kind contributions.
The value of non-cash contributions made by a recipient or non-
Federal third parties toward cost sharing.
Sec. 37.1305 Institution of higher education.
An educational institution that:
(a) Meets the criteria in section 101 of the Higher Education Act
of 1965 (20 U.S.C. 1001); and
(b) Is subject to the provisions of OMB Circular A-110,
``Administrative Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals, and Other Non-Profit
Organizations,'' as implemented by the Department of Defense at 32 CFR
part 32.
Sec. 37.1310 Intellectual property.
Inventions, data, works of authorship, and other intangible
products of intellectual effort that can be owned by a person, whether
or not they are patentable or may be copyrighted. The term also
includes mask works, such as those used in microfabrication, whether or
not they are tangible.
Sec. 37.1315 Nonprofit organization.
(a) Any corporation, trust, association, cooperative or other
organization that:
(1) Is operated primarily for scientific, educational, service, or
similar purposes in the public interest.
(2) Is not organized primarily for profit; and
(3) Uses its net proceeds to maintain, improve, or expand the
operations of the organization.
(b) The term includes any nonprofit institution of higher education
or nonprofit hospital.
Sec. 37.1320 Participant.
A consortium member or, in the case of an agreement with a single
for-profit entity, the recipient. Note that a for-profit participant
may be a firm or a segment of a firm (e.g., a division or other
business unit).
Sec. 37.1325 Periodic audit.
An audit of a participant, performed at an agreed-upon time
(usually a regular time interval), to determine whether the participant
as a whole is managing its Federal awards in compliance with the terms
of those awards. Appendix C to this part describes what such an audit
may cover. A periodic audit of a participant differs from an award-
specific audit of an individual award (as defined in Sec. 37.1235).
Sec. 37.1330 Procurement contract.
A Federal Government procurement contract. It is a legal instrument
which, consistent with 31 U.S.C. 6303, reflects a relationship between
the Federal Government and a State, a local government, or other
recipient when the principal purpose of the instrument is to acquire
property or services for the direct benefit or use of the Federal
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Government. See the more detailed definition of the term ``contract''
at 48 CFR 2.101.
Sec. 37.1335 Program income.
Gross income earned by the recipient or a participant that is
generated by a supported activity or earned as a direct result of a
TIA. Program income includes but is not limited to: income from fees
for performing services; the use or rental of real property, equipment,
or supplies acquired under a TIA; the sale of commodities or items
fabricated under a TIA; and license fees and royalties on patents and
copyrights. Interest earned on advances of Federal funds is not program
income.
Sec. 37.1340 Program official.
A Federal Government program manager, scientific officer, or other
individual who is responsible for managing the technical program being
carried out through the use of a TIA.
Sec. 37.1345 Property.
Real property, equipment, supplies, and intellectual property,
unless stated otherwise.
Sec. 37.1350 Real property.
Land, including land improvements, structures and appurtenances
thereto, but excluding movable machinery and equipment.
Sec. 37.1355 Recipient.
An organization or other entity that receives a TIA from a DoD
Component. Note that a for-profit recipient may be a firm or a segment
of a firm (e.g., a division or other business unit).
Sec. 37.1360 Research.
Basic, applied, and advanced research, as defined in this subpart.
Sec. 37.1365 Supplies.
Tangible property other than real property and equipment. Supplies
have a useful life of less than one year or an acquisition cost of less
than $5,000 per unit.
Sec. 37.1370 Termination.
The cancellation of a TIA, in whole or in part, at any time prior
to either:
(a) The date on which all work under the TIA is completed; or
(b) The date on which Federal sponsorship ends, as given in the
award document or any supplement or amendment thereto.
Sec. 37.1375 Technology investment agreements.
A special class of assistance instruments used to increase
involvement of commercial firms in defense research programs and for
other purposes (described in appendix A to this part) related to
integrating the commercial and defense sectors of the nation's
technology and industrial base. A technology investment agreement may
be a cooperative agreement with provisions tailored for involving
commercial firms (as distinct from a cooperative agreement subject to
all of the requirements in 32 CFR part 34), or another kind of
assistance transaction (see appendix B to this part).
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[FR Doc. 03-18927 Filed 8-6-03; 8:45 am]
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