Assistance Regulations, 69250-69272 [05-22475]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 70, Number 219 (Tuesday, November 15, 2005)]
[Rules and Regulations]
[Pages 69250-69272]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-22475]


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DEPARTMENT OF ENERGY

10 CFR Parts 600 and 603

RIN 1991-AB72


Assistance Regulations

AGENCY: Department of Energy.

ACTION: Interim final rule.

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SUMMARY: The Department of Energy (DOE) is adding a new part to the DOE 
assistance regulations to establish policies and procedures to 
implement the ``other transaction authority'' granted to the Secretary 
of Energy by section 1007 of the Energy Policy Act of 2005. DOE has 
decided to implement other transaction authority through the award and 
administration of technology investment agreements (TIAs). TIAs are a 
new class of assistance instrument for DOE, but they have been used by 
the Department of Defense (DoD) for many years 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 603 is similar to the DoD regulation; both 
provide contracting 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). DOE also is 
revising 10 CFR part 600, subpart A, to conform it with the new part.

DATES: Effective Date: This interim final rule is effective on March 
15, 2006. Comment Date: Written comments must be received by December 
15, 2005.

ADDRESSES: You may submit comments, identified by RIN Number 1991-AB72, 
by any of the following methods:
    1. E-mail to trudy.wood@hq.doe.gov. Include RIN 1991-AB72 and 
``TIA'' in the subject line of the e-mail. Please include the full body 
of your comments in the text of the message or as an attachment.
    2. Federal eRulemaking Portal: https://www.regulations.gov. Follow 
the instructions for submitting comments.
    3. Mail: Address the comments to Trudy Wood, U.S. Department of 
Energy, Office of Procurement and Assistance Policy (ME-61), 1000 
Independence Avenue, SW., Washington, DC 20585. Due to potential delays 
in DOE's receipt and processing of mail sent through the U.S. Postal 
Service, we encourage respondents to submit comments electronically to 
ensure timely receipt.

FOR FURTHER INFORMATION CONTACT: Ms. Trudy Wood, Office of Procurement 
and Assistance Policy, Department of Energy, at 202-827-1336.

SUPPLEMENTARY INFORMATION:

I. Background
II. Discussion of Rule Provisions
III. Discussion on Conforming Changes to 10 CFR Part 600
IV. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under the Treasury and General Government 
Appropriations Act, 2001
    J. Review Under Executive Order 13211
    K. Review Under the Small Business Regulatory Enforcement 
Fairness Act
V. Approval of the Office of the Secretary of Energy

I. Background

    Section 1007 of the Energy Policy Act of 2005 (Pub. L. 109-58) 
amends section 646 of the Department of Energy (DOE) Organization Act 
by adding a subsection (g) which authorizes the Secretary of Energy to 
enter into transactions (other than contracts, cooperative agreements, 
and grants) subject to the same terms and conditions as the Secretary 
of Defense under section 2371 of title 10, United States Code. Pursuant 
to 10 U.S.C. 2371, the Department of Defense (DoD) has developed types 
of cooperative agreements and other transactions to support research 
with potential for both commercial and defense applications. In 1997, 
DoD issued interim guidance that merged various cooperative agreements 
and other transactions that were similar to

[[Page 69251]]

each other into a single class of assistance instruments called 
technology investment agreements (TIAs). DoD published a regulation in 
2003 (68 FR 47150, August 7, 2003) establishing policies and procedures 
for the award and administration of TIAs.
    Today DOE is publishing interim final regulations as a new part 603 
to the DOE assistance regulations to establish policies and procedures 
to implement the Department's ``other transaction authority.'' These 
regulations were developed on an expedited basis in order to comply 
with the statutory requirement to issue guidance within 90 days of 
enactment of the Energy Policy Act of 2005. DOE will continue to review 
and evaluate transactions authorized and carried out by other Federal 
agencies under similar authority. This evaluation, which will be 
considered in formulating the final rule as well as internal guidance, 
includes an assessment of training and experience requirements for 
contracting officers, the use of independent audits, cost sharing, 
tracking of transactions, and knowledge management. The Department is 
seeking public comment on these interim final regulations in accordance 
with subsection 646(g)(6)(B) of the DOE Organization Act. Consistent 
with subsection 646(g)(6)(C) of the same Act, DOE will not carry out 
any transactions under section 646 until DOE considers comments 
received in response to this notice and makes the guidelines final.
    DOE used the DoD TIA regulation as the basis for developing the new 
part 603, but tailored the regulation to fit DOE requirements and 
procedures. Today's rule permits DOE to enter into a TIA, a special 
type of assistance instrument, with a for-profit firm or a consortium 
that includes a for-profit firm after a determination is made that a 
contract, grant, or cooperative agreement is not feasible or 
appropriate. A TIA can be either a type of cooperative agreement with 
more flexible provisions tailored to accommodate the financial 
management, property management, and purchasing systems of commercial 
firms, but with standard intellectual property provisions, or a 
transaction ``other than'' a grant or cooperative agreement if the 
intellectual property requirements vary from the Bayh-Dole statute 
(Chapter 18 of Title 35, U.S.C.) and the DOE patent statutes (42 U.S.C. 
5908 and 42 U.S.C 2182). The two types of TIAs have similar 
requirements except for the intellectual property requirements.
    DOE is also amending the existing 10 CFR part 600, subpart A, which 
establishes general requirements for financial assistance awards. The 
revision extends the application of subpart A to TIAs.

II. Discussion of Rule Provisions

    Part 603 is similar to the DoD Grant and Agreements Regulations, 32 
CFR part 37, Technology Investment Agreements. Like the DoD regulation, 
the new part 603 provides guidance to DOE contracting officers who 
award or administer TIAs, rather than to the TIA recipient. However, 
potential TIA recipients may have an interest in part 603 because it 
tells the contracting officer how to craft award terms and conditions 
that legally bind the recipient. The following paragraphs describe the 
subparts of part 603 and highlight some of the major requirements.
    Subpart A contains general information about TIAs. It explains the 
purpose, form and uses of a TIA and identifies other DOE assistance 
regulations that apply to the award and administration of a TIA.
    Subpart B describes when the contracting officer may use a TIA.
    Section 603.210 limits the use of a TIA to instances when a for-
profit firm is the recipient, a member of a consortium, or is involved 
in the commercial application of the results of the project. The 
section states that a TIA is particularly useful for an award to a 
consortium because such collaborations build new relationships among 
performers in the technology base, which can improve the overall 
quality of the research, development, and demonstration (RD&D), and 
provide a self-governance mechanism. The more flexible terms and 
conditions of a TIA often make it easier to accommodate the needs of 
commercial firms that do not traditionally do business with the 
government.
    Section 603.215 states that recipients are to provide, to the 
maximum extent practicable, at least half of the costs of the RD&D 
project. The purpose of cost sharing is to ensure that recipients have 
a vested interest in the project's success.
    Section 603.230 states that contracting officers may not use a TIA 
if a recipient is to receive fee or profit. The basis for the policy is 
that fee or profit, while appropriate for a procurement contract used 
in a buyer-seller relationship, is not appropriate for an assistance 
instrument used to accomplish a public purpose of support or 
stimulation in a project of mutual interest to the recipient and the 
Government.
    Subpart C addresses expenditure-based and fixed-support TIAs. An 
expenditure-based TIA is somewhat analogous to a cost-type procurement 
contract or grant. A fixed-support TIA is somewhat analogous to a 
fixed-price procurement contract. Section 603.315 describes the 
advantages of a fixed-support TIA, which include reducing or 
eliminating post-award requirements that may be a disincentive for a 
commercial firm to participate in the RD&D.
    Subpart D states the policy to use competitive procedures to award 
TIAs. It also discusses the format and content of the program 
announcement or announcement.
    Subpart E addresses contracting officer's responsibilities, prior 
to awarding TIAs, for determining that potential recipients are 
qualified and evaluating business aspects of the proposed transaction. 
The contracting officer must analyze funding, cost sharing and the 
ability of the recipient to successfully complete the project. In 
addition, if the recipient is a consortium that is not formally 
incorporated, the contracting officer must examine the collaboration 
agreement to ensure that the management plan is sound and that there is 
an effective working relationship among the members.
    Subparts F and G specify administrative requirements for TIAs. 
Subpart F addresses organization-wide system requirements for financial 
management, property management, and purchasing. To reduce 
administrative burden, the general policy is to have each type of 
organization that participates in a TIA continue to use its present 
administrative systems. Subpart G addresses award-specific 
administrative requirements, such as payment methods, revision of 
budget and program plans, intellectual property, reporting, and 
termination and enforcement.
    Overall, subparts F and G give contracting officers considerable 
latitude to negotiate award provisions in areas that sometimes are 
sources of concern for commercial firms.
    Two portions of subpart F may be of particular interest to 
potential recipients. Sections 603.640 through 603.675 address audit 
requirements for expenditure-based TIAs. Under Sec.  603.650, 
contracting officers may authorize use of Independent Public 
Accountants (IPAs) for audits of for-profit firms under certain 
conditions. When IPAs are used, Sec.  603.660 requires the audits to be 
performed in accordance with the Generally Accepted Government Auditing 
Standards (GAGAS) issued by the Government Accountability Office (GAO). 
Much of the GAGAS parallel the Generally

[[Page 69252]]

Accepted Auditing Standards used by the private sector.
    Section 603.680 of subpart F establishes the general policy for 
capital assets, including equipment that for-profit firms may need to 
perform the RD&D under TIAs. The policy calls for allowing a firm to 
charge to an expenditure-based TIA only depreciation or use charges for 
real property and equipment used on a TIA, except in certain 
circumstances. The contracting officer may grant an exception and 
permit a firm to charge the full acquisition cost of a capital asset to 
the RD&D project. However, if the full acquisition cost of the capital 
asset is charged to the award, Sec.  603.680 provides that although the 
recipient takes title to the property, the property is subject to the 
disposition process in 10 CFR 600.321(f).
    A portion of subpart G may be of particular interest to potential 
recipients. Sections 603.840 through Sec.  603.875 address data and 
patent rights and provide contracting officers guidelines for 
negotiating provisions appropriate to a wide variety of circumstances 
that may arise.
    Subpart H details contracting officer's responsibilities at the 
time of award. The section that may be of most interest to potential 
TIA recipients is Sec.  603.1010, which lists substantive issues that 
must be addressed in the award document.
    Subpart I addresses internal agency procedures for post-award 
administration.
    Subpart J includes definitions used in this part. The definitions 
in 10 CFR 600.3 also apply to TIAs.

III. Discussion of Conforming Changes to 10 CFR Part 600

    Today's rule makes the following conforming changes to 10 CFR part 
600, subpart A.
    1. Under the authority paragraph, the rule adds the authority that 
allows DOE to enter into transactions that are other than contracts, 
cooperative agreements or grants.
    2. In Sec.  600.1, the rule amends the last sentence to make 
subpart A apply to technology investment agreements as well as grants 
and cooperative agreements and states that the guidance for technology 
investment agreements is contained in part 603.
    3. In Sec.  600.6(c), the rule amends the paragraph to make the 
noncompetitive financial assistance requirements applicable to TIAs as 
well as grants and cooperative agreements.
    4. In Sec.  600.8(a), the rule amends the paragraph to make the 
program announcement requirements applicable to TIAs as well as grants 
and cooperative agreements.
    5. In Sec.  600.16(b), the rule amends the paragraph to make the 
provision applicable to TIAs as well as grants and cooperative 
agreements and adds the appropriate cites for awards made under subpart 
D and part 603.
    6. In Sec.  600.17, the rule amends the paragraph to clarify that 
the Notice of Financial Assistance Award form (DOE F 4600.1) is 
required only for grants and cooperative agreements awarded under part 
600.
    7. In Sec.  600.23, the rule corrects the cite for the debarment 
and suspension procedures. The debarment and suspension procedures also 
apply to TIAs and are referenced in part 603.
    8. In Sec.  600.26(a), the rule amends the paragraph to state that 
the project period must be specified in the award since the Notice of 
Financial Assistance Award (DOE Form 4600.1) is not appropriate for 
TIAs.

IV. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be ``a 
significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 1993). 
Accordingly, this action is not subject to review under that Executive 
Order by the Office of Information and Regulatory Affairs (OIRA) of the 
Office of Management and Budget (OMB).

B. Review Under Regulatory Flexibility Act of 1980

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking'' (67 FR 53461, August 16, 2002), DOE published 
procedures and policies to ensure that the potential impacts of its 
draft rules on small entities are properly considered during the 
rulemaking process (68 FR 7990, February 19, 2003), and has made them 
available on the Office of General Counsel's Web site: https://
www.gc.doe.gov. DOE has reviewed today's interim final rule under the 
provisions of the Regulatory Flexibility Act and the procedures and 
policies published on February 19, 2003. This regulatory action will 
not have a significant adverse impact on a substantial number of small 
entities because under part 603, 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 DOE research, development, and 
demonstration. On the basis of the foregoing, DOE certifies that the 
interim final rule does not have a significant economic impact on a 
substantial number of small entities. DOE did not prepare a regulatory 
flexibility analysis for this rulemaking.

C. Review Under the Paperwork Reduction Act of 1995

    This regulatory action will not impose any additional reporting or 
recordkeeping requirements subject to approval under the Paperwork 
Reduction Act. Participant reporting and recordkeeping requirements in 
part 603 either are parallel to, or less burdensome than, government-
wide requirements already established in OMB Circular A-110.

D. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this rule falls into a class 
of actions that would not individually or cumulatively have a 
significant impact on the human environment, as determined by DOE's 
regulations implementing the National Environmental Policy Act of 1969 
(42 U.S.C. 4321 et seq.). Specifically, this rule establishes 
guidelines and procedures for application and review, administration, 
audit and closeout of assistance instruments, and, therefore, is 
covered under the Categorical Exclusion in paragraph A6 to subpart D, 
10 CFR part 1021. Accordingly, neither an environmental assessment nor 
an environmental impact statement is required.

E. Review Under Executive Order 13132

    Executive Order 13132, 64 FR 43255 (August 4, 1999), imposes 
certain requirements on agencies formulating and implementing policies 
or regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. The Executive Order also requires agencies 
to have an accountable process to ensure meaningful and timely input by 
State and local officials in the development of

[[Page 69253]]

regulatory policies that have federalism implications. On March 14, 
2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations (65 FR 13735). DOE has examined today's 
proposed rule and has determined that it does not preempt State law and 
does not have a substantial direct effect 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. No further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Federal agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. Section 3(b) of Executive 
Order 12988 specifically requires that Executive agencies make every 
reasonable effort to ensure that the regulation: (1) Clearly specifies 
the preemptive effect, if any; (2) clearly specifies any effect on 
existing Federal law or regulation; (3) provides a clear legal standard 
for affected conduct while promoting simplification and burden 
reduction; (4) specifies the retroactive effect, if any; (5) adequately 
defines key terms; and (6) addresses other important issues affecting 
clarity and general draftsmanship under any guidelines issued by the 
Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law, this rule meets the relevant standards of Executive 
Order 12988.

G. Review Under the Unfunded Mandates Act of 1995

    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.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any proposed rule or policy that may affect 
family well-being. Today's rule will not have any impact on the 
autonomy or integrity of the family as an institution. Accordingly, DOE 
has concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under the Treasury and General Government Appropriations Act, 
2001

    The Treasury and General Government Appropriations Act, 2001, 44 
U.S.C. 3516 note, provides for agencies to review most disseminations 
of information to the public under implementing guidelines established 
by each agency pursuant to general guidelines issued by OMB. OMB's 
guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's 
guidelines were published at 67 FR 62446 (October 7, 2002). DOE has 
reviewed today's interim final rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

J. Review Under Executive Order 13211

    Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use, 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order and (2) is likely to have 
a significant adverse effect on the supply, distribution, or use of 
energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use. Today's regulatory 
action is not a significant energy action. Accordingly, DOE has not 
prepared a Statement of Energy Effects.

K. Review Under the Small Business Regulatory Enforcement Fairness Act

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of today's rule prior to its effective date. The report 
will state that it has been determined that the rule is not a ``major 
rule'' as defined by 5 U.S.C. 801(2).

V. Approval of the Office of the Secretary of Energy

    The Office of the Secretary has approved the issuance of this rule.

List of Subjects

10 CFR Part 600

    Administrative practice and procedure, Assistance programs.

10 CFR Part 603

    Accounting, administrative practice and procedure, Financial 
assistance programs, Grant programs, Reporting and recordkeeping 
requirements, Technology investments.

    Issued in Washington, DC on November 7, 2005.
Richard H. Hopf,
Director, Office of Procurement and Assistance Management, Office of 
Management, Department of Energy.
Robert C. Braden,
Director, Office of Acquisition and Supply Management, National Nuclear 
Security Administration.

0
For the reasons stated in the preamble, part 600 of chapter II, title 
10 of the Code of Federal Regulations, is amended as follows:

PART 600--FINANCIAL ASSISTANCE RULES

0
1. The authority citation for part 600 continues to read as follows:

    Authority: 42 U.S.C. 7101 et seq.; 31 U.S.C. 6301-6308; 50 
U.S.C. 2401 et seq., unless otherwise noted.


Sec.  600.1  [Amended]

0
2. Section 600.1, the last sentence is revised to read as follows:


Sec.  600.1  Purpose.

    * * * This subpart (Subpart A) sets forth the general policies and 
procedures applicable to the award and administration of grants, 
cooperative agreements, and technology investment agreements. The 
specific guidance for technology investment agreements is contained in 
part 603.


Sec.  600.6  [Amended]

0
3. In Sec.  600.6(c), the first sentence is amended by removing ``grant 
or cooperative agreement'' and adding ``grant, cooperative agreement, 
or

[[Page 69254]]

technology investment agreement'' in lieu thereof.


Sec.  600.8  [Amended]

0
4. In Sec.  600.8(a), the first sentence is amended by removing ``grant 
or cooperative agreement'' and adding ``grant, cooperative agreement, 
or technology investment agreement'' in lieu thereof.


Sec.  600.16  [Amended]

0
5. Section 600.16(b) is amended as follows:
0
a. The first sentence is amended by removing ``grant or cooperative 
agreement'' and adding ``grant, cooperative agreement, or technology 
investment agreement'' in lieu thereof.
0
b. The first sentence is amended by removing ``Sec. Sec.  600.125(e) or 
600.230 of this part'' and adding ``Sec. Sec.  600.125(e), 600.230, 
600.317(b), or 603.830'' in lieu thereof.


Sec.  601.17  [Amended]

0
6. Section 600.17 is amended by removing ``Each financial assistance 
award'' and adding ``Each grant and cooperative agreement awarded under 
this part'' in lieu thereof.


Sec.  601.23  [Amended]

0
7. Section 600.23 is amended by removing ``10 CFR part 1036'' and 
adding ``10 CFR part 606'' in lieu thereof.


Sec.  600.26  [Amended]

0
8. Section 600.26(a) is amended by removing ``on the Notice of 
Financial Assistance Award (DOE Form 4600.1)'' and adding ``in the 
award document'' in lieu thereof.

0
9. Part 603 is added to read as follows:

PART 603--TECHNOLOGY INVESTMENT AGREEMENTS

Subpart A--General
Sec.
603.100 Purpose.
603.105 Description.
603.110 Use of TIAs.
603.115 Approval requirements.
603.120 Contracting officer warrant requirements.
603.125 Applicability of other parts of the DOE Assistance 
Regulations.
Subpart B--Appropriate Use of Technology Investment Agreements
603.200 Contracting officer responsibilities.
603.205 Nature of the project.
603.210 Recipients.
603.215 Recipient's commitment and cost sharing.
603.220 Government participation.
603.225 Benefits of using a TIA.
603.230 Fee or profit.
Subpart C--Requirements for Expenditure-Based and Fixed-Support 
Technology Investment Agreements
603.300 Difference between an expenditure-based and a fixed-support 
TIA.
603.305 Use of a fixed-support TIA.
603.310 Use of an expenditure-based TIA.
603.315 Advantages of a fixed-support TIA.
Subpart D--Competition Phase
603.400 Competitive procedures.
603.405 Announcement format.
603.410 Announcement content.
603.415 Cost sharing.
603.420 Disclosure of information.
Subpart E--Pre-Award Business Evaluation
603.500 Pre-award business evaluation.
603.505 Program resources.

Recipient Qualification

603.510 Recipient qualifications.
603.515 Qualification of a consortium.

Total Funding

603.520 Reasonableness of total project funding.

Cost Sharing

603.525 Value and reasonableness of the recipient's cost sharing 
contribution.
603.530 Acceptable cost sharing.
603.535 Value of proposed real property or equipment.
603.540 Acceptability of fully depreciated real property or 
equipment.
603.545 Acceptability of costs of prior RD&D.
603.550 Acceptability of intellectual property.
603.555 Value of other contributions.

Fixed-Support or Expenditure-Based Approach

603.560 Estimate of project expenditures.
603.565 Use of a hybrid instrument.

Accounting, Payments, and Recovery of Funds

603.570 Determining milestone payment amounts.
603.575 Repayment of Federal cost share.
Subpart F--Award Terms Affecting Participants' Financial, Property, and 
Purchasing Systems
603.600 Administrative matters.
603.605 General policy.
603.610 Flow down requirements.

Financial Matters

603.615 Financial management standards for for-profit firms.
603.620 Financial management standards for nonprofit participants.
603.625 Cost principles or standards applicable to for-profit 
participants.
603.630 Use of Federally-approved indirect cost rates for for-profit 
firms.
603.635 Cost principles for nonprofit participants.
603.640 Audits of for-profit participants.
603.645 Periodic audits and award-specific audits of for-profit 
participants.
603.650 Designation of auditor for for-profit participants.
603.655 Frequency of periodic audits of for-profit participants.
603.660 Other audit requirements.
603.665 Periodic audits of nonprofit participants.
603.670 Flow down audit requirements to subrecipients.
603.675 Reporting use of IPA for subawards.

Property

603.680 Purchase of real property and equipment by for-profit firms.
603.685 Management of real property and equipment by nonprofit 
participants.
603.690 Requirements for Federally-owned property.
603.695 Requirements for supplies.

Purchasing

603.700 Standards for purchasing systems of for-profit firms.
603.705 Standards for purchasing systems of nonprofit organizations.
Subpart G--Award Terms Related to Other Administrative Matters
603.800 Scope.

Payments

603.805 Payment methods.
603.810 Method and frequency of payment requests.
603.815 Withholding payments.
603.820 Interest on advance payments.

Revision of Budget and Program Plans

603.825 Government approval of changes in plans.
603.830 Pre-award costs.

Program Income

603.835 Program income requirements.

Intellectual Property

603.840 Negotiating data and patent rights.
603.845 Data rights requirements.
603.850 Marking of data.
603.855 Protected data.
603.860 Rights to inventions.
603.865 March-in rights.
603.870 Marking of documents related to inventions.
603.875 Foreign access to technology and U.S. Competitiveness 
provisions.

Financial and Programmatic Reporting

603.880 Reporting requirements.
603.885 Updated program plans and budgets.
603.890 Final performance report.
603.895 Protection of information in programmatic reports.
603.900 Receipt of final performance report.

Records Retention and Access Requirements

603.905 Record retention requirements.
603.910 Access to a for-profit participant's records.
603.915 Access to a nonprofit participant's records.

Termination and Enforcement

603.920 Termination and enforcement requirements.

[[Page 69255]]

Subpart H--Executing the Award
603.1000 Contracting officer's responsibilities at time of award.

The Award Document

603.1005 General responsibilities.
603.1010 Substantive issues.
603.1015 Execution.

Reporting Information About the Award

603.1020 File documents.
Subpart I--Post-Award Administration
603.1100 Contracting officer's post-award responsibilities.
603.1105 Advance payments or payable milestones.
603.1110 Other payment responsibilities.
603.1115 Single audits.
603.1120 Award-specific audits.
Subpart J--Definitions of Terms Used in this Part
603.1205 Advance.
603.1210 Articles of collaboration.
603.1215 Assistance.
603.1220 Award-specific audit.
603.1225 Cash contributions.
603.1230 Commercial firm.
603.1235 Consortium.
603.1240 Cooperative agreement.
603.1245 Cost sharing.
603.1250 Data.
603.1255 Equipment.
603.1260 Expenditure-based award.
603.1265 Expenditures or outlays.
603.1270 Grant.
603.1275 In-kind contributions.
603.1280 Institution of higher education.
603.1285 Intellectual property.
603.1290 Participant.
603.1295 Periodic audit.
603.1300 Procurement contract.
603.1305 Program income.
603.1310 Program official.
603.1315 Property.
603.1320 Real property.
603.1325 Recipient.
603.1330 Supplies.
603.1335 Termination.
603.1340 Technology investment agreement.

Appendix A to Part 603--Applicable Federal Statutes, Executive 
Orders, and Government-wide Regulations
Appendix B to Part 603--Flow Down Requirements for Purchases of 
Goods and Services


    Authority: 42 U.S.C. 7101 et seq.; 31 U.S.C. 6301-6308; 50 
U.S.C. 2401 et seq., unless otherwise noted.

Subpart A--General


Sec.  603.100  Purpose.

    This part establishes uniform policies and procedures for the 
implementation of DOE's ``other transaction'' authority and for award 
and administration of a technology investment agreement (TIA).


Sec.  603.105  Description.

    (a) A TIA is a special type of assistance instrument used to 
increase involvement of commercial firms in the Department of Energy's 
(DOE) research, development and demonstration (RD&D) programs. A TIA, 
like a cooperative agreement, requires substantial Federal involvement 
in the technical or management aspects of the project. A TIA may be 
either a type of cooperative agreement or a type of assistance 
transaction other than a cooperative agreement, depending on the 
intellectual property provisions. A TIA is either:
    (1) A type of cooperative agreement with more flexible provisions 
tailored for commercial firms (as distinct from a cooperative agreement 
subject to all of the requirements in 10 CFR 600), but with 
intellectual property provisions in full compliance with the DOE 
intellectual property statutes (i.e., Bayh-Dole statute and 42 U.S.C. 
2182 and 5908, as implemented in 10 CFR 600.325). The authority to 
award this type of TIA is 42 U.S.C. 7256(a), as well as any program-
specific statute that provides authority to award cooperative 
agreements; or
    (2) An assistance transaction other than a cooperative agreement, 
if its intellectual property provisions vary from the Bayh-Dole statute 
and 42 U.S.C. 2182 and 5908, which require the Government to retain 
certain intellectual property rights and require differing treatment 
between large businesses and nonprofit organizations or small 
businesses. The authority to award this type of TIA is 42 U.S.C. 
7256(g), as well as any program-specific statute that provides 
authority to award assistance agreements.
    (b) The two types of TIAs have similar requirements, except for the 
intellectual property requirements. If the contracting officer 
determines there is a unique, exceptional need to vary from the 
standard intellectual property requirements in 10 CFR 600.325, the TIA 
becomes an assistance transaction other than a cooperative agreement.


Sec.  603.110  Use of TIAs.

    The ultimate goal for using a TIA is to broaden the technology base 
available to meet DOE mission requirements and foster within the 
technology base new relationships and practices to advance the national 
economic and energy security of the United States, to promote 
scientific and technological innovation in support of that mission, and 
to ensure the environmental cleanup of the national nuclear weapons 
complex. A TIA therefore is designed to:
    (a) Reduce barriers to participation in RD&D programs by commercial 
firms that deal primarily in the commercial marketplace. A TIA allows 
contracting officers to tailor Government requirements and lower or 
remove barriers if it can be done with proper stewardship of Federal 
funds.
    (b) Promote new relationships among performers in the technology 
base. Collaborations among commercial firms that deal primarily in the 
commercial marketplace, firms that regularly perform on the DOE RD&D 
programs and nonprofit organizations can enhance overall quality and 
productivity.
    (c) Stimulate performers to develop and use new business practices 
and disseminate best practices throughout the technology base.


Sec.  603.115  Approval requirements.

    An officer of the Department who has been appointed by the 
President by and with the advice and consent of the Senate and who has 
been delegated the authority from the Secretary must approve the award 
of a TIA and may perform other functions of the Secretary as set forth 
in 42 U.S.C. 7256(g). This authority may not be re-delegated. The DOE 
or National Nuclear Security Administration (NNSA) Senior Procurement 
Executive also must concur in the award of a TIA.


Sec.  603.120  Contracting officer warrant requirements.

    A contracting officer may award or administer a TIA only if the 
contracting officer's warrant authorizes the award or administration of 
a TIA.


Sec.  603.125  Applicability of other parts of the DOE Assistance 
Regulations.

    (a) TIAs are explicitly covered in this part and 10 CFR part 600, 
subpart A--General. 10 CFR part 600, subpart A, addresses general 
matters that relate to assistance instruments.
    (b) Three additional parts of the DOE Assistance Regulations apply 
to TIAs, although they do not mention a TIA explicitly. They are:
    (1) 10 CFR part 601--lobbying restrictions apply by law (31 U.S.C. 
1352) to a TIA that is a cooperative agreement and as a matter of DOE 
policy to a TIA that is an assistance transaction other than a 
cooperative agreement.
    (2) 10 CFR part 606--debarment and suspension requirements apply 
because they cover nonprocurement instruments in general; and
    (3) 10 CFR part 607--drug-free work-place (financial assistance) 
requirements apply because they cover all assistance instruments.
    (c) Other portions of 10 CFR part 600 apply to a TIA as referenced 
in part 603.

[[Page 69256]]

Subpart B--Appropriate Use of Technology Investment Agreements


Sec.  603.200  Contracting officer responsibilities.

    Contracting officers may use a TIA only in appropriate situations. 
To do so, the use of a TIA must be justified based on:
    (a) The nature of the project, as discussed in Sec.  603.205;
    (b) The type of recipient, addressed in Sec.  603.210;
    (c) The recipient's commitment and cost sharing, as described in 
Sec.  603.215;
    (d) The degree of involvement of the Government program official, 
as discussed in Sec.  603.220; and
    (e) The contracting officer's judgment that the use of a TIA could 
benefit the RD&D objectives in ways that likely would not happen if 
another type of instrument were used (i.e., a contract, grant or 
cooperative agreement is not feasible or appropriate). Answers to the 
four questions in Sec.  603.225 form the basis for the contracting 
officer's judgment.


Sec.  603.205  Nature of the project.

    Judgments relating to the nature of the project include:
    (a) The principal purpose of the project is to carry out a public 
purpose of support or stimulation of RD&D (i.e., assistance), rather 
than acquiring goods or services for the benefit of the Government 
(i.e., acquisition);
    (b) To the maximum extent practicable, the TIA does not support 
RD&D that duplicates other RD&D being conducted under existing programs 
carried out by the DOE; and
    (c) The use of a standard contract, grant or cooperative agreement 
for the project is not feasible or appropriate (see questions in Sec.  
603.225).


Sec.  603.210  Recipients.

    (a) A TIA requires one or more for-profit firms to be involved 
either in the:
    (1) Performance of the RD&D project; or
    (2) The commercial application of the results.
    (i) In those cases where there is only a non-profit performer or a 
consortium of non-profit performers or non-profit performs and FFRDC 
contractors, if and as authorized, the performers must have at least a 
tentative agreement with a specific for-profit partner or partners who 
plan on being involved in the commercial application of the results.
    (ii) In consultation with legal counsel, the contracting officer 
should review the agreement between the performers and their for-profit 
partner to ensure that the for-profit partner is committed to being 
involved in the commercial application of the results.
    (b) A TIA may be particularly useful for 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, other 
nonprofit organizations, or FFRDC contractors, if and as authorized) 
because:
    (1) If multiple performers are participating as a consortium, they 
may be more equal partners in the performance of the project than 
usually is the case with a prime recipient and subawards. All of 
performers are more likely to be directly involved in developing and 
revising plans for the RD&D 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 technology base, a principal objective for the use of a TIA.
    (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.
    (c) A TIA may be used for carrying out RD&D performed by single 
firms or multiple performers (e.g., a teaming arrangement) in prime 
award-subaward relationships. In awarding a TIA in those cases, 
however, consideration should be given to 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 the programmatic and business aspects of the overall 
project than they usually have).


Sec.  603.215  Recipient's commitment and cost sharing.

    (a) The contracting officer should evaluate whether the recipient 
has a strong commitment to and self-interest in the success of the 
project and incorporating the technology into products and processes 
for the commercial marketplace. Evidence of that commitment and 
interest should be found in the proposal, in the recipient's management 
plan, or through other means.
    (b) The contracting officer 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 is a 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 RD&D project under a TIA are to provide at least half of 
the costs of the project; and
    (2) The parties must provide the cost sharing from non-Federal 
resources unless otherwise provided by law.
    (c) The contracting officer may consider whether cost sharing is 
impracticable in a given case, unless there is a 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, the contracting officer should carefully consider if 
there are other factors that demonstrate the recipient's self-interest 
in the success of the current project.


Sec.  603.220  Government participation.

    A TIA is used to carry out cooperative relationships between the 
Federal Government and the recipient(s) which require substantial 
involvement of the Government in the execution of the RD&D. For 
example, program officials will participate in recipients' periodic 
reviews of progress and may be substantially involved with the 
recipients in the resulting revisions of plans for future effort.


Sec.  603.225  Benefits of using a TIA.

    Before deciding that a TIA is appropriate, the contracting officer 
also must judge that using a TIA could benefit the RD&D 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 10 CFR part 600). The contracting officer, 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. The contracting officer must report the answers 
to these questions to help the DOE measure the benefits of using a TIA. 
Note full concise answers are required only to questions that relate to 
the benefits perceived for using the TIA, rather than another type of 
funding instrument, for the particular 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 of any commercial 
firms or business units of firms that would not otherwise participate 
in the project? If so:

[[Page 69257]]

    (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? The contracting officer should identify specific 
provisions of the TIA or features of the TIA award process that enable 
their participation. For example, if the RD&D effort is based 
substantially on a for-profit firm's privately developed technology and 
the Government may be a major user of any commercial product developed 
as a result of the award, a for-profit firm may not participate unless 
the Government's intellectual property rights in the technology are 
modified.
    (b) Will the use of a TIA allow the creation of new relationships 
among participants in a consortium, at the prime or subtier levels, 
among business units of the same firm, or between non-Federal 
participants and the Federal Government that will foster better 
technology? If so:
    (1) Why do these new relationships have the potential for fostering 
technology 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, the contracting 
officer should be able to identify specifically what they are. If not, 
the contracting officer should be able to explain specifically why the 
relationships could not be created if another type of assistance 
instrument were used. For example, a large business firm may not be 
willing to participate in a consortium or teaming arrangement with 
small business firms and nonprofit firms under a standard cooperative 
agreement because those entities have invention rights under the Bayh-
Dole statute that are not available to large businesses. A large 
business firm may be willing to participate in a consortium or teaming 
arrangement only if all partners are substantially equal with regard to 
the allocation of intellectual property rights.
    (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 RD&D project that will foster better 
technology, new technology more quickly or less expensively, or 
facilitate partnering with commercial firms? If so:
    (1) What specific benefits result from the use of these new 
practices? The contracting officer should be able to explain 
specifically the 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, the 
contracting officer should be able to identify those provisions or 
features and explain why the practices could not be used if the award 
were made using another type of assistance instrument.
    (d) Are there any other benefits of the use of a TIA that could 
help DOE meet its objectives in carrying out the project? If so, the 
contracting officer should be able to identify specifically what they 
are, how they can help meet the objectives, what features of the TIA or 
award process enable DOE to realize them, and why the benefits likely 
would not be realized if an assistance instrument other than a TIA were 
used.


Sec.  603.230  Fee or profit.

    The contracting officer may not use a TIA if any participant is to 
receive fee or profit. Note that this policy extends to all performers 
of the project, 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 RD&D.

Subpart C--Requirements for Expenditure-Based and Fixed-Support 
Technology Investment Agreements


Sec.  603.300  Difference between an expenditure-based and a fixed-
support TIA.

    The contracting officer may negotiate expenditure-based or fixed-
support award terms for either types of TIA subject to the requirements 
in this subpart. The fundamental difference between an expenditure-
based and a fixed-support TIA is:
    (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 RD&D 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 is 
established at the time of award and is not meant to be adjusted later. 
In that sense, a fixed-support TIA is somewhat analogous to a fixed-
price procurement contract.


Sec.  603.305  Use a fixed-support TIA.

    The contracting officer may use a fixed-support TIA if:
    (a) The agreement is to support or stimulate RD&D with outcomes 
that are well defined, observable, and verifiable;
    (b) The resources required to achieve the outcomes can be estimated 
well enough to ensure the desired level of cost sharing (see example in 
Sec.  603.560(b)); and
    (c) The agreement 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. A fixed-support TIA may not be used if there 
is:
    (1) A requirement (e.g., in statute or policy determination) for a 
specific amount or percentage of recipient cost sharing; or
    (2) The contracting officer, in consultation with the program 
official, otherwise elects to include in the TIA a requirement for a 
specific amount or percentage of cost sharing.


Sec.  603.310  Use of an expenditure-based TIA.

    In general, the contracting officer must use an expenditure-based 
TIA under conditions other than those described in Sec.  603.305. 
Reasons for any exceptions to this general rule must be documented in 
the award file and must be consistent with the policy in Sec.  603.230 
that precludes payment of fee or profit to participants.


Sec.  603.315  Advantages of a fixed-support TIA.

    In situations where the use of a fixed-support TIA is permissible 
(see Sec. Sec.  603.305 and 603.310), its use may encourage some 
commercial firms' participation in the RD&D. With a fixed-support TIA, 
the contracting officer 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;

[[Page 69258]]

    (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; or
    (e) Require the recipient to prepare financial reports for 
submission to the Federal Government.

Subpart D--Competition Phase


Sec.  603.400  Competitive procedures.

    DOE policy is to award a TIA using competitive procedures and a 
merit-based selection process, as described in 10 CFR 600.6 and 600.13, 
respectively:
    (a) In every case where required by statute; and
    (b) To the maximum extent feasible, in all other cases. If it is 
not feasible to use competitive procedures, the contracting officer 
must comply with the requirements in 10 CFR 600.6(c).


Sec.  603.405  Announcement format.

    The announcement must use the government-wide standard format for 
program announcements of funding opportunities (see 10 CFR 600.8). If 
the contracting officer, in consultation with the program official, 
decides that a TIA is among the types of instruments that may be 
awarded under an announcement, the additional elements described in 
Sec. Sec.  603.410 through 603.420 should be included in the 
announcement.


Sec.  603.410  Announcement content.

    Once the contracting officer, in consultation with the program 
official, considers the factors described in Subpart B of this part and 
decides that a TIA is among the types of instruments that may be 
awarded pursuant to a program announcement, it is important to state 
that fact in the announcement. The announcement also should state that 
a TIA is more flexible than a traditional financial assistance 
agreement and that requirements 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.  603.415  Cost sharing.

    To help ensure a competitive process that is fair and equitable to 
all potential proposers, the announcement should state clearly:
    (a) That, to the maximum extent practicable, the non-Federal 
parties carrying out a RD&D project under a TIA are to provide at least 
half of the costs of the project (see Sec.  603.215(b));
    (b) The types of cost sharing that are acceptable;
    (c) How any in-kind contributions will be valued, in accordance 
with Sec. Sec.  603.530 through 603.555; and
    (d) Whether any consideration will be given 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.  
603.215.


Sec.  603.420  Disclosure of information.

    The announcement 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 DOE receives the information from 
them; and
    (b) As provided in 42 U.S.C. 7256(g) incorporating certain 
provisions of 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 the award of a TIA; 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 DOE in 10 CFR part 1004) for 
exemption from FOIA disclosure requirements.

Subpart E--Pre-Award Business Evaluation


Sec.  603.500  Pre-award business evaluation.

    (a) The contracting officer must determine the qualification of the 
recipient, as described in Sec. Sec.  603.510 and 603.515.
    (b) As the business expert working with the program official, the 
contracting officer also must address the financial aspects of the 
proposed agreement. The contracting officer must:
    (1) Determine that the total amount of funding for the proposed 
effort is reasonable, as addressed in Sec.  603.520.
    (2) Assess the value and determine the reasonableness of the 
recipient's proposed cost sharing contribution, as discussed in 
Sec. Sec.  603.525 through 603.555.
    (3) If contemplating the use of a fixed-support rather than 
expenditure-based TIA, ensure that its use is justified, as explained 
in Sec. Sec.  603.560 and 603.565.
    (4) Determine amounts for milestone payments, if used, as discussed 
in Sec.  603.570.


Sec.  603.505  Program resources.

    Program officials can be a source of information for determining 
the reasonableness of proposed funding (e.g., on labor rates, as 
discussed in Sec.  603.520) or establishing observable and verifiable 
technical milestones for payments (see Sec.  603.570).

Recipient Qualification


Sec.  603.510  Recipient qualifications.

    Prior to award of a TIA, the contracting officer's responsibilities 
for determining that the recipient is qualified are the same as those 
for awarding a grant or cooperative agreement. If the recipient is a 
consortium that is not formally incorporated, the contracting officer 
has the additional responsibility described in Sec.  603.515.


Sec.  603.515  Qualification of a consortium.

    (a) When the prospective recipient of a TIA is a consortium that is 
not formally incorporated, the contracting officer must also, in 
consultation with legal counsel, review the management plan in the 
consortium's collaboration agreement 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 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. 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; and
    (5) Provisions for ownership and rights in intellectual property 
developed previously or under the agreement.

[[Page 69259]]

Total Funding


Sec.  603.520  Reasonableness of total project funding.

    In cooperation with the program official, the contracting officer 
must assess the reasonableness of the total estimated budget to perform 
the RD&D that will be supported by the agreement.
    (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. The contracting officer also may rely on experience 
with other awards as the basis for determining reasonableness.
    (b) Real property and equipment. In almost all cases, the project 
costs should normally include only depreciation or use charges for real 
property and equipment of for-profit participants, in accordance with 
Sec.  603.680. 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.  603.525  Value and reasonableness of the recipient's cost sharing 
contribution.

    The contracting officer 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.  603.530 through 603.555. In doing so, the 
contracting officer must:
    (1) Ensure that there are affirmative statements from any third 
parties identified as sources of cash contributions, and
    (2) Include in the award file an evaluation that documents how the 
values of the recipient's contributions to the funding of the project 
were determined.
    (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.  603.215.


Sec.  603.530  Acceptable cost sharing.

    The contracting officer may accept any cash or in-kind 
contributions that meet all of the following criteria.
    (a) In the contracting officer's judgment, they represent 
meaningful cost sharing that demonstrates the recipient's commitment to 
the success of the RD&D 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 
RD&D project's objectives.
    (c) They are costs that may be charged to the project under Sec.  
603.625 and Sec.  603.635, 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, unless otherwise provided by law.


Sec.  603.535  Value of proposed real property or equipment.

    The contracting officer 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.  
603.680 for for-profit participants. The contracting officer may accept 
the full value of a donated capital asset if the real property or 
equipment is to be dedicated to the project and the contracting officer 
expects that it will have a fair market value that is less than $5,000 
at the project's end. In those cases, the contracting officer 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); and
    (b) The current fair market value. The contracting officer 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, the 
contracting officer may accept the current fair market value even if it 
exceeds the value in the recipient's records.


Sec.  603.540  Acceptability of fully depreciated real property or 
equipment.

    The contracting officer should limit the value of any contribution 
of a fully depreciated asset to a reasonable use charge. In determining 
what is reasonable, the contracting officer must consider:
    (a) The original cost of the asset;
    (b) Its estimated remaining useful life at the time of the 
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.  603.545  Acceptability of costs of prior RD&D.

    The contracting officer may not count any participant's costs of 
prior RD&D as a cost sharing contribution. Only the additional 
resources that the recipient will provide to carry out the current 
project (which may include pre-award costs for the current p