[Federal Register Volume 59, Number 4 (Thursday, January 6, 1994)]
[Rules and Regulations]
[Pages 663-670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-69]
[[Page Unknown]]
[Federal Register: January 6, 1994]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
Technology Administration
15 CFR Part 295
[Docket No. 930242-3313]
RIN 0693-AA83
Advanced Technology Program
AGENCY: National Institute of Standards and Technology, Commerce.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The National Institute of Standards and Technology (NIST) is
today issuing a final rule which amends the implementing regulations
for the Advanced Technology Program (ATP). A number of the revisions
are required by the American Technology Preeminence Act of 1992,
including provisions on: participation by foreign companies in ATP; the
establishment of a patent policy different from the government-wide
policy set out by the Bayh-Dole Act; and a new requirement that ``joint
research and development ventures'' be industry-led. Further,
requirements for royalty-sharing by ATP recipients with the Federal
government for inventions funded under ATP have been repealed by the
Act, and are thus removed from the regulations. Similarly, ATP
authority to provide direct funding to independent research
organizations has been repealed. Also, changes not required by the Act
are made, including changes to simplify and clarify the selection
criteria, and to streamline the internal operations of ATP, including
the selection process.
EFFECTIVE DATE: This rule is effective on January 6, 1994.
FOR FURTHER INFORMATION CONTACT:
George A. Uriano or Brian C. Belanger, Advanced Technology Program,
National Institute of Standards and Technology (NIST), telephone number
(301) 975-5187.
SUPPLEMENTARY INFORMATION: The National Institute of Standards and
Technology is today issuing a final rule which amends regulations found
at part 295 of title 15 of the Code of Federal Regulations, which
implement the Advanced Technology Program (ATP). The Advanced
Technology Program assists United States businesses to carry out high-
risk research and development that will, if successful, improve the
competitive position of the United States and its businesses by
accelerating the development of technologies that have significant
potential to stimulate economic growth, and raise productivity. ATP
enters into cooperative agreements with United States joint research
and development ventures and United States businesses, especially small
businesses. Where appropriate, Federal laboratories may be involved in
ATP projects consistent with other authority, such as cooperative
research and development agreements under section 12 of the Stevenson-
Wydler Technology Innovation Act of 1980.
Description of the Changes
Changes to part 295 include revisions on the following topics
(please see the analysis of comments below for additional details):
The eligibility of foreign firms to participate in ATP is
addressed in a new section 295.3 of the regulations, and a related
definition of ``United States owned company'' is added in section
295.2(r). These revisions follow the requirements of section 201(c)(6)
of the American Technology Preeminence Act of 1991 (15 U.S.C.
278n(d)(9)).
The establishment of a patent policy different from the
government-wide policy set out by the Bayh-Dole Act (Pub. L. 96-517, as
amended) is set out at section 295.8(a). These revisions follow the
requirements of section 201(c)(6) of the American Technology
Preeminence Act of 1991 (15 U.S.C. 278n(d)(11)). That statute requires
that title to inventions made in whole or part with Program funds
reside with for-profit companies that have been incorporated in the
United States. Entities that are not for-profit organizations
incorporated in this country are not eligible to obtain title to
inventions made under the Program.
A new requirement that ``joint research and development
ventures'' be industry-led, set out at Secs. 295.2(i) and 295.21, and
the repeal of ATP authority to provide direct funding to independent
research organizations, set out at Sec. 295.30. These revisions follow
the requirements of section 201(c)(2) and section 201(c)(4),
respectively, of the American Technology Preeminence Act of 1991 (15
U.S.C. 278n(b)(1) and (b)(2)).
Requirements for royalty-sharing by ATP recipients with
the Federal government for inventions funded under ATP have been
repealed, and are thus removed from existing Sec. 295.7(c) of the
regulations. This revision follows the requirements of section
201(c)(6) of the American Technology Preeminence Act of 1991.
Finally, changes not required by the Act are made to the
selection criteria, and to the internal operations of ATP, including
the selection process. These changes particularly include revisions to
the remaining definitions in Sec. 295.2, changes to the selection
process described in Secs. 295.4 and 295.5, changes to the selection
criteria as set out in Sec. 295.6, and changes to program
administration found in Secs. 295.7 and 295.14.
Summary of Comments
On August 2, 1993, the Technology Administration published a notice
of proposed rulemaking in the Federal Register (55 FR 41069). In
response to this notice forty-four letters were received; twenty-nine
from universities, ten from other not-for-profit research organizations
and industry associations, one from a state agency, one from a U.S.-
owned for-profit company, one from a U.S. subsidiary of a foreign-owned
corporation, one from a member of the U.S. House of Representatives,
and one from a member of the NIST staff.
All but four of the forty-four respondents, including all twenty-
nine from universities and all ten from other not-for-profit
organizations, commented on the proposed revision to the treatment of
patent rights found in Sec. 295.8. An additional two dozen comments
were received concerning proposed changes to the proposed definitions
set out in Sec. 295.2. The remaining comments were scattered among
several sections, including: five concerning new Sec. 295.14, which
deals with special financial reporting requirements; three on the
revisions to the selection criteria found in Sec. 295.5; two on the use
of abbreviated proposals proposed in Sec. 295.5; and one each on the
provisions on the eligibility and qualification of applicants found in
Secs. 295.3 and 295.31. No comments were received in response to
proposed changes to the following: Sec. 295.1, pertaining to the
purpose of the regulation; Sec. 295.4, the selection process;
Sec. 295.7, pertaining to notices of availability of funds;
Sec. 295.21, on qualification of applicants; Sec. 295.22, dealing with
limitations on assistance; Sec. 295.24, concerning registration under
the antitrust laws; and Sec. 295.30, which describes the types of
assistance available.
The following is a section-by-section description of the comments
received by NIST, and NIST's response to those comments.
Section 295.2 Definitions--Comment Summary (24 Comments)
Twenty-three respondents, all universities or other nonprofit
organizations, questioned whether the definition of ``United States-
owned company'' found in Sec. 295.2(r) of the proposed rule reflected
the actual intent of Congress as stated in the American Technology
Preeminence Act of 1991. The definition of United States-owned company
set out in Sec. 295.2(r) is used in section 295.8 to determine
eligibility to obtain title to inventions arising from assistance under
ATP. A consolidated analysis of the issues raised by Sec. 295.2(r) and
295.8 is presented in the discussion of Sec. 295.8 later in this
notice, and the reader is asked to refer to that discussion.
In addition to the issue described above, one respondent questioned
the exclusion (by omission) of independent research and development
(IR&D) costs in the definition of matching funds found in
Sec. 295.2(1). IR&D funds are generally generated through contracts
funded by the federal government. The financial assistance regulations
which are applicable to ATP awards, and particularly Attachment E to
OMB Circular A-110, prohibit the use of federal funds as cost share or
match unless specifically authorized by federal law. The rule follows
closely the wording of the 1988 legislation and hence cannot be changed
without congressional action. The purpose of the limitations on
qualified matching funds is to obtain a meaningful and significant
commitment of company resources towards ATP objectives, including
support to additional R&D beyond that which would have occurred without
the ATP award.
Section 295.3 Eligibility of United States and foreign-owned
businesses--(1 Comment)
One U.S. subsidiary of a foreign-owned company requested that both
eligibility requirements and cancellation requirements for foreign-
owned applicants be made clearer and that they be consistent with
present law and with H.R. 820. In response, NIST notes that H.R. 820 is
not law, but rather is pending legislation in the Congress. NIST cannot
base changes in rules upon proposed legislation that has not been
enacted.
Section 295.5 Use of Abbreviated Proposals in the Selection Process--
(2 Comments)
Two respondents endorsed the use of abbreviated proposals. One
respondent further proposed that abbreviated proposals address, and
thus be evaluated on, scientific and technical criteria only. NIST has
determined that business and economic factors are important factors in
assessing the potential for success of a proposed project, and
therefore must be considered in addition to the scientific and
technical merit of the proposal.
Section 295.6 Criteria for Selection--(3 Comments)
Two respondents endorsed the increased emphasis on ``scientific and
technical merit'', one of whom suggested increasing its weight further
to 40 percent. Another respondent took issue with the reduced weight
for two proposers ``level of commitment'' and suggested increasing the
weight for the ``commitment'' criteria to 30 percent by eliminating
``experience and qualifications'' as a separate criteria.
In response to these comments, Sec. 295.5 has been modified to
increase the weight of the ``level of commitment'' to 20 percent, the
level that exists in the regulation as it was promulgated in 1990. The
weight given ``experience and qualifications'' has been reduced from 20
percent to 10 percent.
Section 295.8(a) Patent Rights--(40 Comments)
Forty comments were received concerning the proposed revision to
Sec. 295.8(a)(1), thirty-nine from universities and other nonprofit
organizations opposed to the proposal, and one from a business
supporting the proposal. Also, twenty-three of the thirty-nine
commentors described above objected to the definition of ``United
States-owned company'' found in Sec. 295.2(r) of the proposed rule.
The term ``United States-owned company'' defined in Sec. 295.2(r)
is used in Sec. 295.8(a)(1) to determine who is eligible to obtain
title inventions arising from assistance under ATP. The definition
states that an entity must be organized for profit-making purposes to
be deemed a United States-owned company, and Sec. 295.8(a)(1) states
that only United States-owned companies may take title to inventions
arising under the ATP. Taken together, the two sections prevent
universities and other nonprofit organizations from obtaining title to
inventions arising under the ATP.
The thirty-nine universities and nonprofit commentors are strongly
opposed to this outcome. The following objection is typical: ``The ATP
legislation enables universities to participate in research funded
through the program, and (we have) taken advantage of the opportunity
to do so. However, the problem is that NIST has interpreted the ATP
legislation to exclude universities from ownership of intellectual
property resulting from ATP funded research.''
In the view of NIST, the decision to prevent universities and other
nonprofit organizations from taking title to inventions is embedded in
statute, and NIST has no alternative but to follow the law as it
presently is written. As a result of comments received from both for-
profit and nonprofit organizations, NIST recognizes that one ingredient
for the successful implementation of joint ventures under ATP is a
flexible patent policy. The participants in ATP joint ventures need the
flexibility to determine for themselves the best means of
commercializing the technology they develop. This, in turn, requires
the flexibility to allocate intellectual property rights as the joint
ventures best see fit. Accordingly, NIST is working with the Congress
in an attempt to enact a patent policy for ATP that leaves the
decisions on patent ownership to joint venture members. Should a change
in the law be enacted, NIST would immediately implement it. In that
case, NIST would rely on the ATP proposal evaluation criteria to assess
the probability of subsequent commercialization based on the proposed
intellectual property rights arrangement.
Section 201(c)(6) of the American Technology Preeminence Act of
1991 (15 U.S.C. 278n(d)(11)) states that intellectual property rights
developed under ATP ``shall vest in a company or companies incorporated
in the United States.'' In reaching the conclusion that the term
``company or companies'' refers to profit-making entities, NIST has
been guided by the broader context of changes made to the ATP by the
American Technology Preeminence Act. NIST believes that it was the
intent of Congress to provide title to inventions directly to U.S.
companies as the most effective means of assuring that research results
enter the marketplace rapidly, and in the way most beneficial to United
States businesses. In this context, NIST notes that the Act contains a
new requirement that ``joint research and development ventures'' funded
by ATP must be industry-led. NIST also notes the repeal of ATP
authority to provide direct funding to nonprofit independent research
organizations. (See sections 201(c)(2) and section 201(c)(4),
respectively, of the American Technology Preeminence Act of 1991 (15
U.S.C. 278n(b)(1) and (b)(2)).
Thus, NIST believes that the only reasonable reading of section
201(c)(6) is to interpret the term ``United States-owned company'' as
referring to businesses, and specifically, to for-profit entities.
Section 295.8 (b) and (c) Copyright and Publication--(24 Comments)
A number of universities have expressed fear that the new ATP rules
will prevent universities or their employees from copyrighting their
works. The fear is also raised that the ATP rule will require
universities to get the permission of their for-profit collaborators
before publishing their research findings. In response, NIST notes that
the parts of the ATP rule dealing with the questions raised by these
comments on copyright and publication were not proposed to be
substantively changed in the Federal Register notice of August 2, 1993.
In the old rule, the provision on copyright was found in Sec. 295.5(b),
and the treatment of publication of research results was found at
Sec. 295.8(d). In the new rule, the provision on copyright is found in
Sec. 295.8(b), and the treatment of publication of research results is
at Sec. 295.8(c).
Except for renumbering, the only change that NIST proposed for the
old Sec. 295.5(b) concerned the governmental use license that each ATP
funding recipient is required to provide to NIST for any copyrighted
data first produced in the performance of the ATP award. The scope of
the governmental use license has been truncated by deleting the
authority of the government to distribute computer programs first
produced in the performance of the ATP award to users in the United
States. The ability of funding recipients to copyright the works of
their employees remains unchanged. Both the old and new versions of the
ATP regulation state that ``funding recipients'' can copyright works
made under ATP. Universities that receive funds under ATP are ``funding
recipients''. They are funding recipients if they are members of joint
ventures. They are funding recipients if they are subcontractors.
Universities get copyright. Accordingly, no change is made to
Sec. 295.8(c) of the regulation based upon the comments described
above.
Except for renumbering, the only change that NIST proposed for the
old Sec. 295.5(d) was to delete the first part of the first sentence.
That sentence originally read: ``Although the program will encourage
the timely publication of research results by funding recipients, the
decision on whether to publish or not will be made by the funding
recipient(s).'' In the proposed revision, the sentence was revised to
read simply ``The decision on whether to publish or not will be made by
the funding recipient(s).'' NIST believes that the regulation is very
clear that the decision to publish shall be made by negotiated
agreement of the funding recipients and that the for-profit members of
a joint venture will not be able to dictate to universities on this
matter. This provision has been part of every ATP award made since
1990, and no difficulties have arisen under it. Accordingly, no change
is made to section 295.8(c) of the proposed regulation based upon the
comments described above.
Section 295.14 Special Financial Reporting--(5 Comments)
Two universities and three other not-for-profit organizations
commented on proposed section 295.14, which would increase the
flexibility of financial reporting requirements and encourage award
recipients to retain independent CPA firms to perform audit services,
while reserving the right of the Department of Commerce's Office of the
Inspector General to determine the timing and nature of these services,
and to conduct its own audit. The comments suggested a need for greater
specificity as to the applicable OMB regulations which might apply and
the conditions under which the Departmental Inspector General would
exercise his authority in setting the time frame and scope of audit
services.
In response, the regulations have been amended to state that the
audit principles to be applied to ATP awards are the Generally Accepted
Accounting Principles (GAAP) according to the General Accounting
Office's ``Government Auditing Standards'' subtitled ``Standards for
Auditing Government Organization, Program, Activities and Functions''.
Clarifying changes have also been made to the definitions of ``direct
costs'' found at Sec. 295.2(c) and ``indirect costs'' found at
Sec. 295.2(h).
Section 295.31 Qualification of Applicants--(1 Comment)
One respondent urged that state and local governments and U.S.
universities and non-profit research institutes working independently
should be eligible to receive individual ATP awards outside of joint
ventures. No change has been made to the regulation based upon this
comment because eligibility for individual awards is expressly limited
to United States companies by section 278n(b)(2) of title 15 of the
United States Code.
Effective Date of the Final Rule
This final rule relating to grants, benefits, and contracts is
exempt from the delayed effective date requirement, and accordingly,
under section 553(a)(2) of the Administrative Procedure Act (5 U.S.C.
553), is therefore being made effective immediately without a 30 day
delay in effective date.
Classification
This document was not reviewed by the Office of Management and
Budget under Executive Order 12866. The General Counsel certified to
the Chief Counsel for Advocacy, Small Business Administration, at the
time this rule was proposed that, if it were adopted as proposed it
would not have a significant economic effect on a substantial number of
small entities requiring a flexibility analysis under the Regulatory
Flexibility Act. This is because there are only a small number of
awardees and thus only a small number of awards will be given to small
businesses. The program is entirely voluntary for the participants that
seek funding. It is not a major federal action requiring an
environmental assessment under the National Environment Policy Act.
This rule contains collection of information requirements subject to
the Paperwork Reduction Act approved by OMB under control number 0693-
0009. The Advanced Technology Program does not involve the mandatory
payment of any matching funds from a state or local government, and
does not affect directly any state or local government. Accordingly,
the Technology Administration has determined that Executive Order 12372
is not applicable to this program. This notice does not contain
policies with Federalism implications sufficient to warrant preparation
of a Federalism assessment under Executive Order 12612.
List of Subjects in 15 CFR Part 295
Inventions and patents, Laboratories, Research, Science and
technology, Scientists.
Dated: December 27, 1993.
Arati Prabhakar,
Director.
For reasons set forth in the preamble, title 15, part 295 of the
Code of Federal Regulations is amended as follows:
PART 295--ADVANCED TECHNOLOGY PROGRAM
1. The authority citation for part 295 is revised to read as
follows:
Authority: 15 U.S.C. 278n.
2. Section 295.1 is revised to read as follows:
Sec. 295.1 Purpose.
(a) The purpose of the Advanced Technology Program (ATP) is to
assist United States businesses to carry out research and development
on pre-competitive generic technologies. These technologies are: (1)
Enabling, because they offer wide breadth of potential application and
form an important technical basis for future commercial applications;
and (2) high value, because when applied, they offer significant
benefits to the U.S. economy. Precompetitive technology is defined in
Sec. 295.2(n) and generic technology is defined in Sec. 295.2(e).
(b) In the case of joint research and development ventures
involving potential competitors, the willingness of firms to commit
significant amounts of corporate resources to the venture is evidence
that the proposed research and development is precompetitive. For joint
ventures that involve firms and their customers or suppliers or for
single firms not proposing cooperative research and development, a
quantified description of the expected broad applicability of the
technology and adequate assurances that the technology being developed
will be utilized widely can provide evidence that the proposed research
and development is pre-competitive.
(c) These rules prescribe policies and procedures for the award of
cooperative agreements under the advanced Technology Program in order
to ensure the fair treatment of all proposals. While the Advanced
Technology Program is authorized to enter into grants, competitive
agreements, and contracts to carry out its mission, these rules address
only the award of cooperative agreements. The Program employs
cooperative agreements rather than grants because such agreements allow
ATP to exercise appropriate management oversight of projects and also
to link ATP-funded projects to ongoing R&D at the National Institute of
Standards and Technology wherever such linkage would increase the
likelihood of success of the project.
3. Section 295.2 is amended by revising paragraph (a),
redesignating paragraphs (d) through (i) as paragraphs (k) through (p),
redesignating paragraph (b) as paragraph (e) , redesignating paragraph
(c) as paragraph (h), and adding new paragraphs (b), (c), (d), (f),
(g), (i), and (j) to read as follows:
Sec. 295.2 Definitions.
(a) For the purposes of the ATP, the term award means Federal
financial assistance made under a grant or cooperative agreement.
* * * * *
(b) The term cooperative agreement refers to a Federal assistance
instrument used whenever the principal purpose of the relationship
between the Federal Government and the recipient is the transfer of
money, property, or services, or anything of value to the recipient to
accomplish a public purpose of support or stimulation authorized by
Federal statute, rather than acquisition by purchase, lease, or barter,
of property or services for the direct benefit or use of the Federal
Government; and substantial involvement is anticipated between the
executive agency, acting for the Federal Government, and the recipient
during performance of the contemplated activity.
(c) The term direct costs means costs that can be identified
readily with activities carried out in support of a particular final
objective. Because of the diverse characteristics and accounting
practices of different organizations, it is not possible to specify the
types of costs which may be classified as direct costs in all
situations. However, typical direct costs could include salaries of
personnel assigned to the ATP project and associated normal fringe
benefits such as medical insurance. Direct costs might also include
supplies and materials, special equipment required specifically for the
ATP project, and travel associated with the ATP project. ATP shall
interpret direct costs in accordance with 48 CFR part 31 or OMB
Circular A-122, attachment B.
(d) The term foreign-owned company means a company other than a
United States-owned company as defined in Sec. 295.2(r).
* * * * *
(f) The term grant means a Federal assistance instrument used
whenever the principal purpose of the relationship between the Federal
Government and the recipient is the transfer of money, property,
services, or anything of value to the recipient in order to accomplish
a public purpose of support or stimulation authorized by Federal
statute, rather than acquisition by purchase, lease, or barter, of
property or services for the direct benefit or use of the Federal
Government; and no substantial involvement is anticipated between the
executive agency, acting for the Federal Government, and the recipient
during performance of the contemplated activity.
(g) The term independent research organization (IRO) means a
nonprofit research and development corporation or association organized
under the laws of any state for the purpose of carrying out research
and development on behalf of other organizations.
* * * * *
(i) The term industry-led joint research and development venture
means a joint research and development venture that consists of at
least two separately-owned businesses that contribute matching funds to
the project, perform research and development in the project, and
control the venture's membership, research directions and funding
priorities. The venture may include additional companies, independent
research organizations, universities, and/or government laboratories
which may or may not contribute funds to the project and perform
research and development. An independent research organization may
perform administrative tasks on behalf of an industry-led joint
research and development venture, such as handling receipts and
disbursements of funds and making antitrust filings.
(j) The term intellectual property means an invention patentable
under title 35, United States Code, or any patent on such an invention.
* * * * *
4. The newly designated Sec. 295.2(h) is revised to read as
follows:
Sec. 295.2 Definitions.
* * * * *
(h) The term indirect costs means those costs incurred for common
or joint objectives that cannot be readily identified with activities
carried out in support of a particular final objective. A cost may not
be allocated to an award as an indirect cost if any other cost incurred
for the same purpose in like circumstances has been assigned to an
award as a direct cost. Because of diverse characteristics and
accounting practices it is not possible to specify the types of costs
which may be classified as indirect costs in all situations. However,
typical examples of indirect costs include general administration and
general expenses, such as the salaries and expenses of executive
officers, personnel administration, maintenance, library expenses, and
accounting. ATP shall interpret indirect costs in accordance with 48
CFR part 31 or OMB Circular A-122, Attachment C.
5. The newly designated Sec. 295.2(k)(1)(v) is revised and
(k)(1)(vi) is added, to read as follows:
Sec. 295.2 Definitions.
* * * * *
(k)(1) * * *
* * * * *
(v) The production of any product, process, or service; or
(vi) any combination of the purposes specified in paragraphs
(k)(1), (i), (ii), (iii), (iv) and (v) of this section, and may include
the establishment and operation of facilities for the conducting of
research, the conducting of such venture on a protected and proprietary
basis, and the prosecuting of applications for patents and the granting
of licenses for the results of such venture, but does not include any
activity specified in paragraph (k)(2) of this definition.
* * * * *
6. The newly designated Sec. 295.2(l) is revised to read as
follows:
Sec. 295.2 Definitions.
* * * * *
(l) The term matching funds includes the following: (1) Dollar
contributions from state, county, city, company, or other non-federal
sources; (2) in-kind contributions of full-time personnel (i.e.,
persons employed full time by the joint venture or one of the joint
venture members); (3) in-kind contributions of a pro-rata share of
part-time personnel that the Program deems essential to carrying out
the proposed experimental work program and who devote at least 50% of
their time to the program; and (4) in-kind value of equipment that the
Program deems essential to carrying out the proposed experimental work
program, which may include either the purchase cost of new equipment or
the depreciated value of previously purchased equipment. The
depreciation method to be used for the matching fund determination
shall be the internal depreciation accounting method used by the
applicant for that equipment prior to the award. The value of equipment
will be further pro-rated according to the share of total use dedicated
to carrying out the proposed ATP work program. The total value of
equipment expenditures allowable under the match may be applied in the
award year expended or pro-rated over the duration of award years. The
total in-kind value of equipment expenditures can not exceed 30% of the
applicant's total annual share of matching funds. The total in-kind
value of part-time personnel can not exceed 20% of the applicant's
total annual share of matching funds.
* * * * *
7. The newly designated Sec. 295.2(p) is revised to read as
follows:
Sec. 295.2 Definitions.
* * * * *
(p) The term Secretary means the Secretary of Commerce or the
Secretary's designee.
8. Section 295.2 is amended by adding paragraphs (q) through (r) to
read as follows:
Sec. 295.2 Definitions.
* * * * *
(q) The term small business means a business that is independently
owned and operated, is organized for profit, and is not dominant in the
field of operation in which it is proposing, and meets the other
requirements found in 13 CFR part 121.
(r) The term United States-owned company means a for-profit
organization, including sole proprietors, partnerships, or
corporations, that has a majority ownership or control by individuals
who are citizens of the United States.
Secs. 295.3-295.10 [Redesignated as Secs. 295.6-295.13]
9. Sections 295.3 through 295.10 are redesignated as Secs. 295.6
through 295.13, and newly designated Secs. 295.3 through 295.5 are
added to read as follows:
Sec. 295.3 Eligibility of United States- and foreign-owned businesses.
(a) A company shall be eligible to receive an award from the
Program only if:
(1) The Program finds that the company's participation in the
Program would be in the economic interest of the United States, as
evidenced by investments in the United States in research, development,
and manufacturing (including, for example, the manufacture of major
components or subassemblies in the United States); significant
contributions to employment in the United States; and agreement with
respect to any technology arising from assistance provided by the
Program to promote the manufacture within the United States of products
resulting from that technology (taking into account the goals of
promoting the competitiveness of United States industry), and to
procure parts and materials from competitive suppliers; and
(2) Either the company is a United States-owned company, or the
Program finds that the company is incorporated in the United States and
has a parent company which is incorporated in a country which affords
to United States-owned companies opportunities, comparable to those
afforded to any other company, to participate in any joint venture
similar to those authorized under the Program; affords the United
States-owned companies local investment opportunities comparable to
those afforded to any other company; and affords adequate and effective
protection for the intellectual property rights of United States-owned
companies.
(b) The Program may, within 30 days after notice to Congress,
suspend a company or joint venture from continued assistance under the
Program if the Program determines that the company, the country of
incorporation of the company or a parent company, or the joint venture
has failed to satisfy any of the criteria contained in paragraph (a) of
this section, and that it is in the national interest of the United
States to do so.
Sec. 295.4 The selection process.
(a) The selection process for awards is a multi-step process based
on the criteria listed in Sec. 295.6. In the first step, called
``preliminary screening,'' proposals are eliminated that do not meet
the requirements of this rule or the program announcement. Typical but
not exclusive of the reasons for eliminating a proposal at this stage
is that the proposal: is deemed to have serious deficiencies in either
the technical or business plan; or does not meet the definition of
precompetitive, generic technology; or, is not industry-led; or is
significantly overpriced or underpriced given the scope of the work; or
does not meet the requirements set out in the Notice of Availability of
Funds issued pursuant to Sec. 295.7; or in the case of joint ventures,
requests more than a minority share of funding. NIST will also examine
proposals that have been submitted to a previous competition to
determine whether substantive revisions have been made to the earlier
proposal, and if not, may reject the proposal or forward it to a later
stage in the review process based upon the earlier review.
(b) In the second step, referred to as the ``technical and business
review,'' proposals are evaluated under the criteria found in
Sec. 295.6. Proposals are rated as ``not recommended'' or
``recommended.'' Proposals must have high scientific and technical
merit to be recommended. Only those proposals rated as ``recommended''
are considered further. These applicants are referred to as
``semifinalists.''
(c) In the third step, referred to as ``selection of finalists,''
the Program prepares a final scoring and ranking of semifinalist
proposals. During this step, the semifinalist proposers may be asked to
make oral presentations on their proposals at NIST, and in some cases
site visits may be required. Subject to the provisions of Sec. 295.6, a
list of ranked finalists is submitted to the selecting official.
(d) In the final step, referred to as ``selection of awardees,''
the Selecting Official selects funding recipients from among the
finalists, based upon (1) the rank order of the applications on the
basis of all selection criteria (Sec. 295.6); (2) assuring an
appropriate distribution of funds among technologies and activities,
and (3) the availability of funds. The Program reserves the right to
withhold awards in any case where a search of Federal records discloses
information that raises a reasonable doubt as to the responsibility of
the applicant. The decision of the Selecting Official is final.
(e) If a joint venture is ranked as a finalist, but the Program
determines that the joint venture contains weaknesses in its structure
or cohesiveness that may substantially lessen the probability of the
proposed program being completed successfully, the Program may inform
the applicant of the deficiencies and enter into negotiations with the
applicant in an effort to remedy the deficiencies. If appropriate,
funding up to 10 percent of the amount originally requested by the
applicant may be awarded by the Program to the applicant to assist in
overcoming the organizational deficiencies. If the Program determines
within six months of this award that the organizational deficiencies
have been corrected, the Program may award the remaining funds
requested by the applicant to that applicant.
(f) NIST reserves the right to negotiate with applicants selected
to receive awards the cost and scope of the proposed work, e.g., to add
or delete a task to improve the probability of success.
Sec. 295.5 Use of abbreviated proposals in the selection process.
To reduce proposal preparation costs incurred by applicants and to
make the selection process more efficient, NIST may use a preliminary
qualification process based on abbreviated proposals. Announcements
requesting abbreviated proposals will be published as indicated in
Sec. 295.7, seeking proposals that address all of the selection
criteria, but in considerably less detail than full proposals. The
Program will review the abbreviated proposals and select those that
best meet the selection criteria. Submitters of abbreviated proposals
will be notified in writing whether their proposals are recommended for
full proposal, or, not recommended for full proposal. Those whose
proposals are recommended for full proposal submission will be invited
to prepare and submit full proposals. Those not invited to submit
proposals may nonetheless elect to do so, and will have an equal
opportunity for selection. When the full proposals are received, the
review and selection process will continue as described in Sec. 295.4.
10. Section 295.6 is revised to read as follows:
Sec. 295.6 Criteria for selection.
The evaluation criteria to be used in selecting any proposal for
funding under this program, and their respective weights, are listed in
this section. No proposal will be funded unless the Program determines
via the technical review that it has high scientific and technical
merit, no matter how meritorious the proposal might be with respect to
the other selection criteria.
(a) Scientific and Technical Merit of the Proposal (30 Percent)
(1) Quality, innovativeness, and cost-effectiveness of the proposed
technical program, i.e. uniqueness with respect to current industry
practice. Applicants shall compare and contrast their approaches with
those taken by other domestic and foreign companies working in the same
field.
(2) Appropriateness of the technical risk and feasibility of the
project; that is, is there a sufficient knowledge base to justify the
level of technical risk involved, and is the risk commensurate with the
potential payoff. Projects should press the state of the art while
still demonstrating feasibility.
(3) Coherency of technical plan and clarity of vision of technical
objectives, and the degree the technical plan meets Program goals.
(4) Adequacy of systems-integration and multi-disciplinary planning
including integration of appropriate downstream or upstream production,
manufacturing, quality assurance, and customer service requirements.
(5) Potential broad impact on U.S. technology and knowledge base.
(b) Potential Broad-based Economic Benefits of the Proposal (20
Percent)
(1) Potential to improve U.S. economic growth.
(2) Timeliness of proposal; that is, the potential project results
will not occur too late or too early to be competitively useful.
(3) Degree to which ATP support is essential for the achievement of
the broad-based benefits from the proposed R&D and appropriateness of
proposed R&D for ATP support. This factor takes into consideration the
likelihood of the results being achieved in the same general time frame
by the applicant or by other U.S. researchers without ATP support, and
whether other Federal agencies or other sponsors are already funding
very similar kinds of work.
(4) Cost-effectiveness of proposal.
(c) Adequacy of Plans for Eventual Commercialization (20 Percent)
(1) Evidence that if the project is successful, the applicants will
pursue further development of the technology toward commercial
application, either through their own organization(s) or through
others.
(2) Degree to which proposal identifies potential applications of
the technology and provides evidence that the applicant has credible
plans to assure prompt and widespread use of the technology if the R&D
is successful and to ensure adequate protection of the intellectual
property by the participant(s) and, as appropriate, by other U.S.
businesses.
(d) Proposer's Level of Commitment and Organizational Structure (20
Percent)
(1) Level of commitment of proposer as demonstrated by contribution
of personnel, equipment, facilities, and cost-sharing. Extent to which
the proposer assigns the company's best people to the project. Priority
given to this work vis-a-vis other projects.
(2) For joint ventures, the extent to which the joint venture has
been structured (vertical integration, horizontal integration, or both)
so as to include sufficient participants possessing all of the skills
required to complete successfully the proposed work.
(3) For joint ventures, appropriate participation by small
businesses. ``Small business'' is defined in Sec. 295.2(q).
(4) Appropriateness of subcontractor/supplier/collaborator
participation and relationships (where applicable).
(5) Clarity and appropriateness of management plan. Extent to which
the proposers have clarified who is responsible for each task, and the
chain of command. Extent to which those responsible for the work have
adequate authority and access to higher level management.
(e) Experience and Qualifications of the Proposing Organization (10
Percent)
(1) Adequacy of proposer's facilities, equipment, and other
technical, financial, and administrative resources to accomplish the
proposed program objectives. This factor includes consideration of
resources possessed by subcontractors to the applicant or other
collaborators.
(2) Quality and appropriateness of the technical staff to carry out
the proposed work program and to identify and overcome barriers to
meeting project objectives.
(3) Past performance of the company or joint venture members in
carrying out similar kinds of efforts successfully, including
technology application. Consideration of this factor in the case of a
start-up company or new joint venture, will take into account the past
performance of the key people in carrying out similar kinds of efforts.
11. Newly designated Sec. 295.7 is revised to read as follows:
Sec. 295.7 Notice of availability of funds.
(a) The Program shall publish at least annually a Federal Register
notice inviting interested parties to submit proposals, and may more
frequently publish invitations for proposals in the Commerce Business
Daily, based upon the annual notice. Potential applicants must request
a proposal preparation kit from the Program. Applications will only be
considered for funding when submitted in response to an invitation
published in the Federal Register, or a related announcement in the
Commerce Business Daily.
(b) All notices published in accord with Sec. 295.7(a) shall
include the amount of funds available, the approximate number of
awards, types of awards, closing dates, the name, address and telephone
number of the contact person, a requirement that proposals be submitted
with a NIST Form 1262 (for single applicants), or NIST Form 1263 (for
joint ventures), and any other appropriate guidance.
(c) Notices issued under Sec. 295.7(a) shall also state that awards
under the Program shall be subject to all Federal laws and Federal and
Departmental regulations, policies and procedures applicable to
financial assistance awards, and shall require that funds awarded by
the Program under subpart C (single applicants) shall be used only for
direct costs and not for indirect costs, profits, or management fees of
the funding recipients. Notices shall also include the notification
that section 319 of Public Law 101-121 prohibits recipients of Federal
contracts, grants, and loans from using appropriated funds for lobbying
the Executive or Legislative Branches of the Federal Government in
connection with a specific contract, grant, or loan.
12. Newly designated Sec. 295.8 is revised to read as follows:
Sec. 295.8 Intellectual property rights; Publication of research
results.
(a)(1) Patent rights: Title to inventions arising from assistance
provided by the Program must vest in a company or companies
incorporated in the United States. The United States may reserve a non-
exclusive, nontransferable, irrevocable paid-up license to practice or
have practiced for or on behalf of the United Sates any such
intellectual property, but shall not, in the exercise of such license,
publicly disclose proprietary information related to the license. Title
to any such intellectual property shall not be transferred or passed,
except to a company incorporated in the United States, until the
expiration of the first patent obtained in connection with such
intellectual property. Nothing in this paragraph shall be construed to
prohibit the licensing to any company of intellectual property rights
arising from assistance provided under this section.
(2) Patent procedures: Each award by the Program will contain
procedures regarding reporting of inventions by the funding recipient
to the Program; determinations by the Program as to whether it will
retain a governmental use license; march-in rights, and other matters.
(b) Copyrights: Except as otherwise specifically provided for in an
Award, funding recipients under the Program may establish claim to
copyright subsisting in any data first produced in the performance of
the award. When claim is made to copyright, the funding recipient shall
affix the applicable copyright notice of 17 U.S.C. 401 or 402 and
acknowledgment of Government sponsorship to the data when and if the
data are delivered to the Government, are published, or are deposited
for registration as a published work in the U.S. Copyright Office. The
funding recipient shall grant to the Government, and others acting on
its behalf, a paid up, nonexclusive, irrevocable, worldwide license for
all such data to reproduce, prepare derivative works, perform publicly
and display publicly, and for data other than computer software to
distribute to the public by or on behalf of the Government.
(c) Publication of research results: The decision on whether or not
to publish research results will be made by the funding recipient(s).
Unpublished intellectual property owned and developed by any business
or joint research and development venture receiving funding or by any
member of such a joint venture may not be disclosed by any officer or
employee of the Federal Government except in accordance with a written
agreement between the owner or developer and the Program. The licenses
granted to the Government under Sec. 295.8(b) shall not be considered a
waiver of this requirement.
13. Section 295.14 is added to read as follows:
Sec. 295.14 Special financial reporting requirements.
Each award by the Program shall contain procedures regarding
financial reporting to ensure that awards are being used in accordance
with Office of Management and Budget Circular A-122--``Cost Principles
for Non-Profit Organizations'', Federal Acquisition Regulation (FAR)
part 31--``Contract Cost Principles and Procedures'', or other sound
accounting practices to be specified in the Cooperative Agreement. The
audit principles to be applied to ATP awards are the Generally Accepted
Accounting Principles (GAAP) according to the General Accounting
Office's ``Government Auditing Standards'' subtitled ``Standards for
Auditing Government Organization, Program, Activities and Functions''.
Each award will be subject to an Attestation Engagement (i.e.,
providing assurance on representations of compliance with statutory,
regulatory, and contractual requirements) or an audit in conjunction
with the recipient's annual audit at least every two years. In the
interest of efficiency, the recipients are encouraged to retain their
own independent CPA firm to perform these services. The Department of
Commerce's Office of Inspector General (OIG) reserves the right to
determine the time frame and/or level of service of financial audit
reports that are to be delivered and to determine how the close-out
audit is to be conducted. The use of an independent CPA firm does not
preclude the OIG's right to conduct its own audit.
14. The heading for subpart B is revised to read as follows:
Subpart B--Assistance to United States Industry-Led Joint Research
and Development Ventures
15. Section 295.21 is revised to read as follows:
Sec. 295.21 Qualification of applicants.
(a) Assistance under this subpart is available to industry-led
joint research and development ventures only, subject to the
limitations set out in Sec. 295.3 of these regulations. These ventures
may include universities, independent research organizations, and
governmental entities; however, the Program will not provide funding
directly to any university or governmental organization.
(b) Applications for funding under this subpart may be submitted on
behalf of an industry-led joint research and development venture by one
or more businesses or independent research organizations that are
members of the venture. Applications must, however, include letters of
commitment from all proposed members of the venture, verifying the
availability of matching funds, and authorizing the party or parties
submitting the proposal to act on behalf of the venture with the
Program on all matters pertaining to the proposal.
16. Section 295.22 is revised to read as follows:
Sec. 295.22 Limitations on assistance.
An award will be made under this subpart only if the award will
facilitate the formation of a joint venture or the initiation of a new
research and development project by an existing joint venture.
17. Section 295.24 is revised to read as follows:
Sec. 295.24 Registration.
Joint research and development ventures selected for funding must
notify the Department of Justice or the Federal Trade Commission under
the National Cooperative Research Act of 1984. No funds will be
released prior to receipt by the Program of copies of such
notification.
18. The heading for subpart C is revised to read as follows:
Subpart C--Assistance to Single-Applicant U.S. Businesses
19. Section 295.30 is revised to read as follows:
Sec. 295.30 Types of assistance available.
This subpart describes the types of assistance that may be provided
under the authority of 15 U.S.C. 278n(b)(2). Such assistance includes
but is not limited to entering into cooperative agreements with United
States businesses, especially small businesses.
20. Section 295.31 is revised to read as follows:
Sec. 295.31 Qualification of applicants.
Awards under this subpart will be available to all businesses,
subject to the limitations set out in Sec. 295.3 of these regulations.
The Program will not directly provide funding under this subpart to any
governmental entity, academic institution or independent research
organization.
[FR Doc. 94-69 Filed 1-5-94; 8:45 am]
BILLING CODE 3510-13-M
