Overview

Introduction 

DOE is implementing the “other transactions” authority granted to the Secretary of Energy by section 1007 of the Energy Policy Act of 2005 (EPACT 2005) through the award of Technology Investment Agreements (TIAs).    

One of the primary purposes of TIAs is to increase DOE’s access to firms that do business primarily in the commercial marketplace.  A second objective is to create new relationships among science and technology performers in different sectors.  A third purpose is to promote the use of better business practices (e.g., by disseminating best practices, including ones used in the commercial marketplace, for broader use by other firms, including firms that do business primarily with the Government).

Among the best science and technology performers are companies that primarily serve the needs of the commercial marketplace.   In recent years, DOE’s access to many of those performers has been limited by Federal Government business practices.  Those practices include many Government-unique requirements that dissuade some firms from doing business with the Government and cause others to create divisions for
Government business that are separate and isolated from their commercial business. 

Contracting Officers, who are specifically authorized to award and administer TIAs, have a tremendous opportunity and responsibility, but face a great challenge.  The opportunity is the freedom that the TIAs provide to tailor each provision and vary from traditional, Government-unique requirements.  Using this authority appropriately can lower barriers to participation of commercial firms and facilitate new relationships and business practices.  The associated responsibility is to tailor the requirements in ways that also provide for good stewardship of Federal funds. The challenge is to balance these benefits with the added risks that may result from the tailoring of requirements.

This training includes the following topics:

1. What is the authority for “other transactions?”
 
2. What is an “other transaction?”

3. How did DoD implement Section 2371?

4. How did TIAs evolve?

5. Where can I find the DOE TIA guidance?

6. What are assistance transactions other than grants or cooperative agreements?

7. What kinds of instruments are TIAs and what authorities do they use?

8. Who must approve a TIA?

9. Who may award a TIA?

10. When is it appropriate to award a TIA?

11. What are expenditure-based and fixed-support TIAs?

12. How are TIAs more flexible than standard cooperative agreements?

13. Pre-award Phase:  Preparing the announcement.

14. Pre-award Business Evaluation.

15. Award Phase: Crafting a good business arrangement.

16. Post-Award Phase: Administering TIAs.

17. A valuable new tool.

Learning objectives

At the conclusion of this training, the student will be able to:

• Determine authorities, appropriate use, and procedures for Technology Investment Agreements.

• Recognize differences and similarities in purpose and characteristics between Technology Investment Agreements and other assistance instruments (grants and cooperative agreements other than TIAs) that are used to support RD&D.

• Use the TIA authority to tailor provisions and remove barriers to commercial firms' participation, while carrying out the concomitant responsibility to maintain proper stewardship of Federal funds. 

1.   What is the authority for “other transactions?”

Section 1007, entitled ‘Other Transactions Authority,” of EPACT 2005 amended section 646 of the DOE Organization Act (42 U.S.C. 7256).  Among other things, it provides that the Secretary may 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, U.S. Code.

2.   What is an “other transaction?”

The term “other transactions” derives from the Department of Defense’s (DoD’s) authority in 10 U.S.C. 2371.  Although the term is not used in the statute, it is short hand for “transactions other than a contract, grant, or cooperative agreement.”   EPACT 2005 uses the term “other transactions authority” only in the section title.  Both the DoD and DOE statutes state what is not included in these transaction, rather than what is included.  Therefore, the term includes:

• Any acquisition instrument other than a “procurement contract” (a term generally used to mean a contract subject to the FAR).

• Any assistance instrument other than a grant or cooperative agreement;
 
Thus, an “other transaction” is not a kind of instrument but potentially many kinds of instruments.

Some people incorrectly assume that Cooperative Research and Development Agreements, or CRADAs, are “other transactions.”   The primary purpose of a CRADA is to facilitate the transfer of technology generated within Federal laboratories to firms that, through investment in follow-on development, can translate the technology into products and processes to benefit the economy.  They are agreements betweenFederal laboratories and non-Federal entities under which the laboratories do not provide funds to the non-Federal parties.  The authorizing statute (15 U.S.C. 3710a)is careful to distinguish CRADAs from cooperative agreements under theFederal Grant and Cooperative Agreement Act at 31 U.S.C., Chapter 63.  Thus, while CRADAs are “other transactions” in a strict definitional sense (because they are not grants, contracts, or cooperative agreements), their nature and purpose differ fundamentally from acquisition or assistance instruments in general and from the instruments authorized by Section 1007 of EPACT.  CRADAs are not discussed further in this course.

3.   How did DoD implement Section 2371? 

The DoD developed the following two different sets of policies to implement its “other transactions” authority:

Acquisitions- other than contracts.  DoD established policies for acquiring prototypes when a Federal Acquisition Regulation (FAR) contract was not appropriate.   DoD calls these awards “Other Transactions.”    DOE decided not to issue guidance at this time for acquisitions that are other than FAR contracts because, except for NNSA and EM  programs, DOE rarely acquires RD&D for its own use.  Therefore, acquisitions –other than contracts are not covered in the scope of this training.

Assistance- other than grants or cooperative agreements.   DoD developed a new class of assistance instruments for research called Technology Investment Agreements (TIAs).     DOE decided to follow the DoD TIA model, because:

• DOE’s research, development, and demonstration (RD&D) efforts that are not performed by Management and Operating contractors, are usually performed under financial assistance awards. 

• DOE had to developed its policy for “other transactions” on an expedited basis in order to comply with the statutory requirement to issue guidance within 90 days; and
 
• DoD had more than 10 years experience with this type of assistance instrument and DOE wanted to garner the benefits of DoD’s experience. 

4.   How did TIAs evolve?

Understanding the historical origins of the statutes and regulations helps explain why TIAs evolved and how they relate to other kinds of instruments.

The Congress enacted 10 U.S.C. 2371 in 1989 as a two-year pilot authority.   The statute authorized the Secretary of Defense, through the Defense Advanced Research Projects Agency (DARPA), to use cooperative agreements and assistance transactions other than grants or cooperative agreements to carry out basic, applied, and advanced research projects if the use of standard grants was not feasible or appropriate.   The legislative history reveals that prime motivations for providing the authority were to encourage non-traditional government contractors to participate in DoD research programs and develop “dual-use” technology with promising potential for both commercial and military application.   In 1992, Congress amended 10 U.S.C. 2371 to make the authority permanent and extend it to the Military Departments. 

Between 1992 and 1996, DoD used the authority to experiment with cooperative agreements and assistance transactions other than grants or cooperative agreements that were tailored to remove barriers to commercial firms’ participation in dual-use research projects.   DARPA primarily used a type of assistance transaction other than a grant or cooperative agreement for consortium agreements, while the Military Departments primarily used a type of cooperative agreement called a “flexible cooperative agreement.” 

TIAs evolved from DARPA’s consortium agreements and the Military Departments’ “flexible cooperative agreements.”  The two instruments were almost identical and having similar instruments with different names was confusing to Contracting Officers and the Public.   Therefore, in December 1997 DoD issued internal interim guidance that merged the two types of agreements into a single class of assistance instruments called TIAs.  In August 2004, DoD published a rulemaking formally establishing policies and procedures for the award and administration of TIAs, based on the their more than 10 years experience with them. 

5.  Where can I find the DOE TIA guidance?
 
DOE guidance on the award and administration of TIAs is in 10 CFR Part 603.   This policy was published in the Federal Register on May 9, 2006, with an effective date of July 10, 2006.    DOE’s guidance for TIAs is similar to DoD’s, but it has been tailored to fit DOE’s unique mission requirements and internal processes.  10 CFR Part 603 includes the following subparts and appendices:

Subpart A – General
Subpart B – Appropriate Use of Technology Investment Agreements
Subpart C – Requirements for Expenditure-Based and Fixed-Support Technology Investment Agreements
Subpart D – Competition Phase
Subpart E – Pre-Award Business Evaluation
Subpart F – Award Terms Affecting Participants’ Financial, Property, and Purchasing Systems
Subpart G – Award Terms Related to Other Administrative Matters
Subpart H – Executing the Award
Subpart I – Post-Award Administration
Subpart J – Definitions of Terms used in this Part
• Appendix A – Applicable Federal Statutes, Executive orders, and Government-wide Regulations
• Appendix B – Flow Down Requirements for Purchases of Goods and Services

DOE also issued additional implementing guidance in Financial Assistance Letter (FAL) 2006-03.  This FAL provides guidance relating to internal DOE processes such as Contracting Officer’s certification requirements and PADS requirements.

6.  What are assistance transactions other than grants or cooperative agreements?

Before focusing on TIAs, it is worth considering what other types of instruments might also qualify as “assistance transactions other than grants or cooperative agreements.”  Grants and cooperative agreements are the two types of assistance instruments defined in the Federal Grants and Cooperative Agreement Act and most commonly used throughout the Federal Government.  However, there are other types of standard assistance instruments.  For example, loan agreements, loan guarantees, or direct payments to individuals are assistance instruments that some Federal agencies routinely use, although they generally are not used to carry out RD&D projects.  It is impossible to catalog the full range of instruments that could be included within the term “assistance transaction other than a grant or cooperative agreement,” since the statute clearly allows the development of new types of instruments.

Assistance transactions other than grants or cooperative agreements authorized by Section 1007 of EPACT 2005 supplement instruments identified in the Federal Grant and Cooperative Agreement Act, rather than supplant  them.  In fact, Section 1007 requires that DOE award an “other transaction” only after a determination is made that a grant or cooperative agreement is not feasible or appropriate.   This authority provides additional tools to the Contracting Officer that can be used in situations where they are the right tools for the purposes at hand.

7.   What kinds of instruments are TIAs and what authoritiesdo they use?

Is a TIA a cooperative agreement or an “assistance transaction other than a grant or cooperative agreement”?

In short, a TIA can be either a flexible cooperative agreement or an “assistance transaction other than a grant or cooperative agreement.”  The
reasons for that follow from the way the instrument evolved at DoD.

Congress first authorized DoD to use cooperative agreements and types of “other transactions” primarily because they wanted to give the Department a way to overcome barriers to participation in defense research by high-technology firms that did business principally in the commercial marketplace.   The barriers cited most often were related to Government-unique requirements traditionally included in standard funding instruments.   To comply with some of the Government-unique management systems requirements, commercial firms said they either would have to redesign internal systems (e.g., financial management, property management, or procurement systems) or hire more employees. Those changes would serve no purpose for their non-Government business and could increase their costs, making them less competitive in the commercial marketplace. For example, commercial firms noted that their accounting systems are not designed to segregate certain Federally “unallowable” costs that are legitimate costs of doing business in the commercial world. They also expressed concern that granting Federal auditors access to their books would require them to increase the size of their financial management staff.

In addition to Government-unique systems requirements, for-profit firms were concerned about Federal Government requirements for disposition of intellectual property rights. They noted that the requirements in many cases would constrain their ability to commercialize technology in which they had invested their own resources.

DoD recognized that it could tailor cooperative agreements to address most of these barriers, because most administrative requirements for grants or cooperative agreements that affect recipients’ internal systems are in regulations, rather than statutes.   Moreover, the Office of Management and Budget (OMB) guidance for grants and cooperative agreements applies only to State and local governments and institutions of higher education, hospitals, and other nonprofit organizations. The guidance does not apply to for-profit organizations. 

In the area of intellectual property rights, however, grants and cooperative agreements are constrained by the Bayh-Dole patent statute that applies to procurement contracts and financial assistance awards.  DoD recognized that an assistance transaction other than a grant or cooperative agreement (i.e., “other transaction’) could provide the flexibility on patent rights that Contracting Officers might need in some cases.

Based on these findings, the Congressional staff clarified that the intent was for DoD to use a standard instrument (e.g., cooperative agreement) unless it encountered a barrier, such as patent rights, that required the use of some type of “other transaction.”  The purpose of the alternative instruments authorized by 10 U.S.C. 2371 was to help the DoD clear that barrier, not circumvent the use of standard instruments before reaching the barrier. 

DOE followed the DoD lead and implemented similar requirements for its TIA awards.

Two Types of TIAs

The DOE regulations provide that a TIA is:

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 and 42 U.S.C. 2181 and 5908); or

2.  A type of “other transaction” (OT) if its intellectual property provisions vary from the Bayh-Dole and DOE patent statutes.  These patent statutes require the Government to retain certain intellectual property rights and differing treatment between large businesses and nonprofit organizations or small businesses. 

The advantage of “stitching together” these very similar instruments and giving it a single name--TIA--is that it makes the use of two types of instruments less confusing to the non-
Federal parties with whom Contracting Officers negotiate.   Whether the TIA is a flexible cooperative agreement or a type of OT should be entirely transparent to the recipient. Either way, it simply receives a TIA.       

Authority for awarding each type of TIA

1.  TIA -  type of cooperative agreement.  Section 646 of the Department of Energy Organization Act (42 U.S.C. 7256 (a)) provides the Secretary authority to award grants and cooperative agreements.  Thus, if the TIA is a cooperative agreement, the authority is 42 U.S.C. 7256 (a), as well as any program-specific statutes. 

2.  TIA - “other transaction”.   Section 1007 of EPACT 2005 amended section 646 of the Department of Energy Organization Act (42 U.S.C. 7246) by adding a new paragraph (g).  Thus, if the TIA is an “other transaction,” the authority is 42 U.S.C. 7256 (g), as well as any program-specific statutes.

8.  Who must approve a TIA?

An officer of the Department of Energy 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.  This person may also perform other functions of the Secretary as set forth in 42 U.S.C. 7256(g).  By statute, this authority may not be re-delegated.

The DOE or NNSA Senior Procurement Executive must concur in the award of a TIA.

9.  Who may award a TIA?

Only a warranted DOE Contracting Officer may award a TIA and then only if his/her warrant specifically authorizes it.   Since these Contracting Officers must operate in a relatively unstructured business environment, the certification standards for awarding a TIA are: 

• Level III  contracting certification, as defined in DOE O 361.1,  Acquisition Career Development Program;

• Financial Assistance certification as defined in DOE O 361.1; and

• Completion of DOE TIA training.

10.  When is it appropriate to award a TIA?

The Contracting Officer must ensure that TIAs are used only when appropriate.   They must conclude and document that the use of a TIA is justified based on five decision factors, which relate to the:

A. Nature of the project;
B. Type of recipient;
C. Recipient’s commitment and cost sharing;
D. Degree of involvement of the Government program official; and
E. Benefit to RD&D objectives of using a TIA, rather than another type of assistance instrument.

Note:  See Financial Assistance Letter 2006-03, Attachment 1, Memorandum for Record Justification for Use of a Technology Investment Agreement.

A.  Nature of the project (10 CFR 603.205)

Before using a TIA, the Contracting Officer, in conjunction with the program official, must:

• Conclude that 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 direct benefit or use of the Government (i.e., acquisition);
 
• Ensure that, to the maximum extent practicable, the TIA does not support research that duplicates other research being conducted under existing programs carried out by DOE; and

• Judge that the use of a standard grant or cooperative agreement is not feasible or appropriate for the specific project (see paragraph, entitled “Benefits of Using a TIA” in this section).

B.  Type of recipient (10 CFR 603.210)
 
A Contracting Officer may award a TIA only if one or more for-profit firms, not acting in their capacity as the contractor of a Federally Funded Research and Development Center (FFRDC), are involved either in the:

• Performance of the RD&D project, or,

• The commercial application of the results.

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 non-profit organizations, or FFRDC contractors) because interactions among participants within a consortium potentially provide a self-governance mechanism.  TIAs may also be appropriate for research performed by a consortium that includes only one firm.  For example, a firm may have one division exclusively for its commercial business and a separate division for its Government business.  Use of a TIA to support a joint research project proposed by the two divisions would be consistent with the policy objective if it enabled the divisions to collaborate on the same project.

A TIA may be used for RD&D performed by single firms or multiple performers in prime award-subaward relationships.  However, in those cases the regulations advise Contracting Officers to consider providing for greater involvement of the program official or other ways to increase self-governance (e.g., a prime award with multiple subrecipients arranged to give the subrecipients more insight, authority, and responsibility for programmatic and business aspects of the overall project than is customary).

C.  Recipient’s commitment and cost sharing (10 CFR 603.215)

The Contracting Officer must evaluate the recipient’s commitment to, and self-interest in, the success of the project and incorporating their technology into products and processes for the commercial marketplace.  The Contracting Officer should look for evidence of a recipient’s commitment and interest in the recipient’s application or management plan.

The Contracting Officer must seek cost sharing.  A firm’s willingness to invest its own financial resources in the RD&D is an excellent indicator that it believes in the project’s potential for fostering technology that will be incorporated into products or processes for the commercial marketplace. 

• To the maximum extent practicable, the non-Federal parties carrying out a project under a TIA provide at least half of the costs of the project from non-Federal resources.  This is a statutory requirement.

• A Contracting Officer may consider whether cost sharing is impracticable in a given case, unless doing so is precluded by a non-waivable, statutory requirement for cost sharing for the particular program under which the award is to be made.  EPACT 2005 requires 20 percent cost sharing for research and development and 50 percent for demonstration and commercialization, but it may be waived under certain circumstances.

•  Before deciding that cost sharing is impracticable, the Contracting Officer should carefully consider whether there are other factors that demonstrate the recipient’s self-interest in the success of the project.

D.  Degree of involvement of the DOE program official (10 CFR 603.220)

The use of a TIA requires more involvement of the DOE program official in the execution of the RD&D than the usual oversight of a grant.  That involvement can reduce the need for some Federal financial requirements that are problematic for commercial firms.  A program official will normally participate in the recipient’s periodic reviews of project progress and may be substantially involved with the recipient in the resulting revisions of plans for future budget periods. 

E.  Benefits of using a TIA (10 CFR 603.225)

Before deciding that a TIA is appropriate, the Contracting Officer must determine its use benefits 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 600).

10 CFR 603.225 provides a set of questions that the Contracting Officer, in conjunction with Government program officials, must consider in making this determination.  These questions are designed to help identify benefits that may, in a given situation, justify reducing some of the standard government requirements.  Full answers are required only for questions relating to the benefits anticipated for the specific project.  The answers must be documented in the award file and some portions of the answers must be included in the Individual Procurement Action Report (IPAR) for an award that is an “other transaction.” 

The questions, which are stated fully in 10 CFR 603.225, are summarized as follows:

• 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?

• 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?

• Will the use of a TIA allow firms or business units of firms that traditionally accept only Government awards to use new business practices in the execution of the research that will foster new or better technology, technology more quickly or less expensively, or facilitate partnering with commercial firms?

• Are there any other benefits to the use of a TIA that could help DOE meet its objectives in carrying out the project?

11.   Expenditure-based and fixed support TIAs

10 CFR 603.560 describes two different award instruments for TIAs: expenditure-based and fixed support.

An expenditure-based TIA is like a traditional, cost-type grant or cooperative agreement in that the award amount is what the two parties agree they will spend on the project as it is scoped in the agreement.  The total amount ultimately paid the recipient is based on the amount the recipient spends on the project.  If a recipient completes the project before it spends all of the Federal funds and associated cost sharing, the Federal Government may either: (1) recover its share of the unexpended balance of funds; or (2) by mutual agreement with the recipient, amend the agreement to expand the scope of the project.  Work under the agreement ceases when the funds have been exhausted, unless the parties elect to extend the arrangement with additional resources.

Note that the relationship for an expenditure-based TIA pertains to total project costs and does not affect the amounts and timing of payments in relation to the recipient’s disbursement of the funds during the performance of the project.  Amounts of individual payments for the TIA still may be based on performance milestones, rather than incurred costs.  However, the total amount of Federal funds ultimately paid to the recipient at project completion equals the allowable amount spent on project costs. 

For a fixed-support TIA, the amount of assistance established at the time of award is not meant to be adjusted later. As long as the research project is carried out to completion, the amount that the Contracting Officer and recipient agree upon at the outset is fixed.  If the actual cost exceeds the original estimate on which the award amount was based, the recipient is responsible for the difference (thereby increasing its cost share).

What requirements must be included in an expenditure-based TIA?

An expenditure-based TIA must:

• Specify minimum standards for the recipient’s financial management system. The recipient must have systems capable of showing that the funds were used in accordance with the terms of the agreement.

• Specify cost principles or standards stating the types of costs that the recipient may charge to the project (including Federal funds and its own cost sharing).

• Provide for financial audits by Federal auditors or independent public accountants of the recipient’s books and records, to provide assurance that amounts reported by the recipient’s financial management systems are reliable.

• Set minimum standards for the recipient’s purchasing system.

• Require the recipient to prepare financial reports for submission to the Federal Government.

What are the advantages of using a fixed support TIA?

An expenditure-based TIA must include the requirements listed in the preceding paragraph, which are sometimes considered disincentives for commercial firms participation in Federal RD&D awards.  A fixed support TIA does not include these requirements which may encourage the participation of commercial firms.

Given the advantages of a fixed support TIA, why not always use them?

Fixed support TIAs won’t work for all situations. There are three major conditions that have to be met in order to use one:

1. The agreement supports or stimulates RD&D with outcomes that are well defined, observable, and verifiable.  Research by its nature often does not meet this condition.

2. The Contracting Officer can estimate the resources required to achieve those outcomes well enough to ensure the desired level of cost sharing.  The Contracting Officer does not need to estimate project costs precisely if there is substantial cost sharing by the recipient and he/she can, with confidence, identify the minimum amount that the project will cost.  See the discussion in section 10 CFR 603.560, specifically the example given in paragraph (b).

3. There is no non-waivable requirement, in statute or policy determination, for a specific amount or percentage of cost sharing.  A fixed support TIA is not practicable if a specific amount or percentage of cost sharing is required 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 project costs; and
• Provide access for audit to allow verification of the recipient’s compliance with the mandatory cost sharing.

In summary, the Contracting Officer must use an expenditure-based TIA if:

• Research outcomes are not sufficiently well defined to use a fixed-support TIA;

• Resources required to achieve the well-defined research outcomes cannot be estimated well enough to ensure the desired level of cost-sharing; or,

• The TIA requires a specific amount or percentage of recipient cost sharing, either  because: (1) there is a non-waivable requirement (e.g., in statute) for a specific amount or percentage of recipient cost sharing; or (2) the Contracting Officer has elected to include a requirement for a specific amount or percentage of cost sharing in the TIA.

If the three conditions for use of a fixed-support TIA are not met, the Contracting Officer  may be able to use a hybrid instrument that provides fixed support for only a portion of the project (see 10 CFR 603.565).  

12.   How are TIAs more flexible than grants and cooperative agreements?

The DOE guidance for TIAs provides Contracting Officers considerable flexibility to
negotiate provisions in areas that sometimes are perceived as barriers to participation of firms that do business primarily in the commercial marketplace.  Those areas include:

Recipients’ financial management systems—§603.615. 

If applying the usual standards would require changes to a commercial firm’s established cost accounting systems, Contracting Officers may use alternative approaches.  As a minimum, these approaches must provide that recipients:

• Have established cost accounting systems that: (1) comply with Generally Accepted Accounting Principles and (2) control and properly document all cash receipts and disbursements; and,

• Maintain adequate records to account for Federal funds received and recipients’ cost sharing that is required by the award.

Cost principles or standards—§603.625.

 If compliance with the usual cost principles would require changes to a commercial firm’s established cost accounting systems, contracting officers may use alternative approaches.  As a minimum, the alternative approaches must provide that Federal funds and funds counted as recipients’ cost sharing are used for expenditures that:

• A reasonable and prudent person would make in carrying out the research project contemplated by the agreement; and,

• Are consistent with the purposes and any restrictions stated in the governing Congressional authorizations and appropriations.

Audits—§603.650.  

Expenditure-based TIAs generally provide for periodic audits of participants’ systems.  A prime reason for including this requirement is that the Federal Government relies on amounts reported by the participant’s systems when it sets payment amounts or adjusts performance outcomes.  The periodic audit provides some assurance that reported amounts are reliable.  The TIA regulation allows audits of for-profit firms to be performed by the participant’s “Independent Public Accountant” in certain cases, usually as a part of the annual financial statement audit that many firms have, rather than by the Defense Contract Audit Agency or other Federal Government auditors.  For commercial firms that do not grant audit access to Federal auditors, this flexibility can remove that barrier to their acceptance of a TIA.

Patent rights—§603.860.   

Part 603 gives Contracting Officers flexibility to negotiate Government rights of a different scope than the standard patent rights provisions used in DOE grant and cooperative agreement awards, if doing so represents a good balance between the Government’s interests and the recipient’s interests.  Contracting Officers should confer with their IP counsel and program officials to develop an overall strategy for IP rights if a TIA is contemplated.  Examples of ways the Contracting Officer may wish to provide more flexibility, include giving the recipient more time to: (1) notify the Government of an invention; (2) inform the Government whether it intends to take title to the invention; and/or (3 commercialize the invention before the Government license rights in the invention become effective.  In addition, in unusual circumstances, the Contracting Officer may consider modification or elimination of the standard non-exclusive paid-up license for practice by or on behalf of the Government.   If the negotiated IP provision goes beyond what is possible under the Bayh-Dole or DOE patent statutes, the TIA becomes an assistance transaction other than a grant or cooperative agreement (i.e. “‘other transaction”) under the authority of  42 U.S.C. 7256 (g).   The assigned IP counsel must concur with any IP provision that varies from the standard provisions for cooperative agreements.

Rights in technical data and computer software—§603.845. 

Contracting Officers may negotiate alternative data protection, disclosure and use rights for data developed under a TIA, if warranted by recipients’ cost sharing or other factors.  The assigned IP counsel must concur with IP provisions that vary from the standard.

Payments—§603.805. 

The DOE TIA guidanceg or other factors.  The assigned IP counsel must concur with IP provisions that vary from the standard.

 allows for a payment method based on payable milestones (in addition to the usual methods of reimbursement or advance payments).  With the payable milestone method, payments are linked to predetermined measures of observable technical progress throughout the performance of the research project.

Case-by-case decisions

The DOE guidance for TIAs advises Contracting Officers to use TIAs if they anticipate that doing so will yield benefits for RD&D objectives that likely would not be realized if another type of assistance instrument were used (e.g., a cooperative agreement subject to the requirements of 10 CFR 600).  The expectation is for the Contracting Officer to use the flexibility provided by the guidance judiciously on a case-by-case basis, when there are clear benefits to DOE in doing so.  Unique provisions must be carefully drafted and provide adequate protection of taxpayer funds.

Similarities with other instruments

Whether a TIA is a cooperative agreement or an assistance transaction other than a grant or cooperative agreement, it must comply with applicable statutes and regulations, just as other assistance instruments must do.   A TIA that is an assistance transaction other than a grant or cooperative agreement need not comply with requirements that apply only to grants and cooperative agreements.  However, it must comply with statutory and regulatory requirements that apply to assistance or nonprocurement instruments more generally, such as: statutes that apply broadly to DOE appropriations, regardless of the type of funding instrument, and the Government-wide rules on lobbying, nonprocurement debarment and suspension, and drug-free workplace codified at 10 CFR Parts 601, 606, and 607 respectively.

13.   Pre-award Phase: Preparing the announcement.

TIAs are to be awarded using competitive procedures to the maximum extent practicable.  This is a statutory requirement.

Procedures  

The steps that a Contracting Officer takes during the preaward phase for a TIA are generally the same steps used for any assistance award.  A key step is the
discussion of the range of potential instruments.   It is critical that the Contracting Officer work with program officials to consider the factors in Section 10 - “When is it appropriate to award a TIA?”- to determine if the range of potential instruments should include TIAs, because some firms might be willing to prepare and submit a proposal only if the award of a TIA is possible.

Contents of the announcement

Contracting Officers should use the DOE funding opportunity announcement (FOA) template for financial assistance programs.    Most of the content is the same as that for a program awarding only grants or cooperative agreements.  Contracting Officers may also use this format for Broad Agency Announcements.  For a program that may use TIAs, it is important that the announcement inform prospective applicants:

• That TIAs, as well as other instruments, may be awarded under the announcement.  Explicitly stating this fact may encourage applications from firms that otherwise might not participate.

• That applicants must mark business plans and technical information submitted in their application, if they want to protect that material from disclosure for a period of five years.  The materials must bear a legend identifying them as confidential.

• How cost sharing is to be considered or if alternative approaches to demonstrating the recipient’s strong commitment to the success of the project will be considered.  Given the importance of cost sharing in programs that may use TIAs, the announcement should be as clear as possible to ensure that the competitive process is fair and equitable to all potential applicants.

14.   Pre-award business evaluation.

In the pre-award business evaluation, the Contracting Officer must:

 1.  Determine that the recipient is qualified.

 2.   Address the financial aspects of the application, including:

• Determining that the total amount of funding for the proposed effort is reasonable;

• Assessing the value and reasonableness of the recipient’s proposed cost share;

• Justifying the use of a fixed support instrument, if applicable; and

• Determining amounts for milestone payments, if used.

Recipient Qualifications

The responsibility for determining that the prospective recipient is qualified is the
same as for any grant or cooperative agreement.  If the prospective recipient is a consortium that is not itself incorporated as a legal entity, the Contracting Officer is required, in consultation with legal counsel, to review the management plan in the consortium's collaboration agreement to ensure that the management plan is sound and adequately addresses the elements necessary for an effective working relationship among the consortium members (§603.515).  An effective working relationship is essential to increasing the project’s chances of success.

Collaboration Agreement

The collaboration agreement, commonly referred to as the articles of collaboration, is
the document that sets out the rights and responsibilities of each consortium member.
It binds the individual consortium members together, whereas the TIA binds the
Government and the consortium as a group (or the Government and a consortium
member on behalf of the consortium, as explained in §603.1015).  It should contain, as
a minimum:

1.   Management structure/plan.

2.   Method of making payments to consortium members (it is almost always a good idea to have one organization be the consortium’s administrative lead to receive payments from the Federal government and distribute funds to other consortium members).

3.    Means of ensuring and overseeing members’ efforts on the project.

4.    Provisions for members’ cost sharing contributions.

5.   Provisions for ownership and rights in intellectual property developed previously or under the agreement.

Total Funding

Along 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. Section 603.520 provides additional guidance in the areas of labor, real property, and equipment.

Cost Sharing

The Contracting Officer must determine if the recipient’s cost sharing contribution
meets the criteria for cost sharing and its values.  In addition, the Contracting Officer must decide if 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.

Valuing Cost Sharing

The Contracting Officer may accept cash or in-kind contributions if they meet all of these tests:

1. The recipients’ contributions represent meaningful cost sharing that demonstrate a real commitment to the project.

2. The costs are necessary and reasonable.

3. The costs are to be charged to the project, in accordance with the cost principles or standards applicable to the particular participant(s) (see §603.625 and §603.635).

4. The costs are verifiable from the recipient’s records.

5. The costs are not included as part of any other Federal award.

6. The costs are not paid by the Federal Government under another award, with two exceptions:

• Costs authorized by Federal statute to be used for cost sharing; or,

• Independent Research and Development (IR&D) costs (see §603.530(f)).

Generally, the following costs should not be accepted as cost sharing:

• Values of real property or equipment that exceed depreciation or reasonable use charges rarely should be accepted as cost-sharing contributions.

• Costs of patents and other intellectual property should not be included as cost sharing in most cases.  Not only is it difficult to assign values to these intangible contributions, but they usually represent costs of prior research.

Costs of prior research as a cost sharing contribution can never be accepted (see §603.545).

Fixed support or expenditure-based approach

A fixed support TIA requires that the Contracting Officer have a high level of confidence in the estimate of expenditures required to achieve well-defined outcomes.  However, the estimate of the required expenditures does not need to be a precise dollar amount (see the example at §603.560(b)), if:

• The recipient is contributing a substantial share of the costs of achieving the outcomes (i.e., there is substantial cost sharing); and,

• The Contracting Officer is confident that the costs of achieving the outcomes will be at least the minimum amount specified, and the recipient is willing to accept the possibility that its cost sharing percentage ultimately will be higher if the costs exceed that minimum amount.

The level of recipient cost sharing is based solely on the level needed to demonstrate the recipient’s commitment or any statutory cost sharing requirements.  The Contracting Officer may not use a Federal funding shortfall for the program as a reason to try to persuade a recipient to accept a fixed support TIA rather than an expenditure-based instrument.  If there is insufficient funding to provide an appropriate Federal share for the entire project, the Contracting Officer should re-scope the effort covered by the agreement to match available funding.

Hybrid Instruments

If there are multiple participants in a single agreement, the Contracting Officer may choose fixed support arrangements for some of the recipients and expenditure-based arrangements for others (see §603.565).

Milestone Payment Amounts

If milestone payments are used, the Contracting Officer must assess the reasonableness of the estimated amount for reaching each milestone.  Usually, the Contracting Officer should set the amount of each milestone payment to approximate the Federal share of the resources needed to carry out that phase of the research effort.  However, the Contracting Officer has some flexibility in setting up the milestone payment amounts.  For example, he/she might deliberately set payment amounts with a larger Federal share for early milestones if a project involves a start-up company with limited resources.

15.   Award Phase: Crafting a good business arrangement.

Negotiating the arrangement

Once the Contracting Officer has determined that a TIA is an appropriate instrument, made a decision about use of an expenditure-based or fixed-support TIA, and conducted the pre-award business evaluation, the next step is to conduct negotiations with the recipient representatives and Government technical and legal personnel, as appropriate, to finalize the award document.  Negotiations should be based largely on the following templates that DOE has developed:

• Consortium Template Expenditure-Based
• Company Template Expenditure-Based
• Consortium Template Fixed Support
• Company Template Fixed Support

The templates have been developed to assist Contracting Officers in identifying provisions that should be included in a TIA.  Contracting Officers may negotiate provisions that vary from those in the template as long as they comply with the requirements in 10 CFR Part 603.   Go to the templates. The Office of Procurement and Assistance Policy plans to update the templates from time-to-time to incorporate lessons learned.   Therefore, if a Contracting Officer is contemplating the award of a TIA, he/she should check the web site for the most recent versions of the templates.

If the recipient is an unincorporated consortium, some aspects of the negotiation may involve issues the Contracting Officer identified during the pre-award review of the articles of collaboration.  Consortium participants may need to resolve these issues before award.

Substantive content of the award document

The Contracting Officer is responsible for ensuring the award document is accurate, that it addresses all issues, and that it protects the Government’s interests.  The complete list of substantive issues to be addressed in a TIA will vary based on the requirements of the particular project.  Section 603.1010 describes the following minimum set of issues that every award document must address:

a. Project scope
b. Project management
c. Termination, enforcement, and disputes
d. Funding
e. Payment
f. Records, retention, and access to records
g. Patents and data rights
h. Foreign access to technology and U.S. competitiveness
i. Title to, management of, and disposition of tangible property
j. Financial management systems
k. Allowable costs
l. Audits
m. Purchasing system standards
n. Program income
o. Financial and programmatic reporting
p. Assurances for applicable national policy requirements
q. Other matters

Who signs?

Who signs is a question that may arise if the recipient is a consortium that is not formally incorporated.  If consortium members prefer to have the agreement signed by all of them individually, it is permissible to execute the agreement in that manner.  If they wish to designate a single consortium member to sign on behalf of the consortium as a whole, review by legal counsel is needed (see § 603.1015).

Documenting the award file

The award file must include an analysis that:

• Describes the program and the expected commercial benefits;

• Includes the signed articles of collaboration, if the recipient is an unincorporated consortium;

• Describes the announcement, evaluation, and selection process;

• Explains how a TIA was determined to be the most appropriate instrument, which must include answers to the four questions discussed in Section 9 and shown in detail in §603.225 (see Memorandum for Record, Attachment 1 to FAL 2006-03);

• Explains how recipient cost share was valued and, for a fixed support TIA, documents the analysis used to set the fixed level of Federal support; and

• Documents the results of the negotiation, addressing all significant issues such as:

o Reasons for any variations from usual requirements for recipients’ systems.

o Use of Independent Public Accountants for audits.

o Explanation for use of an intellectual property provision that varies from the Bayh-Dole Act or DOE IP requirements.

o Any determination that cost sharing is impracticable.

What are the IPAR requirements for each type of TIA?

As with all other assistance instruments, Contracting Officers must prepare an IPAR for each TIA so that DOE can comply with the statutory requirements for reporting to the Federal-wide data system.  The Contracting Officer must select the appropriate award code for each type of TIA (i.e., FT for a  Technology Investment Agreement - Cooperative Agreements or FO for a Technology Investment Agreement – Other Transaction) (see FAL 2006-03).  The Contracting Officer must also provide some additional information if the award is a “Technology Investment Agreement – Other Transaction” (FO).  

EPACT 2005 requires the Secretary to submit to Congress a report on the Department’s use of transactions other than contracts, grants, or cooperative agreements, not later than 90 days after the end of each fiscal year.  The statute requires that the report contain specific information.  Therefore, if the award is a “Technology Investment Agreement – Other Transaction” (FO), the Contracting Officer must complete the following additional text fields in the Department’s Procurement and Assistance Data System (PADS):

• Technical objectives, including the technology area in which the project was conducted.

• Dollars returned to Government Account.  (This field will default to $0 since EPACT 2005 prohibits requiring repayment of the Federal share of a cost-shared activity as a condition of making an award.)

• Extent to which the other transaction has contributed to a broadening of the technology and industrial base available for meeting the Department of Energy’s needs.

• Extent to which the other transaction has fostered within the technology and industrial base new relationships and practices that support the energy or national security of the United States.

The last two bullets are similar to the questions in 10 CFR 603.225 that the Contracting Officer must consider and document in the Memorandum for Record, page 2 (see FAL 2006-03, Attachment 1).   Contracting Officers may use the responses in the Memorandum for Record to complete the PADS text fields, as appropriate.

16.   Post-award Phase: Administering TIAs.
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Post-award administration of TIAs is similar to that of standard cooperative agreements.  However, Contracting Officers should focus extra attention on the following post-award areas that can be heavily affected by the TIA’s flexible nature:

 Payments

Reviews are similar to those performed on other financial assistance awards, except that the Contracting Officer must ensure that the DOE Project Director reviews the supporting documentation and approves payment if the award includes payable milestones. Contracting Officers should resolve problem/delinquent payments and interface with the recipient’s administrator regarding payment issues, as needed.

Project Management Review Meetings

The DOE Project Officer and Contracting Officer should  attend the initial “kickoff” program management meeting, if practicable, and perform duties associated with a post-award conference, such as, instruction/clarification of agreement administration areas (payments, patents rights, reporting requirements, etc.).  Attendance at subsequent project management reviews will be based on coordination with the DOE Project Officer and the Contracting Officer to establish the necessary support required at these meetings.  The DOE Project Officer should provide the Contracting Officer a brief summary of issues/concerns discussed at the meeting.  Any proposed changes to the award must be  managed under the Modifications provision of the agreement.

Financial Management

The Contracting Officer should maintain accurate records of Government expenditures (payments to the recipient) and monitor limitation of funds.  They must also ensure that quarterly business reports have been filed in a timely manner and are adequate and complete for monitoring financial performance. 

Audits

The Contracting Office should coordinate audit requests; review audit reports for both “single audits” of recipients’ systems and any award-specific audits that may be requested.  If an expenditure-based TIA provides for audits of a for-profit participant by an independent public accountant, the Contracting Officer must specify what the periodic audits are to cover (See 10 CFR 603.660).   The Contracting Officer may use the audit guidance in Attachment 2, “Coverage of Independent Audits of For-profit Firms,” to FAL 2006-03 for this purpose.  This guidance is also available on the Applicant and Recipient Page at http://grants.pr.doe.gov.

Processing of Reports

Contracting Officers must ensure that “Quarterly Reports” and other reports required by the agreement are complete and provided in a timely manner.  They must follow up on late or insufficient reports.  They should also monitor submission and adequacy of Annual Plans, if required.

Modifications (Unfunded)

Contracting Officers must review a change request and coordinate with the DOE Project Director and with the recipient’s administrator, as needed, prior to incorporating the change into the agreement by administrative modification. 

Modifications (Funded)

Same as unfunded modifications, except, if there is a cost associated with the modification, a funded procurement request (PR) is required to initiate the action.  Like any other financial assistance funding action, the Contracting Officer manages the request for proposal process, the analysis, and negotiations.

Incrementally Funded Modifications

Contracting Officers must monitor obligated funds against payable milestone funding requirements and ensure that sufficient funds are obligated to enable payment of the next completed milestones.
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Monitoring Cost Share

Contracting Officers must track required cost share contributions by comparing business reports and DOE Project Officer’s inputs.  They must ensure that contributions are current and on schedule and resolve variances if noted in year-end status reports.  They must also ensure that all required contributions have been made before final Government payment is approved.

Property Administration

If an agreement includes equipment or property acquired with project funds, the Contracting Officer must monitor property reports and determine its valuation and disposition at performance end.

Close Out

Contracting Officers must complete all required close out actions, such as assuring submission of final reports, conducting financial review/audit, assuring patents disclosures and reporting, disposing of equipment/property, making final payment, and deobligating funds, if applicable. 

17.   A valuable new tool.

TIAs are highly flexible instruments that allow qualified Contracting Officers a wide range of discretion in structuring an RD&D agreement that will broaden the technology base available to meet DOE mission requirements or foster new relationships and practices that promote technological innovation in support of that mission.  Their intentionally designed adaptability and variability places a heavy burden of judicious use on DOE.   However, they hold the promise of fostering better, more readily available, or less expensive energy technology that will benefit the U.S. economy and the taxpayers.