-------------------------------- --------------------------------------
  Name:                            Yvonne Joseph

  Routing Symbol:                  ASU-110

  Phone:                           78638

  What pushes this change?         Legal requirements

  Is there a source for the reason To reflect appropriate legal basis for
  for the change? Yes or No. If    obtaining supplies or services through
  yes, what is the source.[^1]     another agency's prime contract and to
                                   make advance payments.

  Policy or Guidance (identify     Guidance
  which):                          

  Brief Description of Change:     To incorporate correct legal citation

  Brief Explanation of Reason for  Correction of existing guidance
  Change:                          

  Language of Change:[^2] (attach  See attached.
  document)                        

  Extent of Development &          Reviewed by AGC.
  Review:[^3]                      

  Target Audience:                 Contracts personnel

  Approval Levels Already          AGC
  Obtained:                        

  Budget Impact:[^4]               None

  Potential links within FAST for  None
  the change:                      

  What do you want the ASAG to do  Adopt into toolbox
  with the change?[^5]             

  Do you have a certain time frame October 2001 publication desired.
  to meet? Yes or No. If yes, what 
  is it?                           
  -------------------------------- --------------------------------------

+------+--------------------------------------------------------+------+
|      | Issue Date (revision): November 2001(revision 1)       |      |
+------+--------------------------------------------------------+------+
| [    | [Topics in the Section]{.underline}                    | [P   |
| Sect |                                                        | age] |
| ion] |                                                        | {.un |
| {.un |                                                        | derl |
| derl |                                                        | ine} |
| ine} |                                                        |      |
+------+--------------------------------------------------------+------+
| *    | **Agreements, Cooperative Agreements, Gifts and        |      |
| *A** | Bequests**                                             |      |
+------+--------------------------------------------------------+------+
| 1    | #### Agreements                                        | 1    |
+------+--------------------------------------------------------+------+
| 2    | Section 106 Cooperative Agreements                     | 8    |
+------+--------------------------------------------------------+------+
| 3    | Gifts and Bequests                                     | 12   |
+------+--------------------------------------------------------+------+
| *    | **Clauses**                                            | 12   |
| *B** |                                                        |      |
+------+--------------------------------------------------------+------+
| *    | **Forms**                                              | 12   |
| *C** |                                                        |      |
+------+--------------------------------------------------------+------+
| *    | **Appendix**                                           | 12   |
| *D** |                                                        |      |
+------+--------------------------------------------------------+------+

**A. AGREEMENTS, SECTION 106 COOPERATIVE AGREEMENTS, GIFTS AND
BEQUESTS**

**1. AGREEMENTS**

a\. *Applicability.* This section applies to services and supplies
(including construction) and real property to the extent authorized by
law.

\(1\) Airport Improvement (AIP) Grants authorized under 49 U.S.C. 47101
et seq. are covered in FAA Order 5100.38A, AIP Handbook, October 24,
1989.

\(2\) Cooperative Research and Development Agreements \[CRDAs\]
authorized under 15 U.S.C. 3710a [et]{.underline} [seq]{.underline}. are
covered under FAA Order 9550.6A "Technology Transfer Program."

b.  *Authority*.

\(1\) *General Authority. 49 U.S.C.* 106(*l*)(6) and/or 106(m) should be
cited as general authority for all agreements, except where the
Department of Defense (DOD) exception applies, or where the agreement is
with a foreign government to provide technical assistance. In Sections
49 U.S.C. 106(*l*)(6) and 106(m), Congress provided the FAA with
specific authority to "enter into and perform such contracts, leases,
cooperative agreements or other transactions as may be necessary to
carry out the functions of the Administrator and the Administration"
with any Federal or non-Federal entity "on such terms and conditions as
the Administrator may consider appropriate."

\(a\) Section 106(m) also clarifies that the FAA may use or accept the
services, equipment, personnel, and facilities of another Federal
agency, as well as a private or public entity and may do so with or
without reimbursement. That section also provides specific authority to
the head of another Federal agency to make the services, equipment,
personnel, and facilities of the Federal agency available to the
Administrator. Additionally, the head of another Federal agency is
authorized, notwithstanding any other provision of law, to transfer to,
or receive from the FAA non-administrative supplies or equipment without
reimbursement.

\(b\) Prior to the enactment of Sections 106 (*l*)(6) and 106(m) in
1996, 49 U.S.C. 322(c) provided general authority for FAA and other DOT
modal administrations to enter into reimbursable agreements with other
agencies (i.e. interagency agreements) and for cooperative agreements to
use the services, records and facilities of State, territorial,
municipal and other agencies. However, Sections 106(l) and (m) provide
specific authority for FAA to enter into a broader range of agreements
and should be cited in place of Section 322(c).

\(2\) *Joint Activities with DOD.* For joint activities between DOD and
the FAA described in Section C.2.b. below, the legal authority is 49
U.S.C. 40121(c)(2).

\(3\) *Technical Assistance Agreements with Foreign Governments.* For
technical assistance agreements with foreign governments described in
Section d. below, the legal authority is 49 U.S.C. 40113(e).

\(4\) *Supplies or Services through Another Agency's Prime Contracts.*

**[(a) Where the FAA seeks to obtain supplies or services through
another agency's prime contract and to make advance payments, the
Economy Act, 31 U.S.C 1535 should be cited as additional authority for
FAA. In most cases, the Economy Act also provides authority for the
other Federal agency]{.underline}** **[If the Economy Act is cited, the
contracting officer should make a determination that the supplies or
services cannot be obtained as conveniently or cheaply through direct
contract with a commercial contractor.]{.underline}**

\(b\) If no advance payments are contemplated, the FAA may elect to use
the authority of Section 106 (l) and (m) (but see funding implications
in subparagraph j. *Funding*, below**)**.

\(5\) *Parallel Authorities*. The Federal Aviation Act contains other
specific program authorities applicable to certain types of agreements,
which may be cited as parallel authority where appropriate. Legal
counsel should be consulted for additional guidance in selecting any of
the listed authorities**.** (See Appendix Attachment 1, *Parallel
Authorities*.)

c\. *Types of Agreements.*

\(1\) General.

\(a\) As discussed above the FAA has broad general authority to use
various agreements, other than procurement contracts, to obtain or
provide services and supplies when necessary to accomplish the mission
of the FAA.

\(b\) Agreements may be made on such terms and conditions as the
Administrator may consider appropriate --

\(i\) With or without reimbursement; *and*

\(ii\) With another Federal agency or instrumentality of the Federal
government, a modal administration within the Department of
Transportation, a state, local government, municipality, or other public
entity, foreign governments, and private entities.

\(c\) Agreements are classified into three general categories as
follows:

> \(i\) Interagency Agreements;
>
> \(ii\) Intra-agency Agreements;
>
> \(iii\) Other Transactions.

\(2\) *Interagency Agreements.* Interagency agreements are made with
other Federal agencies as defined in Section 551(a) of Title 5 of the
United States Code. Such agreements are appropriate where FAA either
directly, or through a prime contractor, provides services, supplies or
facilities to another Federal agency, or where FAA obtains services, or
supplies, or facilities from another Federal agency, or that agency's
contractor. (The requesting agency is the agency that needs the
services, supplies or facilities; the servicing agency provides the
services, supplies or facilities to the requesting agency.)

###  (a) *OMB Circular A-76.* Where the FAA requires the servicing agency to perform a commercial activity, the contracting officer should conduct a cost comparison under OMB Circular A-76. 

###  (b) *Joint Activities with DOD.* 

###  (i) DOD has the same exemptions from acquisition laws as are waived by the Administrator in the AMS when---

###  (A) The FAA and DOD are engaged in joint actions, 

###  (B) DOD\'s contribution to the total cost of the activity is significant (more than ten (10) percent, and 

###  (C) The purpose of the acquisition is to improve or replenish the national air traffic system. Joint actions include situations where both agencies share the same mission need and engage in joint activities to plan and implement the solution. 

###  (ii) Where these three criteria are met, either the FAA or the DOD may conduct the acquisition using the policies of the AMS. (An example of a joint activity that meets these criteria is the STARS acquisition.) 

###  (c) *Interagency Agreements with Other Civilian Agencies.* Except for the limited exception for joint activities with DOD described above, where FAA acquires services or supplies through another Federal agency or its contractor, FAA is subject to the acquisition laws applicable to that agency. In a similar vein, unless authorized by statute or regulation, other Federal agencies may not conduct acquisitions using the FAA's exemptions from acquisition laws. 

#  (3) *Intra-agency Agreements*. An Intra-agency agreement is a written agreement between the FAA and the Office of the Secretary of Transportation (OST) or another DOT operating administration. The FAA may use an Intra-agency agreement to provide services or supplies to, or receive services or supplies from or through OST or another DOT operating administration. 

\(4\) *Other Transactions*.

\(a\) *General.*

\(i\) An Other Transaction (OT) is typically an agreement between the
FAA and a non-Federal entity (either foreign or domestic) where the
FAA\'s purpose is to obtain a direct benefit that advances the agency's
mission while also providing assistance to the general public. In some
cases, including multi-party transactions, an OT provides the
flexibility to develop partnering relationships with industry in meeting
agency objectives. For example, the FAA may enter into an OT agreement
with another party to jointly develop a system, which the FAA may
eventually purchase through a procurement contract, but the system might
also be purchased by airport authorities and foreign air traffic
organizations. Another instance might be the construction of a fence, or
the laying of cable that would benefit the airport authority (or the
general public) and the FAA facility at the airport.

\(ii\) In addition to joint funding agreements, in-kind contributions
are allowed. The FAA is specifically authorized to use or accept the
services, equipment, personnel, and facilities of non-Federal entities
and to cooperate with them in the use of FAA's services, equipment,
personnel, and facilities.

\(iii\) OT agreements should be carefully drafted to avoid the
inadvertent creation of a joint venture, which is separate legal entity
formed to accomplish a discreet purpose. As a general rule, all parties
to a joint venture agreement have joint and several liability for all
claims arising under the agreement. In addition to other legal
consequences, such agreements violate the Anti-deficiency Act and are
prohibited.

\(b\) *Other Transactions Requiring Reimbursement to the FAA*.

\(i\) In performing Agreements under which the FAA receives payment for
benefits rendered to a non-Federal entity, the FAA's policy is to
minimize competition with the private sector in performing commercial
activities. Commercial services should ordinarily not be provided unless
the FAA is providing such services for its own use according to the
policies of OMB Circular A-76. Additionally, in determining whether to
enter into such agreements, the IPT should evaluate the following
factors, all of which are equally important:

\(A\) Will the proposed activity advance the FAA's mission;

\(B\) Are there appropriate private sector sources;

\(C\) Does the FAA have some unique capability that will be of benefit
to the non-Federal party while helping to advance the agency's mission.

> \(ii\) The following are examples of the types of projects that might
> meet these criteria:

\(A\) Flight check and commissioning of a new system at an airport,

\(B\) Relocation of NAVAIDS,

\(C\) Engineering services in connection with construction of a new
runway,

\(D\) Relocation of buildings and shelters at airports run by municipal
or state authorities where the FAA provides drawings or resident
engineer (RE) assistance.

##### 

\(5\) *Section 106 Cooperative Agreements Distinguished.* FAA also has
broad authority under 49 U.S.C 106 to enter into cooperative agreements
with any Federal and non-Federal entity on such terms and conditions as
the Administrator may deem appropriate. These agreements are used to
provide assistance to a recipient and are more fully covered in
Paragraph 2 below.

d\. *International Agreements.*

\(1\) Agreements with foreign governments, or quasi-governmental
entities are most commonly used to establish a technical assistance or
research and development relationship between the FAA and the foreign
entity. In such instances, the FAA's interest is in encouraging aviation
safety outside the United States pursuant to 49 U.S.C. 40113(e).

\(2\) When a foreign government is a party to the transaction, the
agreement is a government-to-government agreement governed by
international law. The FAA must obtain Department of State (DOS)
clearance on the negotiation and final terms of such agreements*.*

\(3\) In negotiating agreements with foreign private civil aviation
authorities and other quasi-governmental entities, the FAA consults with
DOS on foreign policy issues that might arise under such agreements.

\(4\) The IPT or contracting officer should coordinate with the Office
of International Aviation (AIA), which has organizational responsibility
for coordinating the agreement with the DOS and the responsible U.S.
embassy, and for transmitting the agreement to the foreign entity for
signature.

\(5\) Department of State clearance is not required for agreements with
private contractors; however, the IPT may consult with AIA in
appropriate circumstances.

\(6\) *Approval of Administrator.* The FAA Administrator or designee
must approve equipment purchases by a foreign government or
quasi-governmental entity under any FAA prime contract.

e\. *Content.* All agreements shall be in writing and should at a
minimum contain:

\(1\) A clear statement of requirements;

\(2\) The term of the agreement;

\(3\) Procedure for modifications;

\(4\) The legal authority for the agreement;

\(5\) Termination and dispute resolution provisions;

\(6\) A fund citation and payment provision, if appropriate, or
description of in-kind contribution of both parties; and

\(7\) Other terms and conditions, as appropriate, such as intellectual
property and indemnification provisions.

f\. *Format.*

\(1\) *Memorandum of Agreement (MOA).* Where the FAA intends to create a
legally binding commitment, a Memorandum of Agreement should be executed
by the parties.

\(2\) *Memorandum of Understanding (MOU).* A Memorandum of Understanding
is an agreement to agree and is not legally binding on either party.
MOUs are appropriate where the parties seek only to memorialize policies
and procedures of mutual concern, or describe other relationships *that
are not intended to create legally binding obligations*.

*g. Public Announcement.* There is no requirement for competition or
public announcement.

h\. *Justification.* Each agreement should be supported by a written
statement describing the technical, program, or business reasons
justifying the agreement.

i\. *Unsolicited Proposals.* Unsolicited proposals are not prohibited.
The unsolicited proposal must evidence a unique and innovative idea or
approach, which is not the subject of a current or anticipated
solicitation. Additionally, the following factors and any others
appropriate for the particular proposal should be considered:

\(1\) Unique and innovative methods, approaches or concepts demonstrated
by the proposal;

\(2\) Overall scientific or technical merits;

\(3\) The offeror's capabilities, related experience, facilities,
techniques, or unique combinations of these which are integral factors
for achieving the proposal objectives;

(4) The qualifications, capabilities and experience of the proposed key
    personnel who are critical in achieving the proposal objectives.

j\. *Funding.*

\(1\) *General.* Funds must be obligated to an agreement within the
period of their availability consistent with the purposes of the
appropriation. Additionally, when FAA funds are obligated under an
agreement with a servicing agency, the obligation maintains the same
impact and restrictions when it is transferred to the servicing agency.
For example, funds from the FAA\'s Operations, RE&D and F&E accounts may
be used only for the purposes of the appropriation and do not lose their
character once transferred to the servicing agency. Likewise, when FAA
is the servicing agency, an obligation against an appropriation of a
requesting agency maintains the same impact and restrictions as the
appropriation of origin.

\(2\) *Economy Act.* Where the Economy Act is cited, funds must be
obligated by the servicing agency [prior to their
expiration]{.underline}, i.e. if the servicing agency is to perform the
work itself, performance of the work must begin prior to that date. If
the agency is to acquire the product or service through contract, the
contract must have been executed and funds obligated to the contract
prior to their expiration date. Any funds not properly obligated by the
servicing agency must be returned to the requesting agency prior to
their expiration date.

\(3\) *Other Situations*. Where the Economy Act is not cited as
authority for the FAA, funds are obligated at the time the FAA signs the
agreement and places funds on the agreement.

k\. *Administrative Overhead Rates.*

\(1\) *Application*

\(a\) Where the FAA is reimbursed for services and supplies provided
under an Agreement, charges are assessed at the following rates:

\(i\) Federal agency - 17%,

\(ii\) Non-Federal entity - 26%.

\(b\) The Office of Budget, ABU-100 is the point of contact for
questions relating to current administrative overhead rates, which might
be amended after the FAA\'s cost accounting system is fully implemented.

\(2\) *Computation of Overhead Rates.* The above rates reflect the full
cost of the service or supplies (direct and indirect costs) and, in the
case of the non-federal entity, a small percentage for overhead. For
Federal agencies, the rates exclude unfunded Civil Service Retirement
Service costs. Full costs include, but are not limited to, an
appropriate share of:

\(a\) Direct and indirect personnel costs, including salaries and fringe
benefits such as medical insurance and retirement. Retirement costs
should include all funded or unfunded accrued costs not recovered by
employee contributions as specified in OMB Circular A-11.

\(b\) Physical overhead, consulting, and other indirect costs including
material and supply costs, utilities, insurance, travel, and rents or
imputed rents on land, buildings and equipment. If imputed rental costs
are included, they should also include:

\(i\) Depreciation of structures and equipment, based on official
Internal Revenue Service depreciation guidelines unless better estimates
are available; and

\(ii\) Annual rate of return (equal to the average long-term Treasury
bond rate) on land, structures, equipment and other capital resources
used;

\(iii\) The management and supervisory costs;

\(iv\) Where appropriate, the costs of enforcement, collection,
research, establishment of standards and any environmental impact
statements.

\(3\) *Franchise Fund.* The Administrative Services Franchise Fund
authorized by the Department of Transportation and Related Agencies
Appropriations Act, Public Law 104-205, September 30, 1996 authorizes
the collection of the full expenses of operation and \"an amount
necessary to maintain a reasonable operating reserve.\"

l\. *Disposition of Funds Received.* Funds received under an Agreement
shall be credited to the appropriation from which the expenses were
incurred, unless otherwise required by one of the specific program
authorities cited in Paragraph D, Appendix Attachment 1, *Parallel
Authorities*, or current and prior appropriation acts.

m\. *Limited Delegation of Authority.*

\(1\) The Administrator has delegated authority to award contracts,
cooperative agreements and other transactions to the FAA Acquisition
Executive (FAE); provided that the Administrator is given an opportunity
to review any grant or cooperative agreement (other than those awarded
under the preexisting authority contained in 49 U.S.C. 44912, 44505, and
47101, et seq.), or other transaction with a total cumulative value
equal to, or greater than \$10 million, or which is of significant
congressional interest.

The FAE subsequently re-delegated this authority to the regional
administrators, center directors, and managers of each logistics
division with authority for further re-delegation to individuals having
the appropriate qualifications.

\(2\) The following factors, which are not all inclusive, typically
indicate that the Administrator\'s review is required:

> \(a\) The total cumulative value equals or exceeds \$10 million; or

\(b\) The total cumulative value is less than \$10 million, but the
following conditions are present:

> \(i\) The transaction is the subject of one or more congressional
> inquiries; or
>
> \(ii\) The transaction is described in a statute, committee report, or
> agency budget; and

\(iii\) Either the schedule, performance, or estimated cost baseline
will be significantly breached by 20% or more.

n\. *Execution of the Agreement.* The Contracting Officer, or other
employee who has been delegated such authority, shall execute the
agreement on behalf of the FAA, provided that the estimated dollar value
of the agreement does not exceed that individual's delegated authority
(*see* subparagraph m, *Limited Delegation of Authority; the
Administrator\'s Delegation of Authority;* and *the* *FAA Acquisition
Executive's Delegation of Authority)*.

o\. *Legal Review.* All agreements require legal review prior to
execution. Ideally, legal counsel should be involved at the early stages
of the award process to assist with selection of the appropriate legal
instrument, drafting appropriate terms and conditions, and other legal
issues. AGC-7 in consultation with AGC-500 is responsible for providing
legal review of all international government to government agreements
and agreements with international quasi-governmental entities. In the
Europe, Africa and Middle East (EAME) Region, AEU-7 provides legal
review for agreements with foreign governments and quasi-governmental
entities. AGC-500 and regional counsel are responsible for providing
legal review on all other agreements and will consult with AGC-7 on any
agreements that may have foreign policy implications.

p\. *Disputes.* Where possible, disputes will be resolved by informal
discussion between the parties. In the event the parties are unable to
resolve any disagreement through good faith negotiations, the dispute
may be resolved by the FAA Administrator, or designee whose decision is
not subject to further administrative review and, to the extent
permitted by law, is final and binding (*see* e.g. 49 U.S.C. 46110).

**2. SECTION 106 COOPERATIVE AGREEMENTS**

a\. *Applicability.*

\(1\) This section applies to cooperative agreements for services,
supplies and real property issued under the authority of 49 U.S.C. 106
(l) and (m).

\(2\) FAA Order 9550.7A implements the Research Grants Program
authorized by Public Law 101-508, Sections 9205, 9208, codified at 49
U.S.C. 44511, 44512 and Public Law 101-604, Section 107, codified at 49
U.S.C. 44912. Except for Chapter 8, Sections 1-4, 6-8, the provisions of
FAA Order 9550.7A ***do not*** apply to cooperative agreements issued
under the authority of 49 U.S.C. 106 (l) and (m).

b\. *Authority.*

\(1\) *General*. In Public Law 104-264, Congress provided the FAA with
specific authority to "enter into and perform ...cooperative
agreements...as may be necessary to carry out the functions of the
Administrator and the Administration" with any Federal or non-Federal
entity "on such terms and conditions as the Administrator may consider
appropriate" (see 49 U.S.C. 106(*l*)(6) and 106(m)). By its express
terms, the statute applies to all activities of the agency and is not
limited to research activities, or to non-profit entities (see for
example, 49 U.S.C 44512).

\(2\) *Grants*. Public Law 104-264 does not provide new or additional
authority to award grants, which continue to require specific program
authority either in an appropriation or authorization statute.

c\. *Definitions.*

\(1\) *Cooperative Agreement.* A cooperative agreement is a legal
instrument used when the principal purpose of the relationship is to
transfer a thing of value to a recipient, either public or private, to
carry out a public purpose of support or stimulation authorized by law
instead of acquiring (by purchase, lease or barter) property or services
for the direct use or benefit of the agency and there is substantial
Federal involvement in the activity. For example, the FAA might enter
into a cooperative agreement with a university to provide funding to
support research on fire resistant fabrics for use in aircraft that do
not produce poisonous fumes. The agency\'s principal purpose is to
stimulate the development of fire resistant fabrics to benefit the
general public. The benefit to the FAA is indirect - improved safety for
aircraft passengers, which also supports the mission of the FAA.

\(2\) *Grant*. A grant is similar to a cooperative agreement except that
a grant does not require substantial involvement by the FAA in the
performance of the effort. Substantial FAA involvement may be necessary
when an activity is technically or managerially complex, or requires
extensive close coordination with other federally supported work or
multiple recipients.

d\. *Appropriations.*

\(1\) *General Principles.*

\(a\) The core principles governing the obligation of Federal funds
apply to cooperative agreements: appropriations may be used only for the
purpose(s) for which they were made; funds must be obligated within the
period of their availability and may not exceed the available
appropriation. The [bona]{.underline} [fide]{.underline} need rule also
applies; however, the prohibition against augmentation of obligations
does not apply to transactions authorized by 49 U.S.C 106 and the credit
back provisions of current and former FAA appropriations statutes.

\(b\) As a general rule, funds awarded under a cooperative agreement
lose their character as Federal funds after award and are not subject to
the same restrictions as when the Federal government itself spends
appropriated funds. There are exceptions to this rule, including
situations where a statute, program legislation, agency regulations or
the grant agreement provides otherwise. For example, Title VI of the
Civil Rights Act, 42 U.S.C. 2000d prohibits discrimination on the basis
of race, color or national origin under any program or activity
receiving Federal financial assistance. Similarly, the Rehabilitation
Act of 1973, as amended, prohibits discrimination against handicapped
individuals in any program or activity that receives Federal financial
assistance.

\(c\) The statutory prohibition against advance payments does not apply,
as the policy underlying the prohibition (payment for supplies and
services upon receipt) is not relevant to an assistance relationship.

\(d\) F&E funds may be used for cooperative agreements only where the
following three criteria are met: (a) the primary purpose is to benefit
the public rather than FAA, (b) there is subtantial FAA involvement, and
(c) funds will be used to acquire, improve or establish air navigation
facilities.

\(2\) *Office of Management and Budget (OMB) Circulars*. Several OMB
Circulars impose restrictions on projects funded with Federal funds. In
construing FAA\'s authority under 49 U.S.C. 106, the FAA\'s policy is to
follow the guidance of these circulars to the extent such standards are
consistent with the FAA\'s Acquisition Management System and the
Administrator\'s authority to implement \"such terms or conditions as
the Administrator may deem appropriate.\"

\(a\) *Office of Management and Budget Circular A-110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations*."

\(i\) OMB Circular A-110 establishes pre-award and post-award standards
for Federal grants and agreements awarded to institutions of higher
education, hospitals, and other non-profit organizations. The circular
does not apply to such awards or agreements where a statute specifically
prescribes policies or specific standards that are inconsistent with the
circular.

\(ii\) The circular defines an award as \"financial assistance that
provides support or stimulation to accomplish a public purpose.\" Awards
include grants and other agreements in the form of money or property in
lieu of money by the Federal Government to an eligible recipient. The
term does not include: technical assistance, which provides services in
lieu of money; other assistance in the form of loans, loan guarantees,
interest subsidies, or insurance; direct payments of any kind to
individuals, and contracts which are required to be entered into and
administered under procurement laws and regulations.

\(b\) *OMB Circular A-102, Grants and Cooperative Agreements with State
and Local Governments.* (Note that sub-awards made by State and local
governments to organizations covered by OMB Circular A-110 are covered
by Circular A-110).

\(c\) *Allowable Costs.* The following OMB Circulars describe basic cost
principles applicable to the organization incurring the cost*. (a) OMB
Circular A-87, Cost Principles for State Local and Indian Tribal
Governments, (b) OMB Circular A-122, Cost Principles for Non-profit
Organizations*, excluding educational institutions and other
organizations specified in the circular*,* and *(c) OMB Circular A-21,
Cost Principles for Educational Institutions.*

\(d\) *Treatment of* *Commercial Organizations.* The FAA may extend the
coverage of OMB Circular A-110 to commercial organizations, foreign
governments, organizations under the jurisdiction of foreign governments
and international organizations.

e\. *Content.* All cooperative agreements shall be in writing and should
contain the following provisions: (Examples of these provisions and
other clauses are included in Appendix F. OMB Circulars A-110 and A-102
also provide additional guidance for cooperative agreements funded by
appropriated funds.)

\(1\) A clear statement of purpose,

\(2\) The legal authority for the agreement,

\(3\) A description of the intended beneficiary,

\(4\) A description of the level of FAA involvement,

\(5\) The term of the agreement,

\(6\) Authority and procedure for modifications,

\(7\) Level of funding commitment and any limitations or conditions,
e.g. milestone payments where the Government's share is distributed at
the same ratio as the recipient's share,

\(8\) Recipient standards - cost accounting; financial management
systems; procurement, technical capability, property management and
management organization, technical capability,

\(9\) A fund citation and payment provision, if appropriate, or
description of in-kind contribution of each party,

\(10\) Allowable Costs. Describe any unallowable costs, e.g. profit and
fee,

\(11\) FAA's right to audit for a stated period of time,

\(12\) Mandatory clauses if Federal funds are obligated, e.g.
anti-lobbying, compliance with civil rights laws (see subparagraph 2.d.,
*Appropriations,* above.**)**

\(13\) Small business opportunities,

\(14\) Suspension/termination (a cooperative agreement may not be
transferred to another recipient without the express, written consent of
the FAA prior to the transfer),

\(15\) Dispute resolution,

\(16\) Debarment/suspension. (Cooperative agreements funded with Federal
funds should not be awarded to suspended or debarred entities (at any
tier). Appropriate flow through provisions should be included in the
Agreement to prohibit sub-awards to suspended or debarred parties.)

\(17\) Other terms and conditions, as appropriate, such as
indemnification and intellectual property.

f\. *Evaluation/Selection of Recipients.* Cooperative agreements may be
awarded at the discretion of the FAA on a non-competitive basis; however
competition is encouraged whenever practicable. The following factors
and any others appropriate for the particular proposal should be
considered:

\(1\) Technical merit and program value,

\(2\) Cost/contribution of the parties,

\(3\) Capability of the recipient to accomplish the objectives of the
cooperative agreement.

g\. *Justification.* Each cooperative agreement should be supported by a
written justification describing the following:

\(1\) The purpose of the cooperative agreement,

\(2\) The expected benefit to the recipient and the general public,

\(3\) FAA's substantial involvement in performance of the activity, and

\(4\) The method for selection of the recipient(s).

h\. *Administration.* Cooperative agreements awarded under this
authority will be administered by the awarding activity subject to the
continuing oversight of the Associate Administrator for Research and
Acquisitions, ARA-1, who is authorized to redelegate this authority, as
appropriate.

**3.** **GIFTS AND BEQUESTS**

Under 49 U.S.C. 326, the Administrator has the authority to accept any
conditional or unconditional gift or donation of money or property, real
or personal, or of services for the FAA. Property accepted under this
authority and proceeds from the sale of that property must be used, as
nearly as possible, under the terms of the gift. FAA Order 2700.20A
implements the Administrator\'s gift authority and must be consulted in
determining whether a transaction should be processed as a gift.
Typically, a gift is characterized by the following criteria: (1) a
unilateral transfer to the Government, with or without conditions; (2)
the FAA is not obligated to provide anything in return; and (3) there is
no continuing relationship with the donor. For example, an airport
offers to purchase and provide the FAA with a system such as a MALSR,
provided that the FAA places it at that airport, and the FAA is not
required to provide anything in return, but is required to maintain the
equipment. In that situation, the airport is making a gift and the
organizational unit must process the transaction using the process of
FAA Order 2700.20A. If the airport also requires FAA to service its
MALSR\'s in return, a procurement contract should be used as the FAA
would be procuring a system by providing services as consideration. If
the airport retains title to the MALSR, but the FAA would be responsible
for its maintenance, the agreement should be an \"other transaction.\"

**B. CLAUSES**

See FAST Procurement Toolbox

**C. FORMS**

See FAST Procurement Toolbox for applicable forms.

.

**D. APPENDIX**

Attachment 1 - Parallel Authorities

Attachment 2 - Sample Interagency Agreement

Attachment 3 - Sample Intra-Agency Agreement

Attachment 4 - Sample Other Transaction - State, Municipality or Private
Entity

Attachment 5 - Sample Memorandum of Understanding (MOU)

Attachment 6 - Sample Section 106 Cooperative Agreement

Attachment 7 -- Intellectual Property - Section 106 Cooperative
Agreements

*Appendix Attachment 1*

*Page 1*

## **APPENDIX ATTACHMENT** 

**PARALLEL AUTHORITIES**[^6]

-   **49 U.S.C. 40108 -** authorizes the FAA to establish training
    schools for FAA officers and employees. Authorizes attendance of
    officers and employees of other Federal entities, governments of
    foreign countries, and individuals from the aeronautics industry.
    Authorizes the Administrator to "*require payment or transfer of
    amounts or other consideration to offset the additional cost*" of
    any *of "those officers, employees, or individuals*." **Amounts
    received may be credited to the appropriation current when the
    expenditures are or were paid, the appropriation current when the
    amount is received, or both.**

-   **49 U.S.C. 40113(e) -** authorizes the Administrator to provide
    safety-related training and operational services to foreign aviation
    authorities with or without reimbursement. **Funds received shall be
    credited to the appropriation from which the expenses were
    incurred.**

-   **49 U.S.C. 44502 (a)(2)** - authorizes the Administrator to make an
    agreement with an airport owner or sponsor (includes a private owner
    of a public use airport) so that the owner or sponsor will provide
    site preparation work associated with acquiring, establishing, or
    improving an air navigation facility and be paid or reimbursed from
    the appropriated amounts (under section 48101(a)).

-   **49 U.S.C. 44502(d)** - authorizes the FAA to provide, by
    regulation, assistance, and sale of fuel, oil, equipment and
    supplies to an aircraft in an emergency. **The cost of the
    assistance may be credited to the appropriation from which the cost
    was paid.**

-   **49 U.S.C. 47301 - 47305** - provides authority to acquire,
    establish and construct airport property and airway property (except
    meteorological facilities) in foreign territory, authority to
    transfer property, train foreign citizens, accept payment from a
    government of a foreign country or international organization for
    facilities or services provided the government or organization, and
    **authority to credit funds so received to current appropriations**.

> **49 U.S.C. 44903(c) -** provides authority to the Administrator to
> authorize an airport operator to use on a reimbursable basis,
> personnel employed by the Administrator, or by another department,
> agency, or instrumentality of the Government with the consent of the
> head of the department, agency, or instrumentality, to supplement
> State, local, and private law enforcement personnel.

*Appendix Attachment 1*

*Page 2*

-   **49 U.S.C. 44505(d) -** authorizes cooperative agreements on a
    cost-shared basis for research, engineering and development with
    Federal and non-Federal entities.

-   **49 U.S.C. 44912 -** authorizes grants and cooperative agreements
    for research technologies to counter terrorist acts against civil
    aviation.

-   **49 U.S.C. 44913 -** authorizes grants under the Explosive
    Detection K-9 Team Training Program.

-   **49 U.S.C. 44935(c)(2) -** authorizes reimbursement for travel,
    transportation, and subsistence expenses for security training of
    non-United States Government domestic and foreign individuals whose
    services will contribute significantly to carrying out civil
    aviation security programs.

-   **49 U.S.C. 47104 -** authorizes project grants for airport
    development from the Airport and Airway Trust Fund**.**

-   **49 U.S.C. 47151 -** authorizes the Administrator to give an
    interest in surplus airport property to a State, political
    subdivision of a State, or tax supported organization. Such surplus
    property may be used by the U.S. Government without charge if the
    President declares a national emergency.

    *Appendix Attachment 2*

    *Page 1*

    **APPENDIX ATTACHMENT 2**

**SAMPLE INTERAGENCY AGREEMENT**

**INTERAGENCY AGREEMENT BETWEEN THE**

**FEDERAL AVIATION ADMINISTRATION (FAA)**

**and**

\[*[**CO insert name of other agency here**.]{.underline}*\]

**ARTICLE I. PARTIES**

**ARTICLE 2. SCOPE**

a\. Purpose:

The purpose of this Agreement between the Federal Aviation
Administration (FAA) and [\[*CO insert name of the other
agency*]{.underline}\] is to \[*[CO insert description of the work to be
performed.]{.underline}*\]

b\. Specific goals and objectives to be accomplished. \[*[CO describe
the goals and objectives to be accomplished.]{.underline}*\]:

c\. Roles and responsibilities. \[*[CO describe roles and
responsibilities of the parties.]{.underline}*\]

**ARTICLE 3. EFFECTIVE DATE and TERM**

This Agreement is effective on the date of the last signature and shall
continue in effect until \[*[CO insert completion date of the
interagency agreement]{.underline}*\], or until earlier terminated by
the parties, as provided herein.

**ARTICLE 4. DELIVERY/PERFORMANCE**

Work shall be accomplished according to the following schedule:

\[*[CO insert work schedule to be followed in performing the
work.]{.underline}*\]

**ARTICLE 5. REPORTING REQUIREMENTS**

\[*[CO describe reporting requirements, e.g. Program Plans, Technical
Reports, Progress Reports or Milestone Reporting, including financial
reports, if required]{.underline}.*\]

**ARTICLE 6. RELEASE OF TECHNICAL DATA**

No information, oral or written, concerning the results or conclusions
made pursuant to this Agreement shall be published or released to the
public without the prior written approval of the FAA Contracting
Officer.

*Appendix Attachment 2*

*Page 2*

**ARTICLE 7. LEGAL AUTHORITY**

This Agreement is entered into under the authority of the Federal
Aviation Act of 1958, 49 U.S.C. 106(1) and 106(m), and 31 U.S.C 1535.

> \[*Note 1. If this is a joint activity with Department of Defense (see
> T.3.8.1.b.2, Joint Activities with DOD), also cite 49 U.S.C.
> 40121(c)2.*\]

**ARTICLE 8. POINTS OF CONTACT**

[FAA Program Office/Technical Officer]{.underline}

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[FAA Contracting Officer]{.underline}

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Federal Agency]{.underline}

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Address]{.underline}

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**ARTICLE 9. FUNDING AND PAYMENT**

a\. Funds in the amount of \$\[*[CO insert amount]{.underline}*\] are
hereby obligated to this Interagency Agreement. Obligation is chargeable
to Appropriation Code:

\[*[CO insert appropriation code here]{.underline}*\] \[[*CO* i*nsert PR
number here*]{.underline}\]

b\. A properly executed request for payment should be submitted to the
FAA at the billing address identified below.

**Billing Address:**

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Federal Aviation Administration

c\. Upon termination or expiration of this Agreement, any FAA funds
which have not been spent or obligated for allowable expenses prior to
the date of termination and are not reasonably necessary to cover
termination expenses shall be returned to the FAA.

*Appendix Attachment 2*

*Page 3*

> \[*Note 2. When the Economy Act is cited as authority, funds must be
> obligated by the servicing agency prior to their expiration, i.e. if
> the servicing agency is to perform the work itself, performance of the
> work must begin prior to that date. If the agency is to acquire the
> product or service through contract, the contract must have been
> executed and funds obligated to the contract prior to their expiration
> date. Any funds not properly obligated must be returned prior to their
> expiration date.*\]
>
> \[*Note 3. Describe any other funding limitations, e.g. limits on the
> use of FAA funds for a multi-year contract.*\]

**ARTICLE 10. LIMITATION OF FUNDS**

The FAA's liability to make payments to \[*[CO insert name of other
agency]{.underline}*\] is limited to the amount of funds obligated
hereunder, including written modifications to this Agreement.

**ARTICLE 11. APPROVAL OF PRIME CONTRACT/MODIFICATIONS**

> \[*Note 4. If the FAA will obtain products or services through the
> other Federal agency's contractor, describe the role of the FAA
> Contracting and Legal Offices. Typically, the FAA reviews the
> underlying contract and modifications, drafts the statement of work
> and provides other technical assistance prior to award. FAA legal
> reviews the underlying contract to determine if it is in compliance
> with FAA specific statutes and funding limitations. The following is
> suggested:*\]

Prior to executing any contract or modification to an existing contract
in order to fulfill the requirements of Article \[*[CO insert Article
Number]{.underline}*\] of this Agreement, the \[*[CO insert name of
other agency]{.underline}*\] agency shall provide the FAA Contracting
Officer with a copy of the contract or modification. The written
concurrence of the FAA Contracting Officer shall be obtained by \[*[CO
insert name of other agency]{.underline}*\] prior to contract award, or
execution of the modification.

**ARTICLE 12. CHANGES, MODIFICATIONS**

a\. Changes and/or modifications to this Agreement shall be in writing
and signed by a FAA Contracting Officer and the Contracting Officer of
\[*[CO insert name of other agency]{.underline}*\] Agency, or their duly
authorized representatives acting within the scope of their authority.
No oral statement by any person shall be interpreted as modifying or
otherwise affecting the terms of this Agreement. All requests for
interpretation or modification shall be made in writing.

b\. The FAA Technical Officer identified in Article 8 is responsible for
the technical administration of this Agreement. The FAA Technical
Officer is not authorized to make any changes that impact the cost,
schedule or performance of this Agreement without the written consent of
the FAA Contracting Officer.

**ARTICLE 13. TERMINATION**

Either party may terminate this Agreement at any time prior to its
expiration date, with or without cause, and without incurring any
liability or obligation to the terminated party (other than payment of
amounts due and owing and performance of obligations accrued, in each
case on or prior to the termination date)

*Appendix Attachment 2*

*Page 4*

by giving the other party at least thirty (30) days prior written notice
of termination. Upon receipt of a notice of termination, the receiving
party shall take immediate steps to stop the accrual of any additional
obligations, which might require payment.

\[*[CO will insert here any additional termination requirements that may
apply, e.g. disposition of data, return, or other disposition of
property to either party.]{.underline}*\]

**ARTICLE 14. ORDER OF PRECEDENCE**

In the event of any inconsistency between the terms of the Agreement,
the inconsistency shall be resolved by giving preference in the
following order:

a\. The Agreement

b\. The Attachments

**ARTICLE 15. PROTECTION OF INFORMATION**

The parties agree that they shall take appropriate measures to protect
proprietary, privileged, or otherwise confidential information that may
come into their possession as a result of this Agreement.

\[*[If appropriate, the CO may include specific provisions governing the
release of data developed under the Agreement.]{.underline}*

**ARTICLE 16. DISPUTES**

Where possible, disputes will be resolved by informal discussion between
the parties. If the parties are unable to resolve any disagreement
through good faith negotiations, the dispute will be resolved by \[*[The
CO should describe here the internal dispute resolution process, e.g.
management of either party, such as, the integrated product team lead,
head of contracting activity, or the Administrator.]{.underline}*\]

**AGREED:**

[Federal Agency]{.underline} [Federal Aviation
Administration]{.underline}

BY: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ BY:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

TITLE: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TITLE:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DATE: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ DATE:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**APPENDIX ATTACHMENT 3**

**SAMPLE INTRA-AGENCY AGREEMENT**

**INTRA-AGENCY AGREEMENT**

**BETWEEN**

**NORTHWEST MOUNTAIN VIDEO PRODUCTIONS (FAA)**

**AND**

**DEPARTMENT OF TRANSPORTATION (OST)**

The Northwest Mountain Video Productions group (ANM Video Productions)
and the Department of Transportation (OST) mutually agree to the
following:

**[FAA RESPONSIBILITIES]{.underline}**

The responsibilities of ANM Video Productions under this agreement
include but are not limited to the following:

a\. Provide a broadcast quality video production including storyboard
construction, scripting, taping, editing, and graphics/animation not to
exceed 20 finished minutes. The video (1DOT Safety Video) shall be
approximately 15 minutes in length and depict safety messages provided
by the various modals of the Department of Transportation.

b\. Completion of video storyboard by August 15,1998.

c\. Completion of video script by November 25, 1998.

d\. Completion of location taping with professional talent by December
9, 1998.

e\. First cut video completion by January 15, 1999.

f\. Delivery of the finished product, with a BetaCam SP master (9 master
tapes total) for distribution to OST and each participating modal on or
before January 31, 1999.

f\. Distribution of one VHS format duplicate to OST and each
participating modal administration.

**[DOT RESPONSIBILITIES]{.underline}**

The Department of Transportation (OST) will reimburse ANM Video
Productions (FAA) for the total cost of the product, including master
tapes and VHS copies, in the amount of \$50,000.00.

Accounting Code \[*[CO to insert accounting code here]{.underline}*\]

**Billing Address**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

NORTHWEST MOUNTAIN VIDEO DEPARTMENT OF

PRODUCTIONS (FAA) TRANSPORTATION (OST)

By \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ By
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

# Title \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Title \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

*Appendix Attachment 4*

*Page 1*

**APPENDIX ATTACHMENT 4**

**SAMPLE OTHER TRANSACTION --**

**STATE, MUNICIPALITY OR PRIVATE ENTITY**

**MEMORANDUM OF AGREEMENT BETWEEN**

**FEDERAL AVIATION ADMINISTRATION (FAA)**

**AND**

***[\[CO insert Name of non-Federal Party (Parties)]{.underline}***\]

[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}

**ARTICLE I. PARTIES**

The parties to this Agreement are the Federal Aviation Administration
(FAA) and \[*[CO insert name of Non-Federal party]{.underline}*\]

**ARTICLE 2. SCOPE**

a\. Purpose:

The purpose of this Agreement between the Federal Aviation
Administration (FAA) and \[*[CO insert name of Non-Federal
party]{.underline}*\] is to \[*[CO insert description of purpose of the
agreement]{.underline}*\].

b\. Specific goals and objectives to be accomplished:

c\. Management of the project:

d\. Roles and responsibilities:

Parties are bound by a duty of good faith and best effort in achieving
the goals of the Agreement

e\. Contributions of the Parties:

*\[[CO describe the contributions of each party, e.g. cost-share
arrangement, in-kind contributions and total estimated project cost for
both parties. Describe any limitations, e.g. risk of loss for in-kind
contributions, responsibility for repairs, refurbishment, and
disposition.]{.underline}*\]

f\. Type of Agreement:

This Agreement is an \"other transaction\". It is not intended to be,
nor shall it be construed as, a partnership, corporation, or other
business organization.

**ARTICLE 3. EFFECTIVE DATE and TERM**

*Appendix Attachment 4*

*Page 2*

The effective date of this Agreement is the date on which it is signed
by the FAA or \[*[CO insert name of non-Federal party]{.underline}*\],
whichever is later. This Agreement shall continue in effect until \[*[CO
insert completion date]{.underline}*\] or until earlier terminated by
the parties as provided herein.

**ARTICLE 4. MILESTONES**

Work shall be accomplished according to the following milestones. \[*[CO
insert information in the following spaces.]{.underline}*\]

*Note. This schedule should be tailored as appropriate.*

**[Milestone]{.underline}** **[Completion Date]{.underline}**
**[Responsible Party]{.underline}**

Sign Agreement \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Detailed SOW \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Subcontract Selection(s) \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Subcontract Approval(s) \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Subcontract Award(s) \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Project Completion \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**ARTICLE 5. REPORTING REQUIREMENTS**

\[*[CO describe here reporting requirements, e.g. Program Plans,
Technical Reports, Progress Reports or Milestone Reporting, including
financial reports, if required.]{.underline}*\]

**ARTICLE 6. INTELLECTUAL PROPERTY**

a\. Rights in Data

The Government retains Government Purpose Rights in all data developed
under this agreement.

"Data" means recorded information, regardless of form or method of
recording, which includes but is not limited to, technical data,
computer software, trade secrets, and mask works. The term does not
include financial, administrative, cost, pricing or management
information.

"Government Purpose Rights" means the rights to --

\(1\) Use, modify, reproduce, release, perform, display, or disclose
data within the government without restriction; and,

\(2\) Release or disclose technical data outside the government and
authorize persons to whom release or disclosure has been made to use,
modify, reproduce, release, perform, display, or disclose that data for
government purposes.

*Appendix Attachment 4*

*Page 3*

"Government Purpose" means any activity in which the United States
Government is a party, including cooperative agreements with
international or multi-national defense organizations, or sales or
transfers by the United States Government to foreign governments or
international organizations. Government purposes include competitive
acquisition by or on behalf of the government but do not include the
rights to use, modify, reproduce, release, perform, display, or disclose
data for commercial purposes or authorize others to do so.

b\. Rights in Inventions

The respective rights of the Government and the other parties to this
agreement are the same as those found at T.5-10 "Patent Rights --
Retention by the Contractor (Short Form).

> *Note. This intellectual property provision is an example. Parties
> should carefully evaluate and include appropriate intellectual
> property provisions depending on the nature of the Agreement. For
> example, the FAA may wish to disclose technical data to the public for
> commercial or other purposes, which is not covered under the
> government purpose license described herein. Additionally, the
> Bayh-Dole Act, which governs rights in inventions made under funding
> agreements does not apply to agreements under the FAA's "other
> transaction" authority)*

**ARTICLE 7. LEGAL AUTHORITY**

This Agreement is entered into under the authority of 49 U.S.C. 106(1)
and (m), which authorizes agreements and other transactions on such
terms and conditions as the Administrator determines necessary.

**ARTICLE 8. POINTS OF CONTACT**

[FAA Program Office/Technical Officer]{.underline}

[Non-FAA Party]{.underline}

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[FAA Contracting Officer]{.underline}

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**ARTICLE 9. FUNDING AND PAYMENT**

a\. The FAA will contribute \$\[*[CO insert amount]{.underline}*\] as
its share of the cost to perform this Agreement. The \[*[Co insert name
of non-Federal party]{.underline}*\] will contribute \[*[CO describe
schedule of in-kind contributions, if any]{.underline}*\]. Funds in the
amount of \$\[*[CO insert amount]{.underline}*\] are hereby committed
for the term of this Agreement. Obligation is chargeable to
Appropriation Code \[*[CO insert appropriation code]{.underline}*\] in
procurement request number\[*[CO insert number]{.underline}*\].

*Appendix Attachment 4*

*Page 4*

b\. A properly executed request for payment should be submitted to the
FAA at the billing address identified below.

**Billing Address:**

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

c\. In the event of termination or expiration of this Agreement, any FAA
funds which have not been spent or obligated for allowable expenses
prior to the date of termination, and are not reasonably necessary to
cover termination expenses shall be returned to the FAA.

**ARTICLE 10. LIMITATION OF FUNDS**

The Government's liability to make payments to \[*[CO insert name of
non-Federal party]{.underline}*\] is limited to the amount of funds
obligated hereunder, including written modifications to this Agreement.

**ARTICLE 11. APPROVAL OF SUBCONTRACTORS**

The Contracting Officer shall be reasonably notified in advance of
entering into any subcontract. Any subcontractors and outside associates
or consultants required by the contractor in connection with the
services covered by this Agreement shall be limited to individuals or
firms that are specifically agreed to by all parties. The contractor
must obtain the Contracting Officer's written consent before placing any
subcontract.

**ARTICLE 12. AUDITS**

The Government has the right to examine or audit relevant financial
records for a period not to exceed three years after expiration of the
terms of this Agreement. The contractor/subcontractor must maintain an
established accounting system that complies with generally accepted
accounting principles. Commercial companies should ensure their record
retention policies comply with this policy.

**ARTICLE 13. CHANGES, MODIFICATIONS**

Changes and/or modifications to this Agreement shall be in writing and
signed by a FAA Contracting Officer and the \[*[CO identify
representative or designee]{.underline}*\] of \[[*CO insert name of
non-Federal party*\].]{.underline} The modification shall cite the
subject Agreement, and shall state the exact nature of the modification.
No oral statement by any person shall be interpreted as modifying or
otherwise affecting the terms of this Agreement.

**ARTICLE 14. TERMINATION**

In addition to any other termination rights provided by this Agreement,
either party may terminate this Agreement at any time prior to its
expiration date, with or without cause, and without incurring any
liability or obligation to the terminated party (other than payment of
amounts due and owing and performance of obligations accrued, in each
case on or prior to the termination date) by giving the other party at
least thirty (30) days prior written notice of termination. Upon receipt
of a notice of termination,

*Appendix Attachment 4*

*Page 5*

the receiving party shall take immediate steps to stop the accrual of
any additional obligations, which might require payment.

[\[*CO should include any additional termination requirements that may
apply, e.g. return of property to either party or other method of
disposition*]{.underline}\]*[.]{.underline}*

**ARTICLE 15. ORDER OF PRECEDENCE**

In the event of any inconsistency between the terms of the Agreement,
the inconsistency shall be resolved by giving preference in the
following order:

\(a\) The Agreement,

\(b\) The Attachments.

**ARTICLE 16. CONSTRUCTION OF THE AGREEMENT**

This Agreement is an "other transaction" issued under 49 U.S.C 106 (1)
and (m) is not a procurement contract, grant or cooperative agreement.
Nothing in this Agreement shall be construed as incorporating by
reference or implication any provision of Federal acquisition law or
regulation.

Each party acknowledges that all parties hereto participated equally in
the negotiation and drafting of this Agreement and any amendments
thereto, and that, accordingly, this Agreement shall not be construed
more stringently against one party than against the other.

**ARTICLE 17. DISPUTES**

Where possible, disputes will be resolved by informal discussion between
the parties. In the event the parties are unable to resolve any
disagreement through good faith negotiations, the dispute will be
resolved by \[*[CO describe internal dispute resolution process, e.g.
management of either party, or an oversight committee]{.underline}*\].
The decision is final unless it is timely appealed to the FAA
Administrator, whose decision is not subject to further administrative
review and, to the extent permitted by law, is final and binding.

**ARTICLE 18. WARRANTIES**

The FAA makes no express or implied warranties as to any matter arising
under this Agreement, or as to the ownership, merchantability, or
fitness for a particular purpose of any property, including any
equipment, device, or software that may be provided under this
Agreement.

**ARTICLE 19. INSURANCE**

\[*[CO insert name of non-Federal party]{.underline}*\] shall arrange by
insurance or otherwise for the full protection of \[*[CO insert name of
non-Federal party]{.underline}*\] from and against all liability to
third parties arising out of, or related to, its performance of this
Agreement. The FAA assumes no liability under this Agreement for any
losses arising out of any action or inaction by \[*[CO insert name of
non-Federal party]{.underline}*\], its employees, or contractors, or any
third party acting on its behalf. \[*[CO insert name of non-Federal
party]{.underline}*\] agrees to

*Appendix Attachment 4*

*Page 6*

hold the United States harmless against any claim by third persons for
injury, death or property damage arising out of or in connection with
its performance under this Agreement.

**ARTICLE 20. LIMITATION OF LIABILITY**

Claims for damages of any nature whatsoever pursued under this Agreement
shall be limited to direct damages only up to the aggregate amount of
\[*[CO insert amount]{.underline}*\] funding obligated under this
Agreement at the time the dispute arises. In no event shall the FAA be
liable for claims for consequential, punitive, special and incidental
damages, claims for lost profits, or other indirect damages.

**ARTICLE 21. LOWER TIER AGREEMENTS**

\[*[CO insert name of non-Federal party]{.underline}*\] shall include
Articles \[*[CO insert article numbers]{.underline}*\] suitably modified
in all lower tier Agreements, regardless of tier).

**ARTICLE 22. CIVIL RIGHTS ACT**

*\[[CO insert name of non-Federal party]{.underline}*\] shall comply
with Title VI of the Civil Rights Act of 1964 relating to
nondiscrimination in Federally assisted programs and provide a
certification to that effect.

**ARTICLE 23. OFFICIALS NOT TO BENEFIT**

AMS Clause 3.2.5-1, \"Officials Not to Benefit\" and Clause 3.2.5-7,
\"Disclosure Regarding Payments to Influence Certain Federal
Transactions\" are attached hereto and incorporated by reference into
this Agreement.

**ARTICLE 24. PROTECTION OF INFORMATION**

The parties agree that they shall take appropriate measures to protect
proprietary, privileged, or otherwise confidential information that may
come into their possession as a result of this Agreement.

**AGREED:**

[TBD]{.underline} [Federal Aviation Administration]{.underline}

BY: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ BY:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

TITLE: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TITLE:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DATE: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ DATE:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Appendix Attachment 5

*Page 1*

**APPENDIX ATTACHMENT 5**

**SAMPLE MEMORANDUM OF UNDERSTANDING (MOU)**

**MEMORANDUM OF UNDERSTANDING**

**THE FEDERAL AVIATION ADMINISTRATION**

**and**

**XYZ**

**1.** **[Parties]{.underline}**

The parties to this Memorandum of Understanding \["MOU"\] are the
Federal Aviation Administration \["FAA"\] and XYZ.

**2. [Objectives]{.underline}**

The objectives of this MOU are as follows:

(a)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(b)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**3. [Responsibilities of the Parties]{.underline}**

\(a\) FAA

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\(b\) XYZ

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**4. [Funding]{.underline}**

**No funds are obligated under this MOU**. Each party shall bear the
full cost it incurs in performing, managing, and administering its
responsibilities under this MOU.

*Appendix Attachment 5*

*Page 2*

**5. [Warranties]{.underline}**

Neither the FAA nor \[*[Insert name of other party]{.underline}*\] makes
any express or implied warranty as to any matter arising under this MOU.

**6. [Protection of Confidential/Privileged Information]{.underline}**

Each party shall take appropriate measures to protect proprietary,
privileged or otherwise confidential information obtained as a result of
its activities under this MOU.

**7. [Construction ]{.underline}**

The parties understand and agree that this Memorandum of Understanding
does not confer any legal rights, duties or obligations on either party
and is not subject to dispute in any forum. Neither party is authorized
or empowered to act on behalf of the other with regard to any matter,
and neither party shall be bound by the acts or conduct of the other in
connection with any activity under this MOU. This provision shall
survive termination of this MOU.

**8**. **[Effective Date/Term/Termination]{.underline}**

This MOU shall be effective on the date of the last signature of the
parties and shall remain in force until terminated by mutual agreement
or unilaterally by either party upon 30 days notice to the other party.

**9. [Authority]{.underline}**

The authority for this MOU is 49 U.S.C. 106 (f)(2)(A) and 106(*l*) and
(m).

**XYZ Federal Aviation Administration**

**By \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ By
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

# Title \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Title \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**Date \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

*Appendix Attachment 6*

*Page 1*

**APPENDIX ATTACHMENT 6**

**SAMPLE SECTION 106 COOPERATIVE AGREEMENTS**

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

**Between**

**ABC AIRLINES, INC.**

**and the**

**FEDERAL AVIATION ADMINISTRATION**

*Cooperative Agreement Letter*

The Federal Aviation Administration hereby enters into Cooperative
Agreement No. DTFAO I -98-C-00000 with:

ABC Airlines, Inc.

in accordance with the contributions designated in this document in
Article III, Contributions of the Parties. The total funded amount of
this Agreement is:

\$xxxxxxxx

The purpose of this Cooperative Agreement is to develop full Computer
Assisted

# Passenger Screening (CAPS) functionality for ABC Airlines, Inc. 

The period of performance for this Cooperative Agreement extends from
the final signature date below to September 30, 1998. The terms and
conditions of this Cooperative Agreement are described in the following
pages. ABC Airlines, Inc. and the Federal Aviation Administration
acknowledge acceptance of this Cooperative Agreement and agree to abide
by all of the terms and conditions set forth herein. In WITNESS WHEREOF,
the parties hereto affix their signatures as follows:

For ABC Airlines, Inc. For the FAA

Name Name

# Date of Signature Date of Signature

*Appendix Attachmentt 6*

*Page 2*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

## 

## ***TABLE OF CONTENTS***

## I. GENERAL PROVISIONS \...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\........\... *1* 

A.  *Parties to the Agreement*
    \...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\..........\.....
    *1*

B.  *Effective Date and Milestones
    \...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*...*\...\...\...1*

C.  *Authority
    \...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\..........\...\.....
    1*

II\. DESCRIPTION OF THE COMPUTER ASSISTED PASSENGER SCREENING

(CAPS) IMPLEMENTATION
EFFORT\...\...\...\...\...\...\...................................*2*

*A.
Background\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\..........\....2*

*B.
Objectives\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
2*

*C.
Scope\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
2*

*D. Coordination with Related
Programs\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
3*

III\. CONTRIBUTIONS OF THE PARTIES
\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
*3*

A.  *FAA
    Contributions\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    3*

B.  *Lead Carrier
    Contributions*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    *4*

*C. Limitation of Funds*
\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
*4*

*D. Reimbursement of Costs*
\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*5*

*E. Selection of
alternatives*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*5*

IV\. TECHNICAL
DIRECTION\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
5

A.  *Management
    Structure*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....*6*

B.  *FAA
    Role*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    *6*

V. REQUIRED SUBMISSIONS TO THE
FAA\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...6

A.  *CAPS Functional
    Specification*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    6

B.  *CAPS Operational Readiness
    Plan*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*6*

C.  *CAPS Quality Assurance
    Plan*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....*6*

D.  *CAPS Project
    Plan*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...7

E.  *CAPS Monthly Project
    Report*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....7

F.  *Alpha Test Plan and
    Report*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....7

G.  *Beta Test Plan and
    Report*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\........\...\...\...\...\...\...\...\...\....
    *8*

H.  *Verification of
    System/Software*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\......\....*8*

I.  *Budget
    Report*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*8*

*Appendix Attachment 6*

*Page 3*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

## ***TABLE OF CONTENTS (Cont'd)***

# VI. INTELLECTUAL PROPERTY RIGHTS \...\...\...\...\...\...\...\...\..... *9* 

A.  *Ownership Rights in Developed
    Technology*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*9*

B.  *U.S. Government Rights in Developed
    Technology*\...\...\...\...\...\...\...\...\...\...\...\...\.....*9*

C.  *Marking of Intellectual
    Property*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*10*

D.  *Survival*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*10*

E.  *Laws Governing Patents, Copyrights and Other Data
    Rights*\...\...\...\...\...\...\...\....*10*

F.  *Recoupment*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*10*

VII\. DISPUTE
RESOLUTION\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*10*

VIII\. TERM AND TERMINATION
\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*10*

A.  *Term*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*10*

B.  *Termination*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    *10*

C.  *Return of
    Funds*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*11*

D.  *Termination Settlement*
    \...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*11*

IX\. LIABILITY AND
INDEMNICATION\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
*11*

X. SPECIAL
PROVISIONS\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....*11*

A.  *FAA Agreements
    Officer\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....11*

B.  *Notices\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....11*

C.  *Audit*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*12*

D.  *Warranty*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*12*

E.  *Force
    Majeure*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*12*

F.  *Security*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    *13*

*P. Third Party
Participation*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
*15*

G.  *Changes In
    Ownership*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    *13*

H.  *Lobbying
    Certification*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    *13*

I.  *Severability*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    *13*

J.  *Construction of
    Agreement*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
    *14*

K.  *Entire
    Agreement*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    *14*

L.  *Amendments*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*14*

M.  *Relationship of
    Parties*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*14*

*N. Limitation of
Assignment*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....*14*

*O. Contracting By Lead
Carrier*\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....*14*

*Attachment 6*

*Page 4*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

## 

1\. **GENERAL PROVISIONS**

***A. Parties to the Agreement***

The parties to this Cooperative Agreement (hereinafter the
\"Agreement\') are as follows:

**1.** The Federal Aviation Administration (FAA), an agency of the
Department of Transportation, United States Government,

**2.** ABC Airlines, Inc., (hereinafter designated \"Lead Carrier\"), a
privately held for profit air carrier corporation subject to regulation
by the FAA.

***B. Effective Date and Milestones***

The effective date of this Agreement is the last date of signature on
the foregoing bilateral agreement letter. The following schedule applies
for implementation of CAPS:

**[Milestone Completion Date Responsibility]{.underline}**

Sign Cooperative Agreement 4/98 FAA, Lead Carrier

Convene Initial CAMCOM N/A Lead Carrier

Submit CAPS Development Plan 1/98 Lead Carrier

Submit Initial **Monthly** Progress Rpt\* Lead Carrier

Submit Initial Budget Rpt\* Lead Carrier

Approve CAPS Development Plan 4/98 FAA

Commence All CAPS Installations 3/98 Lead Carrier

Complete All CAPS Installations Lead Carrier

Conduct Alpha Testing 1/98 Lead Carrier

Conduct Beta Testing 3/98 Lead Carrier

Commence Full Operations 7-98 Lead Carrier

\* Monthly reports thereafter

**C.** ***Authority***

This Agreement is authorized by 49 U.S. C. 106(*l*)(6), which permits
the Administrator to

enter into cooperative agreements on such terms and conditions as the
Administrator may consider appropriate. In addition, this Agreement is
undertaken pursuant to a specific mandate by the White House Commission
on Aviation Safety and Security pertaining to implementation of
automated domestic passenger profiling. The goal of the Commission and
of this Agreement is to raise the level of airline security for the
traveling public.

**II. DESCRIPTION OF THE COMPUTER ASSISTED PASSENGER SCREENING (CAPS)
IMPLEMENTATION EFFORT**

***A. Background***

*Appendix Attachment 6*

*Page 5*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

During 1994 and 1995, ABC Airlines, in concert with the FAA\'s Aviation
Security Research and Development, Human Factors Program, conducted
research into Computer Assisted Passenger Screening

(CAPS). The purpose of the research was to evaluate the feasibility of
creating a process to aid security personnel in assessing the threats
posed (or not posed) by particular passengers traveling on civil
aircraft.

***B.** **Objectives ***

The objectives of this Agreement are to achieve:

> \(1\) Successful implementation of the basic CAPS program, as defined
> herein.
>
> \(2\) Development of computer software interfaces and data retrieval
> methods for adapting CAPS.

***C. Scope***

Lead Carrier will use the funds and in-kind contributions provided to it
by the FAA, its

own funds and in-kind contributions, and as appropriate, other resources
as Lead Carrier is able to advance in achieving the foregoing
objectives.

CAPS software must be Year 2000 compliant. This means that the software
must accurately process date/time data, including but not limited to,
calculating, comparing, and sequencing from, into, and between the
twentieth and twenty-first centuries, the years 1999 and 2000, and leap
year calculations. Furthermore, Year 2000 compliant technology, when
used in combination with other information technology, shall accurately
process date/time data if the other information technology properly
exchanges date/time data with it.

Configuration Management of CAPS requirements and changes shall comply
with FAA Security Division (ACS) directives and ACSSP
amendments/changes.

***D. Coordination with Related Programs***

The parties agree that this effort will be undertaken in coordination
with other programs underway to raise the level of airline security for
the traveling public, provided that no FAA funds obligated under this
Agreement are used to finance or assume any obligation for other
programs or initiatives, except by mutual written agreement.

**III**. **CONTRIBUTIONS OF THE PARTIES**

The contributions of the parties to this Agreement are as follows:

***A. FAA Contributions***

***1. Cash Contributions***

The FAA will provide **cash contribution** to the Lead Carrier as shown
below.

*Appendix Attachment 6*

*Page 6*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

\$xxxxxx

***2. In-kind Contributions***

The FAA will provide the following **in-kind contributions** as
Government Furnished Information (GFI) subject to a schedule to be
jointly determined by the parties:

> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
>
> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

***3. Other Contributions***

In addition to cash and in-kind contributions, the FAA will use best
efforts to provide appropriate assistance, such as technical advice, to
Lead Carrier from and through FAA operational organizations.

***B. Lead Carrier Contributions***

Lead Carrier will contribute any necessary cash and in-kind resources
required in excess of the FAA\'s contribution to achieve the objectives
of this Agreement.

***C.* *Limitation of Funds***

Notwithstanding any other provision herein, and unless expressly agreed
in writing, the FAA\'s total cash contribution shall in no event exceed
\$xxxxxx. Except as expressly stated in this Agreement, the FAA assumes
no liability or obligation in connection with the implementation of CAPS
functionality for any air carrier.

***D. Reimbursement of Costs***

The parties agree that the FAA level of funding may not be, nor is it
intended to be, sufficient to cover the costs of implementing CAPS as
described in this Agreement. In the event that Lead Carrier\'s cash
requirements are less than the FAA level of funding provided, Lead
Carrier agrees to return any remaining funds to the FAA at the
conclusion of this Agreement. Subject to the Limitation of Funds above,
funds will be provided to Lead Carrier according to the following
schedule:

*Appendix Attachment 6*

*Page 7*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

• Fifty-percent (50%) of total amount \$xxxxxx.

• Fifty-percent (50%) of total amount \$xxxxxx.

These funds will serve to reimburse to a partial extent all reasonable,
allowable, and allocable costs, *excluding profit or fee* in connection
with such costs. In addition, while FAA funds may be used for the
direct, general, and administrative expenses of accomplishing the
objectives of this Agreement, in no case shall these funds be used for
payment of legal or other costs for Lead Carrier relating to the
formation of this Agreement. Lead Carrier will be accountable to FAA for
the management of these funds and for any income earned on such funds
while held in account by Lead Carrier, consistent with AMS T.3.8.1.

Financial reporting for funding will be in accordance with Article V,
Required Submissions to the FAA.

***E. Selection of Alternatives***

The FAA and Lead Carrier agree on the alternative CAPS development
method as proposed by the Lead Carrier and evaluated by the FAA.

**IV.** **TECHNICAL DIRECTION**

The parties agree on the following organization and roles for management
of this Agreement.

***A. Management Structure***

The CAPS implementation effort will be managed by a Cooperative
Agreement Management Committee (\"CAMCOM") consisting of one advisory
FAA representative, the Cooperative Agreement Technical Representative
(CATR), AAR-600 from the Security Equipment Product Team, Lead Carrier
representation as the lead air carrier, and ABC Airlines representation
(advisory only). The CAMCOM will be chaired by Lead Carrier, which
agrees that the FAA and its contractors may attend and participate in
all CAMCOM sessions in an advisory capacity.

Lead Carrier will appoint a CAPS Implementation Project Manager who will
report to the CAMCOM on all operational matters and who will carry out
the technical and administrative requirements of this Agreement. The
Project Manager will be responsible for providing the information and
documentation discussed in Article V, \"Required Submissions to the
FAA*.*

***B. FAA Role***

The work performed under this Agreement is not subject to the technical
direction of the FAA. The FAA CATR will perform oversight to ensure that
Government funding is expended in a prudent, efficient, and effective
manner. The FAA CATR is not authorized to alter the terms and conditions
of this Agreement.

*Appendix Attachment 6*

*Page 8*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

**V.** **REQUIRED SUBMISSIONS TO THE FAA**

***A. CAPS Functional Specification***

Lead Carrier shall provide a copy of the CAPS Functional Specification,
for Lead

Carrier\'s own implementation of CAPS. The Functional Specification
shall demonstrate the traceability or mapping of the FAA CAPS Policy
Requirements Document and all amendments to the CAPS Functional
Specification of Lead Carrier. The traceability or mapping shall
describe how each specific CAPS policy requirement is satisfied by the
corresponding element of the Functional Specification.

***B. CAPS Operational Readiness Plan***

Lead Carrier shall provide a copy of the CAPS Operational Readiness Plan
to the FAA. The CAPS Operational Readiness Plan shall describe the
approach for determining the completeness and readiness of Lead Carrier
to bring CAPS into full operational use. The Plan shall include, but not
be limited to, the following elements: (1) training completions; (2)
operational procedures; (3) systems management; (4) system security; (5)
maintenance; and (6) performance monitoring of CAPS as required by FAA
CAPS Policy Requirements Document and all subsequent addendums.

***C.** **CAPS Quality Assurance Plan ***

Lead Carrier shall provide a copy of the CAPS Quality Assurance Plan to
the FAA. The Quality Assurance Plan shall describe all activities being
performed by Lead Carrier to assure the quality of all CAPS processes
and products, including all CAPS life cycle artifacts and operational
procedures.

***D.** **CAPS Project Plan ***

Lead Carrier shall provide a copy of the CAPS Project Plan to the FAA.
The Project Plan shall describe all milestones, along with the work
breakdown structure to accomplish the milestones.

***E. CAPS Monthly Project Report***

Lead Carrier shall submit a CAPS Monthly Project Report to the FAA. The
Progress Report shall include at the minimum the following information
elements:

• Accomplishments for the past month against the project plan,

• Known technical risks in terms of a description of each risk,
abatement strategies for each risk, and an indication of whether the
risk is increasing or decreasing over the period,

• Any updates to the CAPS Project Plans,

• Progress expected to be made in the upcoming month against the current
Project Plan.

*Appendix Attachment 6*

*Page 9*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

***F. Alpha Test Plan and Report***

The first test is intended to be a non-operational (not live) test.
Prior to the test, Lead Carrier shall provide a copy of the CAPS Alpha
Test Plan to the FAA. The Test Plan shall describe the traceability of
test cases to each CAPS Functional Specification element for Lead
Carrier. The CAPS alpha test shall be performed in accordance with a FAA
approved test plan in an environment that will not affect the real- time
operational aspects of the on-line computer reservation system. The test
performed shall exercise all

aspects of the CAPS requirements so that known inputs are evaluated
against the CAPS criteria and weights to produce results that can be
compared against expected CAPS output.

Lead Carrier shall provide formal written results to the FAA of alpha
tests conducted at each CAPS implementation site. The alpha test report
shall include the plan against which the test was conducted, test
results, and documented acceptance by the affected air carrier. The FAA
reserves the right to witness alpha testing as required, and to mandate
additional testing as needed.

# 

# *G. Beta Test Plan and Report* 

The second test is intended to be an operational (live) test. Prior to
the test, Lead Carrier shall provide a copy of the CAPS Beta Test Plan
to the FAA. The Test Plan shall describe the traceability of test cases
to each CAPS Functional Specification element for Lead Carrier. The CAPS
beta test shall be performed in accordance with an FAA approved test
plan in an environment that affects the real-time operational aspects of
the on-line computer reservation system. The tests performed shall
exercise all aspects of the CAPS requirements so that known inputs are
evaluated against the CAPS criteria and weights to produce results that
can be compared against expected CAPS output.

Lead Carrier shall provide formal written results to the FAA of beta
tests conducted at each CAPS implementation site. The beta test report
shall include the plan against which the test was conducted, test
results, and documented acceptance by the affected air carrier. The FAA
reserves the right to witness beta testing as required, and to mandate
additional testing as needed.

## 

## ***H. Verification of System/Software*** 

Lead Carrier shall develop and use software test programs and test data
to verify the correct design and construction of the CAPS software, and
to correct performance of CAPS in an operational environment. In lieu of
developing completely new test software and test data, Lead Carrier may
utilize verification products included within the ABC Airlines developed
version of CAPS. The FAA reserves the right to inspect CAPS software and
systems components, and to witness actual tests performed by Lead
Carrier using the test software and data. The FAA also reserves the
right to utilize its own test data to verify the correct performance of
CAPS.

***I. Budget Report***

The CAMCOM will provide the FAA CATR with monthly budget updates, to be
prepared in a format jointly agreed to by the parties. The budget and
updates are management documents prepared for the

*Appendix Attachment 6*

*Page 10*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

purpose of estimating project costs in the aggregate, and the fact that
a cost or category of cost is not specifically identified in the budget
shall not make such cost or cost category unallowable pursuant to
Article III.D, Reimbursement of Costs.

**Summary of Deliverables and Schedule:**

CAPS Functional Specification 30 days after execution of Cooperative
Agreement

CAPS Operational Readiness Plan 60 days after execution of Cooperative
Agreement

CAPS Quality Assurance Plan 60 days after execution of Cooperative
Agreement

CAPS Project Plan 30 days after execution of Cooperative Agreement

CAPS Monthly Project Report 5 days after end of month

Alpha Test Plan and Report 30 days prior to test. Report: IO days after
completion of test.

Beta Test Plan and Report 30 days prior to test. Report: 10 days after
completion of test.

Verification of System/Software As requested

Budget Report 5 days after end of month

**\*** \"Days\" as shown are calendar days.

**VI.** **INTELLECTUAL PROPERTY RIGHTS**

The parties agree to the following stipulations regarding technology
(software or otherwise) which may be developed as a consequence of this
Agreement. Lead Carrier will ensure that all current and future carriers
using the same CRS will have full access to CAPS functionality.

***A. Ownership Rights in Developed Technology***

All intellectual property created or developed in the performance of
this Agreement, whether in the form of patentable subject matter,
copyright, trade secret information, *\"know-how\',* or other
intellectual property shall, as between the FAA and Lead Carrier, become
and remain the property of Lead Carrier, either directly or by
assignment from the FAA, subject only to the FAA\'s rights under
subparagraph B. of this Article.

***B. U.S. Government Rights in Developed Technology***

The FAA shall retain, reserve, and be granted by Lead Carrier as
applicable a non- exclusive, non-transferable, irrevocable, paid-up
license to use for U.S. Government purposes only, and to permit other
U.S. Government agencies to use for U.S. Government purposes only, any
or all of the developed technology resulting from this Agreement
throughout the world. Neither the FAA nor any other U. S. Government
agency shall permit any person or entity other than Lead Carrier to use
the developed technology in whole or in part for commercial purposes
without the express prior written consent of Lead Carrier. U.S.
Government agencies may permit U.S. Government contractors to use Lead
Carrier developed technology only under procurement contracts, grants,
cooperative agreements, and interagency

*Appendix Attachment 6*

*Page 11*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

and intra-agency agreements awarded for U.S. Government purposes, with
the written provision prohibiting the disclosure of developed technology
and prohibiting its use for any commercial or non-U. S. Government
purpose.

**C. *Marking of Intellectual Property ***

Lead Carrier shall make reasonable efforts to ensure that any developed
technology resulting from this Agreement is appropriately marked with
legends indicating patent, copyright, or other form of ownership as may
be required by law. To the extent provided by law, the U.S. Government
and its employees shall be excused from liability for innocent
infringement of Lead Carrier\'s rights in any developed technology
produced under this Agreement without statutorily required markings.

***D. Survival***

The provisions of this Article VI, Intellectual Property Rights, shall
survive termination or expiration of this Agreement.

***E. Laws Governing Patents, Copyrights and Other Data Rights***

All U.S. laws governing patents, copyrights, or other data rights shall
remain in full force and effect, and the parties agree to abide by these
laws.

***F. Recoupment***

The FAA shall have the right to recoup its cash contributions under this
Agreement out of any net revenues derived from Lead Carrier\'s licensing
of developed technology resulting from performance pursuant to the
Agreement. The percentage share is fixed at fifty percent (50%). The
parties also agree on an expiration date for the FAA\'s recoupment right
of ten (10) years from the expiration or termination date of this
Agreement.

**VII. DISPUTE RESOLUTION**

Where possible, disputes will be resolved by informal discussion between
the parties. In the event the parties are unable to resolve any
disagreement through good faith negotiations, either party may terminate
this Agreement.

**VIII. TERM AND TERMINATION**

The performance period of this Agreement is governed by the following
stipulations.

***A. Term***

This Agreement will remain in full force and effect from its effective
date (last date of signature) through [September 30, 1998]{.underline}.

*Appendix Attachment 6*

*Page 12*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

***B. Termination***

In addition to any other termination rights provided by this Agreement,
either party may terminate this Agreement at any time prior to its
expiration date, with or without cause, and without incurring any
liability or obligation to the terminated party (other than payment of
amounts due and owing and performance of obligations accrued, in each
case on or prior to the termination date) by giving the other party at
least thirty (30) days prior written notice of termination. Upon receipt
of a notice of termination, the receiving party shall take immediate
steps to stop the accrual of any additional obligations which might
require payment.

***C. Return of Funds***

In the event of termination or expiration of this Agreement, any FAA
funds which have been advanced to Lead Carrier by the FAA and which (1)
have not been spent or obligated by Lead Carrier for allowable expenses
prior to the date of termination, and (2) are not reasonably necessary
to cover termination expenses shall be returned to the FAA. Any FAA
funds which have been advanced and expended for allowable costs shall
not be returned to the FAA, and Lead Carrier shall have no liability or
obligation with respect to these funds, unless provided elsewhere in
this Agreement.

***D. Termination Settlement***

In the event of termination, no further funds will be advanced to Lead
Carrier, except as reasonably necessary to effect the termination or to
satisfy obligations incurred prior to the termination, consistent with
the provisions of Article III.C., Federal Funding.

**IX.** **LIABILITY AND INDEMNIFICATION**

Except as specifically provided in this Agreement, the FAA, for itself
and its contractors, assumes no liability under this Agreement for loss
arising out of the conduct or activities undertaken by Lead Carrier,
affiliates, associates, or its contractors, or any third party in
connection with this Agreement. The FAA

will not indemnify Lead Carrier, affiliates, associates, its
contractors, or any third party against any third party claims or third
party liability, but will assume liability for U.S. Government use of
Lead Carrier\'s developed technology under the Government-purpose
license granted under Article VI, Intellectual Property Rights.

Lead Carrier shall obtain appropriate insurance and take other
appropriate steps to protect itself or others for any loss it may incur
in connection with performance under this Agreement. The substance of
Article IX shall be included in all contracts and other agreements with
third parties at any tier. The provisions of Article IX shall survive
termination or expiration of this Agreement.

**X**. **SPECIAL PROVISIONS**

*Appendix Attachment 6*

*Page 13*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

### *A. FAA Agreements Officer* 

The FAA Agreements Officer has the authority to administer and modify
this Agreement on behalf of the FAA.

***B. Notices***

Any notice required or permitted to be given under this Agreement will
be in writing and shall be either personally delivered, given by
facsimile transmission, or sent by certified mail, return receipt
requested, postage prepaid, or sent by Federal Express, as follows:

**If to Lead Carrier If to the** FAA:

Project Manager Agreements Officer, ASU-300

Lead Carrier, ABC Airlines Federal Aviation Administration

Carrier Address 800 Independence Avenue, S.W

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Washington,
D.C. 20591

Notices given hereunder will be deemed given on the date personally
delivered,

transmitted by facsimile, or if mailed, upon the date of signing of the
Certified Mail - Return Receipt, or five days after mailing, whichever
is less.

***C. Audit***

The General Accounting Office, the Department of Transportation, and the
FAA or its designee will have the right to review and audit the books
and records of Lead Carrier and cognizant contractors (see pass-down
requirement below) to the extent necessary to verify the allowability of
costs under this Agreement and as otherwise required by law.

Lead Carrier shall maintain for the term of this Agreement and three (3)
complete calendar years thereafter, such books and records as are
reasonably necessary to accurately reflect its operations under this
Agreement. The periods of access and examination shall continue,
however, for the time necessary to dispose of appeals, litigation,
claims, disputes, or exceptions arising from performance or
costs/expenses incurred under this Agreement.

Lead Carrier shall include in contracts and agreements with other
parties for the purpose of CAPS implementation, a provision granting the
U.S. Government access to contractor or agreement party records for the
same purposes in this subparagraph concerning audits. The provisions of
this subparagraph shall survive termination or expiration of this
Agreement.

***D. Warranty***

*Appendix Attachment 6*

*Page 14*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

The FAA and Lead Carrier, individually and as parties to this Agreement,
make no express or implied warranty as to any matter whatsoever
concerning the Agreement, including accomplishment of objectives or
success of the outcome.

These warranty provisions shall survive termination or expiration of
this Agreement.

***E. Force Majeure***

Neither party will be liable to the other for any unforeseeable event
not caused by the fault or negligence of such party, which causes such
party to be unable to perform its obligations under this Agreement, and
which it has not been able to overcome by the exercise of due diligence,
including but not limited to natural disasters or human strife and
disputes. The party unable to perform shall use its best efforts to
resume performance, suspending it only for that period reasonably
necessary to overcome the effects of the force majeure event. If
performance is suspended for more than seven (7) days, the party unable
to perform shall provide weekly progress reports with a forecast of
recovery, for the period of suspension.

***F. Security***

The FAA CAPS requirements documents, including CAPS Factors and Weights,
and all addendums containing policy guidance and clarification material,
contain sensitive information and are subject to the provisions of 14
CFR 191. Lead Carrier agrees to take measures to ensure that this
information is appropriately protected within its own organization.
Public disclosure or publication of matters relating to this Agreement,
including outcomes or results, must first receive the prior approval of
the FAA Agreements Officer.

Lead Carrier shall include in contracts and agreements at any tier, the
substance of this subparagraph concerning security. These security
provisions shall survive termination or expiration of this Agreement.

***G. Changes In Ownership***

Lead Carrier will notify the FAA within forty-five (45) calendar days of
any change in the ownership structure of Lead Carrier.

***H. Lobbying Certification***

Lead Carrier shall comply with the provisions of 31 USC 1352 prohibiting
the recipient of a Federal cooperative agreement from using appropriated
funds to pay any person to influence or attempt to influence an officer
or employee of any agency, a Member of Congress, an officer or employee
of Congress, or an employee of a Member of Congress in connection with
any transaction enumerated in the foregoing Code. Lead Carrier must
include a provision mandating compliance with 3 1 USC 13 52 in all
contracts or agreements which it enters under Article X.0, Contracting
by Lead Carrier

*Appendix Attachment 6*

*Page 15*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

Lead Carrier hereby declares that it has neither made nor agreed to make
any payment

with respect to this Agreement, using funds other than appropriated
funds, which would be prohibited by 31 USC 1352 if the payment were made
using appropriated funds.

***1. Severability***

In the event that any Article and/or parts of this Agreement are
determined to be void, such Article or portions thereof shall lapse. No
such lapse will affect the rights, responsibilities, and obligations of
the parties under this Agreement, except as provided herein. If either
party determines that such lapse has or may have a material effect on
the performance of the Agreement, such party shall promptly notify the
other party, and they shall negotiate in good faith a mutually
acceptable amendment to the Agreement if appropriate to address the
effect of the lapse.

**J. *Construction of Agreement ***

This Agreement shall be construed as an assistance agreement consistent
with applicable Federal law.

***K. Entire Agreement***

This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral
or written, of the parties.

***L. Amendments***

This Agreement shall not be amended, altered, or modified except by an
instrument in writing duly executed by Lead Carrier and the FAA
Agreements Officer.

***M*. *Relationship Of Parties***

The legal relationship between the FAA and Lead Carrier shall be none
other than that expressly specified in this Agreement, and nothing in
this Agreement shall be construed to create any relationship of
partnership, joint venture, agency, or fiduciary duty between the
parties, or to impose any liability or obligation on either party except
those liabilities and obligations expressly stated herein. Nothing in
this Agreement shall be construed to confer any legal or equitable
rights, express or implied, on any person or entity other than the
parties hereto.

***N. Limitation of Assignment***

Neither party may assign its rights or obligations under this Agreement
to any other entity or person without the other party\'s prior express
written consent. Nothing in this provision, however, shall be construed
to limit Lead Carrier\'s right to assign, license, or otherwise transfer
rights to its developed technology to any entity or person subject to
the U.S. Government\'s rights under Article VI, Intellectual Property
Rights.

***0. Contracting By Lead Carrier***

*Appendix Attachment 6*

*Page 16*

**COOPERATIVE AGREEMENT**

**DTFAOI-98-C-00000**

Lead Carrier may enter into contracts in its own name for the purpose of
carrying out the objectives of this Agreement. The terms and conditions
awarded at all tiers will include such terms and conditions from this
Agreement as appropriate or otherwise designated.

***P. Third Party Participation***

Lead Carrier is authorized but not obligated to enlist the
participation, support, or investment of third parties in the CAPS
implementation project, subject to appropriate limitations regarding
conflicts of interest.

*Appendix Attachment 7*

*Page 1*

**APPENDIX ATTACHMENT 7**

**INTELLECTUAL PROPERTY**

**SECTION 106 COOPERATIVE AGREEMENTS**

# 1.0 Patents and Inventions

1.1 Policy

a\. The disposition of rights to inventions made by small business firms
and non-profit organizations, including universities and other
institutions of higher education, under FAA-assisted programs is
governed by Chapter 18 of Title 35 of the United States Code, commonly
called the Bayh-Dole Act, 35 U.S.C. §200, *et seq*. In accordance with
the Presidential Memorandum entitled *Government Patent Policy* issued
on February 18, 1983 and Executive Order 12591, FAA may apply the
policies of that Act to all participants in cooperative agreements. The
Department of Commerce (DOC) is the lead agency for implementing the
Bayh-Dole Act and has published guidance to Federal agencies at Part 401
of Title 37 of the Code of Federal Regulations, 37 CFR §401.

b\. FAA's standard Patent Rights clause is identical to that prescribed
in 37 CFR §401.14(a) except that:

1\. FAA has tailored the clause to apply to funding agreements (which
term includes both grants and cooperative agreements), and to identify
FAA as the interested Government agency;

2\. pursuant to DOC guidance appearing in Part 401 of Title 37 of the
Code of Federal Regulations, 37 CFR §401.5(d), FAA has added to
paragraph b. of the clause a stipulation that FAA reserves the right to
direct a recipient to transfer to a foreign government or research
performer such rights to any subject invention as are required to comply
with any international treaty or agreement identified when the grant is
made as being applicable to the assisted research;

3\. as permitted by 37 CFR §401.5(f), FAA has added two subparagraphs to
the end of paragraph f. 7of the clause to require recipients, or their
representatives to send to FAA confirmations of the Government licenses
for and copies of any U.S. patents on subject inventions; and

4\. the word "recipient" is substituted for "contractor", and
"cooperative agreement" is substituted for "contract."

c\. FAA patent policy with respect to procurement contracts is found in
the Acquisition Management System, AMS. For patent policy relating to
research grants, see Chapter 8, section 5 (as amended) of FAA Order
9550.7A, Research Grants Program.

1.1.2 Standard Patent Rights Clause

Where appropriate, the Standard Patent Rights Clause found at 37 CFR
§401.14, appropriately modified as explained below, should be used in
every cooperative agreement awarded by the FAA unless a special patent
clause has been negotiated that would better serve the interests of the
FAA and the Government as a whole. The concurrence of legal counsel is
required for the use of any special patent clauses that deviate from
that set out at 37 CFR §401.14.

a\. In cooperative agreements covered by a treaty or agreement that
provide that an international organization or foreign government,
research institute or inventor will own or share patent rights, FAA will
acquire such patent rights as are necessary to comply with the
applicable treaty or agreement.

*Appendix Attachment 7*

*Page 2*

b\. If a recipient elects not to retain rights to an invention, FAA will
allow the inventor to retain the principal patent rights unless the
recipient, or the inventor's employer if other than the recipient, shows
that it would be harmed by that action.

c\. FAA will normally allow any patent rights not wanted by the
recipient, or inventor to be dedicated to the public through publication
in scientific journals or as a statutory invention registration.
However, if another Federal agency is known to be interested in the
relevant technology, FAA may give it an opportunity to review and patent
the invention so long as that does not inhibit the dissemination of the
research results to the scientific community.

1.2 Copyright

1.2.1 Rights to Copyrightable Material

The FAA shall apply the following principles governing the treatment of
copyrightable material produced under FAA cooperative agreements.

a\. FAA normally will acquire only such rights to copyrightable material
as are needed to achieve its purposes or to comply with the requirements
of any applicable government-wide policy or international agreement.

b\. To preserve incentives for private dissemination and development,
FAA normally will not restrict or take any part of income earned from
copyrightable material except as necessary to comply with the
requirements of any applicable government-wide policy or international
agreement.

c\. In exceptional circumstances, FAA may restrict or eliminate a
recipient's control of FAA-supported copyrightable material (including
computer software and associated documentation) and of income earned
from it, if FAA determines that this would best serve the purposes of a
particular program.

1.2.2 Standard Copyrightable Material Clause

The following copyrightable material clause should be used in every
cooperative agreement awarded or entered into by FAA that relates to
scientific or engineering research unless a special copyrightable
material clause has been negotiated. The concurrence of legal counsel is
required for the use of any special copyrightable material clauses that
deviate from that set out below.

CLAUSE-COPYRIGHTABLE MATERIAL

a\. "Subject writing" means any material that:

1\. is or may be copyrightable under Title 17 of the United States Code;
and

2\. is produced by the recipient, or its employees in the performance of
work under this grant, cooperative agreement or other transaction.

Subject writings include, but are not limited to, such items as reports,
books, journal articles, sound recordings, videotapes, video discs,
computer software and related documentation.

*Appendix Attachment 7*

*Page 3*

b\. Copyright Ownership, Government License. Except as otherwise
specified in the grant, cooperative agreement, or other transaction, or
by this paragraph, the recipient may own or permit others to own
copyright in all subject writings. The recipient agrees that if it or
anyone else does own the copyright in

a subject writing, the Federal government will have a non-exclusive,
nontransferable, irrevocable, paid-up license to exercise or have
exercised for or on behalf of the U.S. throughout the world all the
exclusive rights provided by copyright. Such license, however, will not
include the right to sell copies or phonorecords of the copyrighted
works to the public.

c\. Effect of International Agreements. If the cooperative agreement, or
other transaction indicates it is subject to an identified international
agreement or treaty, FAA can direct the recipient to convey to any
foreign participant or otherwise dispose of such rights to subject
writings as are required to comply with that agreement or treaty.

d\. Recipient Action to Protect Government Interests. The recipient
agrees to acquire, through written agreement or an employee
relationship, the ability to comply with the requirements of the
preceding paragraphs and, in particular, to acquire the ability to
convey rights in a subject writing to a foreign participant if directed
by FAA under the previous paragraph. The recipient further agrees that
any transfer of copyright or any other rights to a subject writing, by
it or anyone whom it has allowed to own such rights, will be made
subject to the requirements of this article.

(*End of clause)*

**1.3 Special Patent and Copyright Situations**

**1.3.1 Special Grant Provisions**

At the request of the prospective recipient, or on recommendation from
FAA staff, the FAA Official authorized to award or administer the
cooperative agreement, with the concurrence of the cognizant Program
Manager and legal counsel, may negotiate special patent or copyright
provisions when that Official determines that exceptional circumstances
require restriction or elimination of the right of a prospective
recipient to control principal rights to subject inventions or writings
in order to better achieve the objectives of the program, the mission of
the FAA, or (in the case of inventions) Chapter 18 of Title 35 of the
United States Code. Every special copyright or patent provision will
allow the recipient, after an invention has been made or copyrightable
material created, to request that it be allowed to retain principal
rights to that invention or material, unless doing so would be
inconsistent with an obligation imposed on FAA by statute, international
agreement or pact with other participants in or supporters of the
research.

**2.1 Cooperative Agreements Not Primarily for Experimental,
Developmental, or Research Work**

cooperative agreements not primarily intended to support experimental,
developmental, or research work should include appropriate patent or
copyrightable material provisions when necessary to protect the
interests of the FAA and the Government as a whole.

[^1]: Example of sources: OIG Recommendation, White Paper, Legislation,
    Executive Order, etc.

[^2]: A copy of the suggested language that should be added to, or
    replace, language in the AMS. If revising, also provide a comparison
    copy of existing language to revised language (i.e. "red-line"
    version)

[^3]: Internal and external to the FAA, as applicable.

[^4]: Not necessarily in dollars.

[^5]: Example of ASAG actions: information only, review and comment,
    disseminate among organization for comment.

[^6]: **These authorities are in addition to 49 U.S.C. 106.
    Authorization for specific program activities may also be contained
    in current or former appropriation statutes not reflected above,
    e.g., the Administrative Services Franchise Fund authorized by the
    Department of Transportation and Related Agencies Appropriations
    Act, Public Law 104-205, authorizes franchising for certain
    administrative services consistent with the statutory guidelines.**