# Presentation: 692995

## Office of AcquisitionManagement and Policy at the National Institutes of HealthAchieving Acquisition ExcellenceR&D Service ContractingDavid DempseyNovember 9, 2004 Rocky Gap, Maryland

## BASIC REGULATORY SCHEME

- FAR PART 35 – 	RESEARCH AND DEVELOPMENT 			CONTRACTING
- 			HHSAR – 48 C.F.R. 335
- FAR PART 37 – 	SERVICE CONTRACTING
- FAR PART 22 --  	APPLICATION OF LABOR LAWS 			TO GOVERNMENT ACQUISITION
-            29 C.F.R. PART 4 – Service Contract Act
- 	29 C.F.R. Part 541 – FLSA ExemptionsFAR PART 27 – PATENTS, DATA AND COPYRIGHTS

## Research & Development Contracting

- FAR PART 7 – ACQUISITION PLANNING
- WRITTEN ACQUISITION PLAN
- LIFE CYCLE COST ANALYSIS
- FUNDING ISSUE
- TASK ORDERS OR CONTRACT
- FUNDING ISSUE
- SMALL BUSINESS & BUNDLING
- DELIVERABLE (DATA, SOFTWARE, HARDWARE,   VACCINES, SERVICES)
- MILESTONES AND SCHEDULE
- PEFORMANCE BASED SERVICE CONTRACTING (FAR 52.232-32)

## Research & Development Contracting

- FAR PART 10 – MARKET RESEARCH
- WHO DOES WHAT (MULTIPLE REQUIREMENTS versus “RESEARCH INTEGRATOR”)
- HOW (IN HOUSE OR OURSOURCE)
- WHY (PROFIT OR NONPROFIT)
- COMMERCIAL R&D EFFORT OR PECULIARTO NIH

## Research & Development Contracting

- WHAT IS NIH BUYING
- APPLIED RESEARCH
- DEVELOPMENT
-  WORK STATEMENT
- REFLECTS ACQUISITION PLAN _AND_ MARKET RESEARCH
- NIH OBJECTIVES CLEARLY STATED(DR
- DRAFT RFP
- REPORTS OR COMPLETION OF TASKS
- DELIVERABLES
- SCHEDULE

## Research & Development Contracting

- CONTRACT  TYPE
- FFP, COST PLUS, LEVEL OF EFFORT
- COST SHARING
- AMOUNT
- METHOD
- REFLECTS ACQUISITION PLAN AND MARKET RESEARCH

## Research & Development Contracting Services

- PURCHASING A SERVICE
- SERVICE CONTRACT ACT APPLIES
- PROFESSIONAL EXEMPTION APPLIES(29 C.F.R. § 541.300)
- ADMINISTRATIVE EXEMPTION APPLIES(29 C.F.R. § 541.200)
- EXECUTIVE EXEMPTION APPLIES(29 C.F.R. § 541.100)

## Research & Development Contracting Services

**WAGE DETERMINATION** APPLIES TO NON-EXEMPT PERSONNEL “DIRECTLY ENGAGED” IN PERFORMANCE	(29 C.F.R. § 4.153)
- SCA APPLIES AS A MATTER OF LAW (INCLUDES SUBCONTRACTORS) – SO INSERT APPLICABLE WAGE DETERMINATION
- 		DOL ENFORCES THE SERVICE CONTRACT ACT

## Research & Development Contracting Services

- PURCHASING HOURS
- EVALUATE UNCOMPENSATED OVERTIME FOR EXEMPT CONTRACTOR PERSONNEL
- (FAR 37.115-2)
- PURCHASING A TASK
- SALARY CAP LIMITATIONS (PUB. L. 117-116)

## Research & Development ContractingData Rights

- Unlimited rights (data/software)
- Limited rights (data)
- Restricted rights (software)
- Special works (data/software)
- Existing works (data/software)
- “works” from copyright law

## Research & Development ContractingData Rights Licenses

** **

_**UNLIMITED RIGHTS LICENSE**_
- Permits NIH use of technical data and computer software without any limits, including offering the data or computer software to other companies to compete with the contractor in the commercial _and_ government marketplaces.
- The unlimited rights license typically applies to data/computer software *developed exclusively with government funding* or to data/computer software not falling within any other license category.

## Research & Development ContractingData Rights Licenses

_**LIMITED RIGHTS LICENSES**_
- Permits NIH to use technical data within the government except for manufacture.  NIH may not disclose the data outside the government without the contractor’s permission nor disclose data covered by a limited rights license to third parties without contractor permission except under limited circumstances).
- The parties may want to negotiate or specify the disclosure circumstances to narrow the license  for third-party disclosure.

## Research & Development ContractingData Rights Licenses 

- The limited rights license is used for:
- Data pertaining to items, components or processes *developed exclusively at private expense*
- Or data *developed exclusively at private expense* and embodying trade secrets.
- _And_ properly marked

## Research & Development ContractingData Rights Licenses

_**RESTRICTED RIGHTS LICENSE**_
- A restricted rights license applies to *proprietary computer software* (including computer data bases and computer software documentation) developed *exclusively at private expense* and allows the government the license right to:

- (i)   Use or copy the software for use in or with the computer(s) for which it was acquired
- (ii)   Use or copy the software for use in a backup computer;
- (iii)  Reproduce the software for safekeeping (archives) or backup purposes;

## Research & Development ContractingData Rights Licenses

- (iv)  Modify, adapt, or combine the software with other computer software, *provided* that the modified, adapted, or combined portions of the derivative software are made subject to the same restricted rights;
- (v)  Disclose the limited rights software for use by support service contractors in accordance with the above restrictions, provided the government makes such disclosure or reproductionsubject to these restricted rights and;
- (vi) Use or copy the software for use in or transfer to a replacement computer.

## Research & Development Contracting Flowing Down Data/Computer Software Rights Provisions In Subcontracts

- The FAR does not specify that data rights clauses must be flowed down to its subcontractors, but requires contractors to obtain all *necessary* data and computer software rights to fulfill the prime contractor’s obligations to NIH.
- Contractors typically satisfy this FAR requirement by flowing down the data and computer software rights clauses in the prime contract, and obtaining sufficient sublicenses in all subcontractors’ data or software.
- NIH must insure the license rights requirements are imposed upon subcontractors when the proposal identifies relevant subcontractor participation

## Research & Development ContractingCommercial Item Procedures

- Under FAR 12.211, NIH acquires only such rights in commercial data which a contractor customarily provides to the public.
- FAR 12.212 provides that NIH ordinarily acquires commercial computer software or software documentation under licenses customarily provided to the public to the extent consistent with federal law and the government’s needs.
- FAR Part 12 requires NIH to presume that data delivered under a commercial items contract are developed exclusively at private expense – a limited rights license.

## Research & Development ContractingData Rights

**The Contract Terms**
- 	NIH must confirm that every contract includes the appropriate provisions addressing the parties’ respective rights in technical data.
- 	Under FAR 52.227-14, RIGHTS IN DATA – GENERAL,
- 		“Data” includes “computer software**”**** **

## Research & Development ContractingData Rights

**Know the Funding Source**
- 	ACQUISITION PLANNING
- 	MARKET RESEARCH
**	****The Data Rights Clause generally confers greater rights to NIH in technical data/computer software when NIH *****pays ***_***any***_*** part***** of the costs of development of the technical data/computer software or the development was required for contract performance.**

## Research & Development ContractingData Rights

**Mark or Lose**
- 	To obtain and enforce the protections provided in the regulations for its technical data/computer software, contractors must:

- Notify NIH at the earliest opportunity of the 	intent to restrict the government’s rights to the 	technical data/computer software;
- 		Prior to contracting NIH should confirm the 	data/computer software as limited or restricted 	or specially negotiated rights for the delivered 	data or software.

## Research & Development ContractingData Rights

**4.**  **Insure Contractor Records Validate Rights: **Be sure the contractor maintains records of the origin of, and the funding for, regarding the development of the data/computer software to be delivered or used in performing the contract.
**5.**  **Third-party Rights:** Unless NIH appropriately “sublicenses” the unlimited rights data / software, a third party has no  rights to use unlimited rights data or software delivered to the government.

## Research & Development ContractingData Rights

**Deferred Delivery or Ordering of Data**
**	**** **(FAR 52.227-16, Additional Data Requirements):
- 	Should the contract allow NIH to defer ordering or delivery of data or computer software?
- 	If so, does NIH want to limit the time or scope of its deferral rights?
- 	Cost sharings
-  Cost Savings to NIH
-  Commercialization Encouraged

## Research & Development ContractingData Rights Licenses 

- Withholding Technical Data Includes Software Under FAR 52.227-14
- The primary way for contractors to protect technical data (or software) is to withhold the data from NIH and deliver “form, fit, and function data” instead.
- If NIH requires delivery of data (or software) that would otherwise be withheld then insure that contractor delivers properly marked data under a limited rights license.

## Research & Development ContractingCopy Right Licenses

- If data is _first produced_ in the performance of the contract, the contractor provides NIH a _copyright license_(28 USC 1498(b))
- License grants to NIH and those acting on NIH”s behalf a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and display publicly
- FAR 52.227-17, Rights in Data – Special Works
- Contractor can claim copyright to scientific and technical journals based on or containing data first produced in the performance of the contract and published in academic or professional journals

## Research & Development ContractingCopyright Licenses

- If not first produced in the performance of the contract, contractor must obtain NIH’s permission to incorporate copyright data in the deliverable
- Right in Data – Existing works (FAR 52.227-18)
- “Except as otherwise provided in this contract...”
- Marked with “©” symbol upon delivery
- Contractor must be aware of US Government export control regimes prior to exporting any data first produced or specifically used in the performance of the contract
- EAR (Commerce)    ITAR (State)    OFAC (Treasury)

## Research & Development ContractingNIH PATENT RIGHTS

- FAR 52.227-12 (Long Form)
- “Subject invention” means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract
- NIH receives a “nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for on [NIH’s] behalf throughout the world”

## Research & Development ContractingNIH PATENT RIGHTS

- The contractor must disclose all subject inventions to which it elects to retain title
- Periodic reporting listing all subject inventions
- Contractor has established reporting procedures
- Including agreements with employees
- Contractor must utilize subject invention
- NIH has “march in” rights

## Research & Development ContractingNIH PATENT RIGHTS

- Authorization and Consent Clause implements
- 		_28 U.S.C. § 1498(a)_ – contractors and subcontractors at any tier can use any invention described in a United States patent for government use
- No infringement, just payment of royalties (by contractor)
- Contractor must notify NIH if claim of patent or copyright
- 	infringement made based on performance of the contract
- Royalties are allowable costs

## Research & Development ContractingINTELLECTUAL PROPERTY RIGHTS

- PAY CONSTANT ATTENTION TO THE INTELLECTUAL PROPERTY RIGHTS PLAN WHEN ENGAGED IN RESEARCH AND DEVELOPMENT CONTRACTING
- ACQUISITION PLANNING
- MARKET RESEARCH