[Federal Register Volume 60, Number 246 (Friday, December 22, 1995)]
[Rules and Regulations]
[Pages 66510-66516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31187]



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DEPARTMENT OF ENERGY

48 CFR Part 970

RIN 1991-AA63


Acquisition Regulation; Technology Transfer Activities of 
Department of Energy (DOE) Management and Operating Contractors

AGENCY: Department of Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy (DOE) amends the Department of Energy 
Acquisiton Regulation (DEAR) to codify DOE's implementation of its 
technology transfer mission for DOE laboratories (including weapon 
production facilities) operated by management and operating 
contractors.

EFFECTIVE DATE: January 22, 1996.

FOR FURTHER INFORMATION CONTACT: Howard K. Mitchell, Policy Analyst, 
Office of Policy (HR-51), Office of the Deputy Assistant Secretary for 
Procurement and Assistance Management, Washington, D.C., 20585, (202) 
586-8190.

SUPPLEMENTARY INFORMATION:
I. Background
II. Disposition of comments
III. Procedural Requirements
    A. Regulatory Review Under Executive Order 12866
    B. Review Under Executive Order 12612
    C. Review Under Executive Order 12778
    D. Review Under the Regulatory Flexibility Act
    E. Review Under the Paperwork Reduction Act
    F. Review Under the National Environmental Policy Act (NEPA)

I. Background

    The proposed rule was published on May 22, 1995, at 60 FR 27069 
(1995). It was intended to amend the Department of Energy Acquisition 
Regulation (DEAR) to codify DOE's implementation of its technology 
transfer mission for DOE laboratories and weapon production facilities 
operated by management and operating contractors. This mission was 
established by The National Competitiveness Technology Transfer Act of 
1989, as amended by Sections 3134 and 3160 of the National Defense 
Authorization Act for Fiscal Year 1994.

II. Disposition of Comments

    DOE received formal comments from only one entity. This commenter 
is a current Departmental non-profit Management and Operating 
Laboratory contractor. The commenter noted the need for inclusion in 
the proposed definition of bailment the term, Laboratory Tangible 
Research Product. This term would encompass tangible material results 
of research which (i) are provided to permit replication, reproduction, 
evaluation or confirmation of the research effort, or to evaluate its 
potential commercial utility, (ii) are not materials generally 
commercially available, and (iii) were made under the contract by 
Laboratory employees or through the use of Laboratory research 
facilities. The definition of bailment has been modified to incorporate 
this new term. The commenter also expressed concern that the current 
definition of allowable costs only encompassed costs ``through an 
ORTA'', with the implication that the activities and costs associated 
with autonomous Laboratory organizations such as finance, procurement, 
legal and other offices involved in technology transfer would be 
excluded. DOE agrees that such Laboratory organizations may be 
``appropriate organizational elements consistent with the requirements 
for an Office of Research and Technology Applications'' and that the 
costs associated with supporting technology transfer at these 
Laboratory organizations would be allowable subject to other provisions 
of the M&O contract. One of the organizational examples cited by the 
commenter, however, falls under the definition of a home or corporate 
office general and administrative (G&A) expense. DEAR 970.3102-1 
indicates that, in its fee allowance, DOE provides appropriate 
compensation for home office G&A expense. DOE policy also recognizes 
that the circumstances and the need for such home office involvement 
vary considerably from site to site. Therefore, home office G&A 
(including technology transfer related expenses) would normally be 
considered in the individual negotiation of the fee for the contract. 
When the fee amount is believed to be insufficient to cover the extent 
of such offsite involvement, however, DEAR 970.3102-1 also permits 
separate treatment of such a home office expense. Therefore, no change 
in the language of the rule is believed necessary.
    The commenter further suggested adding language under Conflicts of 
Interest to reflect that other persons working at the Laboratory 
participating in Laboratory research or technology 

[[Page 66511]]
transfer activities should also be considered when implementing 
procedures to avoid conflicts of interest. Such other persons would 
most likely be long term visitors, job-shop subcontractors, guest 
scientists, no-pay appointees, post doctoral fellows, industrial 
exchange participants, academic sabbaticals and other non-Laboratory 
personnel. DOE agrees and appropriate language to address this comment 
has been included under Conflicts of Interest--Technology Transfer. The 
commenter also recommended deleting the requirement under (d)(10) which 
requires contractors to notify DOE prior to evaluating a proposal by a 
third party or DOE when the subject matter of the proposal involves an 
elected or waived subject invention or one in which the Contractor 
intends to elect to retain title. The commenter believes that (d)(10) 
is burdensome for Contractors that manage and operate several private 
and DOE facilities because it requires Contractors to search for 
inventions unrelated to the contract. DOE has inserted language under 
(d)(10) to clarify that the notification requirement applies when the 
subject matter of the proposal involves an elected or waived subject 
invention under the contract or one in which the Contractor intends to 
elect to retain title under the contract.
    The commenter recommended adding language to indicate that the U.S. 
Industrial Competitiveness requirements apply to intellectual property 
where the Laboratory obtains rights during the period the Contractor is 
operating the Laboratory and would not apply to intellectual property 
owned by the parent organization/company. Language was added to reflect 
that the U.S. Industrial Competitiveness requirements solely apply in 
licensing and assignment decisions involving Laboratory intellectual 
property where the Laboratory obtains rights during the course of the 
Contractor's operation of the Laboratory under the contract. The U.S. 
Industrial Competitiveness requirements would not apply in licensing 
and assignment decisions involving the Contractor's other intellectual 
property.
    Three comments were made objecting to three separate provisions of 
the Indemnity-Product Liability paragraph which might, in the 
commenter's view, result in the contractor being subjected to undue 
financial/legal risks and administrative burden. Specifically, the 
commenter objected to language that limited the indemnification in 
licensing to only personal injury or property injury and which also 
excluded from the indemnity protection any liability based upon 
negligence of the Contractor. The Indemnity--Product Liability 
provisions as written are minimally acceptable to DOE and therefore, no 
change is being made to the language. However, the Department 
emphasizes that the Contractor is permitted to negotiate language that 
is deemed more beneficial to both the Contractor and the Department. 
With respect to the commenter's objection to the requirement to 
identify and obtain the approval of the Contracting Officer for any 
proposed exceptions to the Participant providing indemnification, the 
Department believes that overall, this requirement is beneficial to the 
Contractor. This requirement provides a mechanism by which the 
Contractor is able to obtain exceptions to the indemnification 
provision and, therefore, no change is believed necessary.
    In the Disposition of Income provisions, the commenter made three 
suggestions. Under subparagraph (h)(1), the first suggestion was to 
modify the language to reflect that the amount of royalties or other 
income earned or retained by the Contractor was to be that amount 
remaining after payment of patenting costs, licensing costs, payments 
to inventors and other expenses incidental to the administration of 
Subject Inventions. This language parallels that which appears in 35 
U.S.C. 202(c)(7)(E)(i) and has been adopted.
    The second comment submitted regarding the Disposition of Income 
provision was to add the text of 35 U.S.C. 202 (c)(7)(E)(ii) which 
would allow the licensing of Subject Inventions to be administered by 
Contractor employees on location at the facility. This suggestion was 
not adopted in that 35 U.S.C. 202 (c)(7)(E)(ii) is already contained in 
the patent clause of the M&O contract. The third comment objected to 
the proposed coverage on inventor award and royalty sharing being 
subject to the approval of the Contracting Officer. Changing the 
requirement to obtain Contracting Officer approval with respect to 
policies for inventor award and royalty sharing, as proposed in this 
comment, would result in a major change to a long standing Departmental 
policy and has not been adopted.
    Under the Transfer to Successor Contractor provision, the commentor 
requested that additional assurance be provided in requiring a 
successor contractor to accept transfer of title and accounts subject 
to the rights and obligations which the previous operator had to its 
inventors, its licensees and to its parent organization/company. No 
change is believed necessary because the intent of the suggestion is 
implicit in the current language.
    In the Technology Transfer Through Cooperative Research and 
Development Agreements, Withholding of Data provision, the commenter 
suggests that the likelihood of obtaining commercially reasonable 
patent protection be included as a standard in determining whether a 
patent application has to be filed. As provided in the M&O contract's 
patent clause, if the Contractor does not file a patent application on 
an invention disclosed to the Government as a subject invention, the 
Government may file. Disclosure of subject inventions and the 
Government's right to file is a statutory requirement.

III. Procedural Requirements

A. Regulatory Review Under Executive Order 12866

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

B. Review Under Executive Order 12612

    Executive Order 12612 (52 FR 41285, October 30, 1987) requires that 
regulations, rules, legislation, and any other policy actions be 
reviewed for any substantial direct effects on States, on the 
relationship between the national government and the States, or in the 
distribution of power and responsibilities among various levels of 
government. If there are sufficient substantial direct effects, then 
the Executive Order requires preparation of a federalism assessment to 
be used in all decisions involved in promulgating and implementing a 
policy action.
    Today's final rule will revise certain policy and procedural 
requirements. However, DOE has determined that none of the revisions 
will have a substantial direct effect on the institutional interests or 
traditional functions of the States.

C. Review Under Executive Order 12778

    Section 2 of Executive Order 12778 instructs each agency to adhere 
to certain requirements in promulgating new regulations and reviewing 
existing regulations. These requirements, set forth in sections 2(a) 
and (b)(2), include eliminating drafting errors and needless ambiguity, 
drafting the regulations to minimize litigation, providing clear and 

[[Page 66512]]
certain legal standards for affected conduct, and promoting 
simplification and burden reduction. Agencies are also instructed to 
make every reasonable effort to ensure that the regulation: specifies 
clearly any preemptive effect, effect on existing Federal law or 
regulation, and retroactive effect; describes any administrative 
proceedings to be available prior to judicial review and any provisions 
for the exhaustion of such administrative proceedings; and defines key 
terms. Therefore, DOE certifies that this final rule meets the 
requirements of sections 2(a) and (b) of Executive Order 12778.

D. Review Under the Regulatory Flexibility Act

    This final rule was reviewed under the Regulatory Flexibility Act 
of 1980, Pub. L. 96-354, which requires preparation of a regulatory 
flexibility analysis for any rule which is likely to have significant 
economic impact on a substantial number of small entities. This final 
rule will have no impact on interest rates, tax policies or 
liabilities, the cost of goods or services, or other direct economic 
factors. It will also not have any indirect economic consequences, such 
as changed construction rates. DOE certifies that this final rule will 
not have a significant economic impact on a substantial number of small 
entities and, therefore, no regulatory flexibility analysis has been 
prepared.

E. Review Under the Paperwork Reduction Act

    No new information collection or recordkeeping requirements are 
imposed by this final rulemaking. Accordingly, no OMB clearance is 
required under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et 
seq.).

F. Review Under the National Environmental Policy Act (NEPA)

    DOE has concluded that promulgation of this rule falls into a class 
of actions (categorical exclusion A5) that are categorically excluded 
from NEPA review because they would not individually or cumulatively 
have significant impact on the human environment, as determined by the 
Department's regulations (10 CFR Part 1021, Subpart D) implementing the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321, 4331-4335, 
4341-4347 (1976)). Therefore, this rule does not require an 
environmental impact statement or an environmental assessment pursuant 
to NEPA.

List of Subjects in 48 CFR Part 970

    Government procurement.

    Issued in Washington, DC on December 15, 1995.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.

PART 970-DOE MANAGEMENT AND OPERATING CONTRACTS

    1. The authority citation for Part 970 continues to read as 
follows:

    Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201), Sec. 644 of the Department of Energy Organization Act, Pub. 
L. 95-91 (42 U.S.C. 7254).

    2. Section 970.5204-40, Technology Transfer Mission, is added to 
read as follows:


970.5204-40  Technology transfer mission.

    As prescribed in 48 CFR 970.73, insert the following clause:

Technology Transfer Mission (Jan. 1996)

    This clause has as its purpose implementation of the National 
Competitiveness Technology Transfer Act of 1989 (Sections 3131, 
3132, 3133, and 3157 of Pub. L. 101-189 and as amended by Pub. L. 
103-160, Sections 3134 and 3160). The Contractor shall conduct 
technology transfer activities with a purpose of providing benefit 
from Federal research to U.S. industrial competitiveness.
    (a) Authority.
    (1) In order to ensure the full use of the results of research 
and development efforts of, and the capabilities of, the Laboratory, 
technology transfer, including Cooperative Research and Development 
Agreements (CRADAs), is established as a mission of the Laboratory 
consistent with the policy, principles and purposes of Sections 
11(a)(1) and 12(g) of the Stevenson-Wydler Technology Innovation Act 
of 1980, as amended (15 U.S.C. 3710a); Section 3132(b) of Pub. L. 
101-189, Sections 3134 and 3160 of P.L. 103-160, and of Chapter 38 
of the Patent Laws (35 U.S.C. 200 et seq.); Section 152 of the 
Atomic Energy Act of 1954, as amended (42 U.S.C. 2182); Section 9 of 
the Federal Nonnuclear Energy Research and Development Act of 1974 
(42 U.S.C. 5908); and Executive Order 12591 of April 10, 1987.
    (2) In pursuing the technology transfer mission, the Contractor 
is authorized to conduct activities including but not limited to: 
identifying and protecting Intellectual Property made, created or 
acquired at or by the Laboratory; negotiating licensing agreements 
and assignments for Intellectual Property made, created or acquired 
at or by the Laboratory that the Contractor controls or owns; 
bailments; negotiating all aspects of and entering into CRADAs; 
providing technical consulting and personnel exchanges; conducting 
science education activities and reimbursable Work for Others (WFO); 
providing information exchanges; and making available laboratory or 
weapon production user facilities. It is fully expected that the 
Contractor shall use all of the mechanisms available to it to 
accomplish this technology transfer mission, including, but not 
limited to, CRADAs, user facilities, WFO, science education 
activities, consulting, personnel, assignments, and licensing in 
accordance with this clause.
    (1) Contractor's Laboratory Director means the individual who 
has supervision over all or substantially all of the Contractor's 
operations at the Laboratory.
    (2) Intellectual Property means patents, trademarks, copyrights, 
mask works, protected CRADA information, and other forms of 
comparable property rights protected by Federal Law and other 
foreign counterparts.
    (3) Cooperative Research and Development Agreement (CRADA) means 
any agreement entered into between the Contractor as operator of the 
Laboratory, and one or more parties including at least one non-
Federal party under which the Government, through its laboratory, 
provides personnel, services, facilities, equipment, intellectual 
property, or other resources with or without reimbursement (but not 
funds to non-Federal parties) and the non-Federal parties provide 
funds, personnel, services, facilities, equipment, intellectual 
property, or other resources toward the conduct of specified 
research or development efforts which are consistent with the 
missions of the Laboratory; except that such term does not include a 
procurement contract, grant, or cooperative agreement as those terms 
are used in sections 6303, 6304, and 6305 of Title 31 of the United 
States Code.
    (4) Joint Work Statement (JWS) means a proposal for a CRADA 
prepared by the Contractor, signed by the Contractor's Laboratory 
Director or designee which describes the following:
    (i) Purpose;
    (ii) Scope of Work which delineates the rights and 
responsibilities of the Government, the Contractor and Third 
Parties, one of which must be a non-Federal party;
    (iii) Schedule for the work; and
    (iv) Cost and resource contributions of the parties associated 
with the work and the schedule.
    (5) Assignment means any agreement by which the Contractor 
transfers ownership of Laboratory Intellectual Property, subject to 
the Government's retained rights.
    (6) Laboratory Biological Materials means biological materials 
capable of replication or reproduction, such as plasmids, 
deoxyribonucleic acid molecules, ribonucleic acid molecules, living 
organisms of any sort and their progeny, including viruses, 
prokaryote and eukaryote cell lines, transgenic plants and animals, 
and any derivatives or modifications thereof or products produced 
through their use or associated biological products, made under this 
contract by Laboratory employees or through the use of Laboratory 
research facilities.
    (7) Laboratory Tangible Research Product means tangible material 
results of research which
    (i) are provided to permit replication, reproduction, evaluation 
or confirmation of 

[[Page 66513]]
the research effort, or to evaluate its potential commercial utility;
    (ii) are not materials generally commercially available; and
    (iii) were made under this contract by Laboratory employees or 
through the use of Laboratory research facilities.
    (8) Bailment means any agreement in which the Contractor permits 
the commercial or non- commercial transfer of custody, access or use 
of Laboratory Biological Materials or Laboratory Tangible Research 
Product for a specified purpose of technology transfer or research 
and development, including without limitation evaluation, and 
without transferring ownership to the bailee.
    (c) Allowable Costs.
    (1) The Contractor shall establish and carry out its technology 
transfer efforts through appropriate organizational elements 
consistent with the requirements for an Office of Research and 
Technology Applications (ORTA) pursuant to paragraphs (b) and (c) of 
Section 11 of the Stevenson-Wydler Technology Innovation Act of 
1980, as amended (15 U.S.C. 3710). The costs associated with the 
conduct of technology transfer through the ORTA including activities 
associated with obtaining, maintaining, licensing, and assigning 
Intellectual Property rights, increasing the potential for the 
transfer of technology, and the widespread notice of technology 
transfer opportunities, shall be deemed allowable provided that such 
costs meet the other requirements of the allowable costs provisions 
of this Contract. In addition to any separately designated funds, 
these costs in any fiscal year shall not exceed an amount equal to 
0.5 percent of the operating funds included in the Federal research 
and development budget (including Work For Others) of the Laboratory 
for that fiscal year without written approval of the Contracting 
Officer.
    (2) The Contractor's participation in litigation to enforce or 
defend Intellectual Property claims incurred in its technology 
transfer efforts shall be as provided in the clause entitled 
``Litigation and Claims'' of this Contract.
    (d) Conflicts of Interest--Technology Transfer. The Contractor 
shall have implementing procedures that seek to avoid employee and 
organizational conflicts of interest, or the appearance of conflicts 
of interest, in the conduct of its technology transfer activities. 
These procedures shall apply to other persons participating in 
Laboratory research or related technology transfer activities. Such 
implementing procedures shall be provided to the Contracting Officer 
for review and approval within sixty (60) days after execution of 
this contract. The Contracting Officer shall have thirty (30) days 
thereafter to approve or require specific changes to such 
procedures. Such implementing procedures shall include procedures 
to:
    (1) Inform employees of and require conformance with standards 
of conduct and integrity in connection with the CRADA activity in 
accordance with the provisions of paragraph (n)(5) of this clause;
    (2) Review and approve employee activities so as to avoid 
conflicts of interest arising from commercial utilization activities 
relating to Contractor-developed Intellectual Property;
    (3) Conduct work performed using royalties so as to avoid 
interference with or adverse effects on ongoing DOE projects and 
programs;
    (4) Conduct activities relating to commercial utilization of 
Contractor-developed Intellectual Property so as to avoid 
interference with or adverse effects on user facility or WFO 
activities of the Contractor;
    (5) Conduct DOE-funded projects and programs so as to avoid the 
appearance of conflicts of interest or actual conflicts of interest 
with non-Government funded work;
    (6) Notify the Contracting Officer with respect to any new work 
to be performed or proposed to be performed under the Contract for 
DOE or other Federal agencies where the new work or proposal 
involves Intellectual Property in which the Contractor has obtained 
or intends to request or elect title;
    (7) Except as provided elsewhere in this Contract, obtain the 
approval of the Contracting Officer for any licensing of or 
assignment of title to Intellectual Property rights by the 
Contractor to any business or corporate affiliate of the Contractor;
    (8) Obtain the approval of the Contracting Officer prior to any 
assignment, exclusive licensing, or option for exclusive licensing, 
of Intellectual Property to any person who has been a Laboratory 
employee within the previous two years or to the company in which he 
or she is a principal; and
    (9) Notify non-Federal sponsors of WFO activities, or non-
Federal users of user facilities, of any relevant Intellectual 
Property interest of the Contractor prior to execution of WFOs or 
user agreements.
    (10) Notify DOE prior to evaluating a proposal by a third party 
or DOE, when the subject matter of the proposal involves an elected 
or waived subject invention under this contract or one in which the 
Contractor intends to elect to retain title under this contract.
    (e) Fairness of Opportunity. In conducting its technology 
transfer activities, the Contractor shall prepare procedures and 
take all reasonable measures to ensure widespread notice of 
availability of technologies suited for transfer and opportunities 
for exclusive licensing and joint research arrangements. The 
requirement to widely disseminate the availability of technology 
transfer opportunities does not apply to a specific application 
originated outside of the Laboratory and by entities other than the 
Contractor.
    (f) U.S. Industrial Competitiveness.
    (1) In the interest of enhancing U.S. Industrial 
Competitiveness, the Contractor shall, in its licensing and 
assignments of Intellectual Property, give preference in such a 
manner as to enhance the accrual of economic and technological 
benefits to the U.S. domestic economy. The Contractor shall consider 
the following factors in all of its licensing and assignment 
decisions involving Laboratory intellectual property where the 
Laboratory obtains rights during the course of the Contractor's 
operation of the Laboratory under this contract:
    (i) whether any resulting design and development will be 
performed in the United States and whether resulting products, 
embodying parts, including components thereof, will be substantially 
manufactured in the United States; or
    (ii) (A) whether the proposed licensee or assignee has a 
business unit located in the United States and whether significant 
economic and technical benefits will flow to the United States as a 
result of the license or assignment agreement; and
    (B) in licensing any entity subject to the control of a foreign 
company or government, whether such foreign government permits 
United States agencies, organizations or other persons to enter into 
cooperative research and development agreements and licensing 
agreements, and has policies to protect United States Intellectual 
Property rights.
    (2) If the Contractor determines that neither of the conditions 
in paragraphs (f)(1)(i) or (ii) of this clause are likely to be 
fulfilled, the Contractor, prior to entering into such an agreement, 
must obtain the approval of the Contracting Officer. The Contracting 
Officer shall act on any such requests for approval within thirty 
(30) days.
    (3) The Contractor agrees to be bound by the provisions of 35 
U.S.C. 204 (Preference for United States industry).
    (g) Indemnity--Product Liability. In entering into written 
technology transfer agreements, including but not limited to, 
research and development agreements, licenses, assignments and 
CRADAs, the Contractor agrees to include in such agreements a 
requirement that the U.S. Government and the Contractor, except for 
any negligent acts or omissions of the Contractor, be indemnified 
for all damages, costs, and expenses, including attorneys' fees, 
arising from personal injury or property damage occurring as a 
result of the making, using or selling of a product, process or 
service by or on behalf of the Participant, its assignees or 
licensees which was derived from the work performed under the 
agreement. The Contractor shall identify and obtain the approval of 
the Contracting Officer for any proposed exceptions to this 
requirement such as where State or local law expressly prohibit the 
Participant from providing indemnification or where the research 
results will be placed in the public domain.
    (h) Disposition of Income.
    (1) Royalties or other income earned or retained by the 
Contractor as a result of performance of authorized technology 
transfer activities herein shall be used by the Contractor for 
scientific research, development, technology transfer, and education 
at the Laboratory, consistent with the research and development 
mission and objectives of the Laboratory and subject to Section 
12(b)(5) of the Stevenson-Wydler Technology Innovation Act of 1980, 
as amended (15 U.S.C. 3710a(b)(5)) and Chapter 38 of the Patent Laws 
(35 U.S.C. 200 et seq.) as amended through the effective date of 
this contract award or modification. If the net amounts of such 
royalties and income received from patent licensing after payment of 
patenting costs, licensing costs, payments to inventors and other 
expenses incidental to the administration of Subject Inventions 
during any fiscal year exceed 5 percent of the 

[[Page 66514]]
Laboratory's budget for that fiscal year, 75 percent of such excess 
amounts shall be paid to the Treasury of the United States, and the 
remaining amount of such excess shall be used by the Contractor for 
the purposes as described above in this paragraph. Any inventions 
arising out of such scientific research and development activities 
shall be deemed to be Subject Inventions under the Contract.
    (2) The Contractor shall include as a part of its annual 
Laboratory Institutional Plan or other such annual document a plan 
setting out those uses to which royalties and other income received 
as a result of performance of authorized technology transfer 
activities herein will be applied at the Laboratory, and at the end 
of the year, provide a separate accounting for how the funds were 
actually used. Under no circumstances shall these royalties and 
income be used for an illegal augmentation of funds furnished by the 
U.S. Government.
    (3) The Contractor shall establish subject to the approval of 
the Contracting Officer a policy for making awards or sharing of 
royalties with Contractor employees, other coinventors and 
coauthors, including Federal employee coinventors when deemed 
appropriate by the Contracting Officer.
    (i) Transfer to Successor Contractor. In the event of 
termination or upon the expiration of this Contract, any unexpended 
balance of income received for use at the Laboratory shall be 
transferred, at the Contracting Officer's request, to a successor 
contractor, or in the absence of a successor contractor, to such 
other entity as designated by the Contracting Officer. The 
Contractor shall transfer title, as one package, to the extent the 
Contractor retains title, in all patents and patent applications, 
licenses, accounts containing royalty revenues from such license 
agreements, including equity positions in third party entities, and 
other Intellectual Property rights which arose at the Laboratory, to 
the successor contractor or to the Government as directed by the 
Contracting Officer.
    (j) Technology Transfer Affecting the National Security.
    (1) The Contractor shall notify and obtain the approval of the 
Contracting Officer, prior to entering into any technology transfer 
arrangement, when such technology or any part of such technology is 
classified or sensitive under Section 148 of the Atomic Energy Act 
(42 U.S.C. 2168). Such notification shall include sufficient 
information to enable DOE to determine the extent that 
commercialization of such technology would enhance or diminish 
security interests of the United States, or diminish communications 
within DOE's nuclear weapon production complex. DOE shall use its 
best efforts to complete its determination within sixty (60) days of 
the Contractor's notification, and provision of any supporting 
information, and DOE shall promptly notify the Contractor as to 
whether the technology is transferable.
    (2) The Contractor shall include in all of its technology 
transfer agreements with third parties, including, but not limited 
to, CRADAs, licensing agreements and assignments, notice to such 
third parties that the export of goods and/or Technical Data from 
the United States may require some form of export control license or 
other authority from the U.S. Government and that failure to obtain 
such export control license may result in criminal liability under 
U.S. laws.
    (3) For other than fundamental research as defined in National 
Security Decision Directive 189, the Contractor is responsible to 
conduct internal export control reviews and assure that technology 
is transferred in accordance with applicable law.
    (k) Records. The Contractor shall maintain records of its 
technology transfer activities in a manner and to the extent 
satisfactory to the DOE and specifically including, but not limited 
to, the licensing agreements, assignments and the records required 
to implement the requirements of paragraphs (e), (f), and (h) of 
this clause and shall provide reports to the Contracting Officer to 
enable DOE to maintain the reporting requirements of Section 
12(c)(6) of the Stevenson-Wydler Technology Innovation Act of 1980, 
as amended (15 U.S.C. 3710a(c)(6)). Such reports shall be made 
annually in a format to be agreed upon between the Contractor and 
DOE and in such a format which will serve to adequately inform DOE 
of the Contractor's technology transfer activities while protecting 
any data not subject to disclosure under the Rights in Technical 
Data clause and paragraph (n) of this clause. Such records shall be 
made available in accordance with the clauses of this Contract 
pertaining to inspection, audit and examination of records.
    (l) Reports to Congress. To facilitate DOE's reporting to 
Congress, the Contractor is required to submit annually to DOE a 
technology transfer plan for conducting its technology transfer 
function for the upcoming year, including plans for securing 
Intellectual Property rights in Laboratory innovations with 
commercial promise and plans for managing such innovations so as to 
benefit the competitiveness of United States industry. This plan 
shall be provided to the Contracting Officer on or before October 
1st of each year.
    (m) Oversight and Appraisal. The Contractor is responsible for 
developing and implementing effective internal controls for all 
technology transfer activities consistent with the audit and record 
requirements of this Contract. Laboratory Contractor performance in 
implementing the technology transfer mission and the effectiveness 
of the Contractor's procedures will be evaluated by the Contracting 
Officer as part of the annual appraisal process, with input from the 
cognizant Secretarial Officer or program office.
    (n) Technology Transfer Through Cooperative Research and 
Development Agreements. Upon approval of the Contracting Officer and 
as provided in a DOE approved Joint Work Statement (JWS), the 
Laboratory Director or his designee may enter into CRADAs on behalf 
of the DOE subject to the requirements set forth in this paragraph.
    (1) Review and Approval of CRADAs
    (i) Except as otherwise directed in writing by the Contracting 
Officer, each JWS shall be submitted to the Contracting Officer for 
approval. The Contractor's Laboratory Director or designee shall 
provide a program mission impact statement and shall include an 
impact statement regarding related Intellectual Property rights 
known by the Contractor to be owned by the Government to assist the 
Contracting Officer in his approval determination.
    (ii) The Contractor shall also include (specific to the proposed 
CRADA), a statement of compliance with the Fairness of Opportunity 
requirements of paragraph (e) of this clause.
    (iii) Within ninety (90) days after submission of a JWS, the 
Contracting Officer shall approve, disapprove or request 
modification to the JWS. If a modification is required, the 
Contracting Officer shall approve or disapprove any resubmission of 
the JWS within thirty (30) days of its resubmission, or ninety (90) 
days from the date of the original submission, whichever is later. 
The Contracting Officer shall provide a written explanation to the 
Contractor's Laboratory Director or designee of any disapproval or 
requirement for modification of a JWS.
    (iv) Upon approval of a JWS, the Contractor's Laboratory 
Director or designee may submit a CRADA, based upon the approved 
JWS, to the Contracting Officer. The Contracting Officer, within 
thirty (30) days of receipt of the CRADA, shall approve or request 
modification of the CRADA. If the Contracting Officer requests a 
modification of the CRADA, an explanation of such request shall be 
provided to the Laboratory Director or designee.
    (v) Except as otherwise directed in writing by the Contracting 
Officer, the Contractor shall not enter into, or begin work under, a 
CRADA until approval of the CRADA has been granted by the 
Contracting Officer. The Contractor may submit its proposed CRADA to 
the Contracting Officer at the time of submitting its proposed JWS 
or any time thereafter. However, the Contracting Officer is not 
obligated to respond under paragraph (n)(1)(iv) of this clause until 
within thirty (30) days after approval of the JWS or thirty (30) 
days after submittal of the CRADA, whichever is later.
    (2) Selection of Participants The Contractor's Laboratory 
Director or designee in deciding what CRADA to enter into shall:
    (i) Give special consideration to small business firms, and 
consortia involving small business firms;
    (ii) Give preference to business units located in the United 
States which agree that products or processes embodying Intellectual 
Property will be substantially manufactured or practiced in the 
United States and, in the case of any industrial organization or 
other person subject to the control of a foreign company or 
government, take into consideration whether or not such foreign 
government permits United States agencies, organizations, or other 
persons to enter into cooperative research and development 
agreements and licensing agreements;
    (iii) Provide Fairness of Opportunity in accordance with the 
requirements of paragraph (e) of this clause; and

[[Page 66515]]

    (iv) Give consideration to the Conflicts of Interest 
requirements of paragraph (d) of this clause.
    (3) Withholding of Data
    (i) Data that is first produced as a result of research and 
development activities conducted under a CRADA and that would be a 
trade secret or commercial or financial data that would be 
privileged or confidential, if such data had been obtained from a 
non-Federal third party, may be protected from disclosure under the 
Freedom of Information Act as provided in the Stevenson- Wydler 
Technology Innovation Act of 1980, as amended (15 U.S.C. 
3710a(c)(7)) for a period as agreed in the CRADA of up to five (5) 
years from the time the data is first produced. The DOE shall 
cooperate with the Contractor in protecting such data.
    (ii) Unless otherwise expressly approved by the Contracting 
Officer in advance for a specific CRADA, the Contractor agrees, at 
the request of the Contracting Officer, to transmit such data to 
other DOE facilities for use by DOE or its Contractors by or on 
behalf of the Government. When data protected pursuant to paragraph 
(n)(3)(i) of this clause is so transferred, the Contractor shall 
clearly mark the data with a legend setting out the restrictions 
against private use and further dissemination, along with the 
expiration date of such restrictions.
    (iii) In addition to its authority to license Intellectual 
Property, the Contractor may enter into licensing agreements with 
third parties for data developed by the Contractor under a CRADA 
subject to other provisions of this Contract. However, the 
Contractor shall neither use the protection against dissemination 
nor the licensing of data as an alternative to the submittal of 
invention disclosures which include data protected pursuant to 
paragraph (n)(3)(i) of this clause.
    (4) Work For Others and User Facility Programs
    (i) WFO and User Facility Agreements (UFAs) are not CRADAs and 
will be available for use by the Contractor in addition to CRADAs 
for achieving utilization of employee expertise and unique 
facilities for maximizing technology transfer. The Contractor agrees 
to inform prospective CRADA participants, which are intending to 
substantially pay full cost recovery for the effort under a proposed 
CRADA, of the availability of alternative forms of agreements, i.e., 
WFO and UFA, and of the Class Patent Waiver provisions associated 
therewith.
    (ii) Where the Contractor believes that the transfer of 
technology to the U. S. domestic economy will benefit from, or other 
equity considerations dictate, an arrangement other than the Class 
Waiver of patent rights to the sponsor in WFO and UFAs, a request 
may be made to the Contracting Officer for an exception to the Class 
Waivers.
    (iii) Rights to inventions made under agreements other than 
funding agreements with third parties shall be governed by the 
appropriate provisions incorporated, with DOE approval, in such 
agreements, and the provisions in such agreements take precedence 
over any disposition of rights contained in this Contract. 
Disposition of rights under any such agreement shall be in 
accordance with any DOE class waiver (including Work for Others and 
User Class Waivers) or individually negotiated waiver which applies 
to the agreement.
    (5) Conflicts of Interest
    (i) Except as provided in paragraph (n)(5)(iii) of this clause, 
the Contractor shall assure that no employee of the Contractor shall 
have a substantial role (including an advisory role) in the 
preparation, negotiation, or approval of a CRADA, if, to such 
employee's knowledge:
    (A) Such employee, or the spouse, child, parent, sibling, or 
partner of such employee, or an organization (other than the 
Contractor) in which such employee serves as an officer, director, 
trustee, partner, or employee--
    (1) holds financial interest in any entity, other than the 
Contractor, that has a substantial interest in the preparation, 
negotiation, or approval of the CRADA;
    (2) receives a gift or gratuity from any entity, other than the 
Contractor, that has a substantial interest in the preparation, 
negotiation, or approval of the CRADA; or
    (B) A financial interest in any entity, other than the 
Contractor, that has a substantial interest in the preparation, 
negotiation, or approval of the CRADA, is held by any person or 
organization with whom such employee is negotiating or has any 
arrangement concerning prospective employment.
    (ii) The Contractor shall require that each employee of the 
Contractor who has a substantial role (including an advisory role) 
in the preparation, negotiation, or approval of a CRADA certify 
through the Contractor to the Contracting Officer that the 
circumstances described in paragraph (n)(5)(i) of this clause do not 
apply to that employee.
    (iii) The requirements of paragraphs (n)(5)(i) and (n)(5)(ii) of 
this clause shall not apply in a case where the Contracting Officer 
is advised by the Contractor in advance of the participation of an 
employee described in those paragraphs in the preparation, 
negotiation or approval of a CRADA of the nature of and extent of 
any financial interest described in paragraph (n)(5)(i) of this 
clause, and the Contracting Officer determines that such financial 
interest is not so substantial as to be considered likely to affect 
the integrity of the Contractor employee's participation in the 
process of preparing, negotiating, or approving the CRADA.
    (o) Technology Transfer in Other Cost-Sharing Agreements. In 
conducting research and development activities in cost-shared 
agreements not covered by paragraph (n) of this clause, the 
Contractor, with prior written permission of the Contracting 
Officer, may provide for the withholding of data produced thereunder 
in accordance with the applicable provisions of paragraph (n)(3) of 
this clause.

(End of clause)

    Alternate I (Jan 1996). As prescribed in 970.7330(b), add the 
following definition under paragraph (b) and new paragraph (p):
    (b)(8) Privately funded technology transfer means the 
prosecuting, maintaining, licensing, and marketing of inventions 
which are not owned by the Government (and not related to CRADAs) 
when such activities are conducted entirely without the use of 
Government funds.
    (p) Nothing in paragraphs (c) Allowable Costs, (e) Fairness of 
Opportunity, (f) U.S. Industrial Competitiveness, (g) Indemnity - 
Product Liability, (h) Disposition of Income, and (i) Transfer to 
Successor Contractor of this clause are intended to apply to the 
contractor's privately funded technology transfer activities if such 
privately funded activities are addressed elsewhere in the contract.
    Alternate II (Jan 1996). As prescribed in 970.7330(c), the 
phrase ``weapon production facility'' may be substituted wherever 
the word ``laboratory'' appears in the clause.

    3. A new subpart 970.73, Technology Transfer, consisting of 
sections 970.7310, 970.7320, and 970.7330, is added to read as follows:

Subpart 970.73 Technology Transfer

Secs.
970.7310  General.
970.7320  Policy.
970.7330  Contract Clause.

Subpart 970.73-Technology Transfer


970.7310  General.

    This subpart prescribes policies and procedures for implementing 
the National Competitiveness Technology Transfer Act of 1989. The Act 
required that technology transfer be established as a mission of each 
Government-owned laboratory operated under contract by a non-Federal 
entity. The National Defense Authorization Act for Fiscal Year 1994 
expanded the definition of laboratory to include weapon production 
facilities that are operated for national security purposes and are 
engaged in the production, maintenance, testing, or dismantlement of a 
nuclear weapon or its components.


970.7320  Policy.

    All new awards for or extensions of existing DOE laboratory or 
weapon production facility management and operating contracts shall 
have technology transfer, including authorization to award Cooperative 
Research and Development Agreements (CRADAs), as a laboratory or 
facility mission under Section 11(a)(1) of the Stevenson-Wydler 
Technology Innovation Act of 1980, as amended. A management and 
operating contractor for a facility not deemed to be a laboratory or 
weapon production facility may be authorized on a case-by-case basis to 
support the DOE technology transfer mission including, but not limited 
to, participating in CRADAs awarded by DOE laboratories and weapon 
production facilities.


970.7330  Contract clause.

    (a) The contracting officer shall insert the clause at 970.5204-40, 
Technology 

[[Page 66516]]
transfer mission, in each solicitation for a new or an extension of an 
existing laboratory or weapon production facility management and 
operating contract.
    (b) If the contractor is a nonprofit organization or small business 
eligible under 35 U.S.C. 200 et seq., to receive title to any 
inventions under the contract and proposes to fund at private expense 
the maintaining, licensing, and marketing of the inventions, the 
contracting officer shall use the basic clause with its Alternate I.
    (c) The contracting officer may substitute the Alternate II phrase 
``weapon production facility'' wherever the word ``laboratory'' appears 
in the clause where the facility is operated for national security 
purposes and engaged in the production, maintenance, testing, or 
dismantlement of a nuclear weapon or its components.

[FR Doc. 95-31187 Filed 12-21-95; 8:45 am]
BILLING CODE 6450-01-P