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Proposed Rule

Grants and Agreements With For-Profit Organizations

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Department of Energy.


Notice of inquiry and opportunity for public comment.


The Department of Energy (the “Department” or “DOE”) is seeking comments on whether to initiate a rulemaking that prescribes administrative requirements for financial assistance awards tailored specifically to for-profit organizations. DOE is also requesting comments on the specific changes proposed in the SUPPLEMENTARY INFORMATION section. Comments received in response to this document should contain no proprietary or confidential business information.


Written comments must be received by July 9, 2001.


Comments (3 copies) should be addressed to: Trudy Wood, U.S. Department of Energy, Office of Procurement and Assistance Management, MA-51, 1000 Independence Avenue, SW., Washington, DC 20585.

If possible a copy should also be E-mailed to

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Ms. Trudy Wood, Office of Procurement and Assistance Policy, Department of Energy, at (202) 586-5625.

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I. Background

Currently, DOE is engaged in the Government-wide effort to streamline and simplify the application, administrative, and reporting procedures for Federal financial assistance programs pursuant to Public Law 106-107, the Federal Financial Assistance Management Improvement Act of 1999 (henceforth “the Act”). As part of its initiative to consult with non-Federal entities, the Department solicited comments and suggestions from the grant community. In response, DOE received comments from for-profit organizations relating to issues that were unique to DOE and that were not being addressed in the Government-wide effort to implement the Act. Therefore, DOE is considering creating a new subpart to 10 CFR part 600 that contains administrative requirements for grants and cooperative agreements that are tailored to for-profit organizations with the goal of eliminating barriers which prevent these organizations from participating in the Department's financial assistance programs.

II. Current Regulations

The DOE assistance regulations are contained in 10 CFR part 600. As a matter of discretion, these regulations provide that the Office of Management and Budget (OMB) administrative requirements for grants and cooperative agreements with institutions of higher education, hospitals, and other non-profit organizations also apply to for-profit organizations.

III. Rulemaking Under Consideration

DOE is considering initiating a rulemaking that provides administrative requirements for grants and cooperative agreements that are specifically tailored to for-profit organizations. The changes under consideration would: (1) eliminate unnecessary requirements; and (2) maximize the effectiveness with which the Department's financial assistance programs support the accomplishment of their purposes, consistent with good stewardship of public funds and statutory requirements.

IV. Proposed Changes

DOE is considering the following major changes to 10 CFR part 600:

1. Create a new subpart that provides administrative requirements for grants and cooperative agreements that are specifically tailored to for-profit organizations, similar to the Department of Defense Grant and Agreement Regulations, 32 CFR part 34, Administrative Requirements for Grants and Agreements with For-Profit Organizations. Among other things, the new subpart would allow DOE to apply less restrictive requirements to small awards and to awards made pursuant to the Small Business Innovation Research or Small Business Technology Transfer Research programs.

2. Eliminate the requirement for incorporation of the following intellectual property clauses in awards with for-profit organizations:

a. FAR 52.227-1 Authorization and Consent

b. FAR 52.227.2 Notice and Assistance Regarding Patent and Copyright Infringement

c. FAR 52.227-3 Patent Indemnity

d. FAR 52.227-23 Rights in Proposal Data

3. Revise the Rights in Data and Patent Rights Provisions for financial assistance awards with large for-profit organizations. The new provisions would incorporate the following changes:

a. Eliminate DOE's routine use of clauses that grant to DOE the right to require recipients, under certain circumstances, to license background data and patents to third parties, to assure commercialization (see DEAR 952.227-13(k) and 952.227-14). DOE would require such third party licensing rights only when it is necessary to satisfy the needs of the program; and

b. Eliminate the requirement that the recipient obtain the Contracting Officer's approval prior to copyrighting computer software developed under the assistance award.

4. Simplify the advanced patent waiver petition process by making advanced waiver approval automatic if the awardee agrees to the conditions specified in the solicitation. This simplified process would eliminate the detailed 20 question waiver petition. The conditions specified in the solicitation would include:

a. Providing a one paragraph summary of a business plan for commercializing the technology;

b. Non-Federal cost sharing of at least 20 percent to establish a corporate commitment to commercializing the technology;

c. Agreement to statutory requirements attaching to the subject inventions, such as subject invention disclosure to DOE, Government purpose license rights, march-in rights, and a preference for United States industries; and

d. A U.S. competitiveness requirement dealing with substantial manufacturing in the U.S.

5. Simplify the financial and program management requirements by:

a. Encouraging recipients to use existing financial management systems Start Printed Page 23198established for conducting business in the commercial marketplace to the extent that the systems comply with Generally Accepted Accounting Practices (GAAP) and certain minimum standards (i.e., effective control of funds, accurate records that document the source and application of the Federal funds and the recipient's required cost share, and a system to support charges to Federal awards for salaries and wages);

b. Establishing a preference for the reimbursement method of payment; and

c. Requiring recipients that expend $300,000 or more in a year under Federal awards to have an audit for that year by an independent auditor. The audit generally would be made a part of the regularly scheduled, annual audit of the recipient's financial statements.

6. Clarify and simplify the property standards. The revised property standards would encourage recipients to use existing property management systems to the extent that the systems meet certain minimum requirements.

7. Significantly reduce requirements imposed on recipient procurement activities in favor of best commercial practices. DOE is considering establishing minimum procurement requirements, such as:

a. Requiring recipients' procurement procedures to use effective competition techniques or other means that ensure reasonable cost for procured goods and services;

b. Requiring pre-award review of procurements only when the contracting officer judges that there is a compelling need to do so and then only if a provision in the award states the requirement; and

c. Encourage the use of best commercial practices in the procurement of commercial items.

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Issued in Washington, D.C. on April 30, 2001.

Richard H. Hopf,

Acting Director, Office of Management and Administration, U.S. Department of Energy.

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[FR Doc. 01-11519 Filed 5-7-01; 8:45 am]