[Federal Register Volume 59, Number 4 (Thursday, January 6, 1994)]
[Rules and Regulations]
[Pages 663-670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-69]


[[Page Unknown]]

[Federal Register: January 6, 1994]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Technology Administration

15 CFR Part 295

[Docket No. 930242-3313]
RIN 0693-AA83

 

Advanced Technology Program

AGENCY: National Institute of Standards and Technology, Commerce.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The National Institute of Standards and Technology (NIST) is 
today issuing a final rule which amends the implementing regulations 
for the Advanced Technology Program (ATP). A number of the revisions 
are required by the American Technology Preeminence Act of 1992, 
including provisions on: participation by foreign companies in ATP; the 
establishment of a patent policy different from the government-wide 
policy set out by the Bayh-Dole Act; and a new requirement that ``joint 
research and development ventures'' be industry-led. Further, 
requirements for royalty-sharing by ATP recipients with the Federal 
government for inventions funded under ATP have been repealed by the 
Act, and are thus removed from the regulations. Similarly, ATP 
authority to provide direct funding to independent research 
organizations has been repealed. Also, changes not required by the Act 
are made, including changes to simplify and clarify the selection 
criteria, and to streamline the internal operations of ATP, including 
the selection process.

EFFECTIVE DATE: This rule is effective on January 6, 1994.

FOR FURTHER INFORMATION CONTACT:
George A. Uriano or Brian C. Belanger, Advanced Technology Program, 
National Institute of Standards and Technology (NIST), telephone number 
(301) 975-5187.

SUPPLEMENTARY INFORMATION: The National Institute of Standards and 
Technology is today issuing a final rule which amends regulations found 
at part 295 of title 15 of the Code of Federal Regulations, which 
implement the Advanced Technology Program (ATP). The Advanced 
Technology Program assists United States businesses to carry out high-
risk research and development that will, if successful, improve the 
competitive position of the United States and its businesses by 
accelerating the development of technologies that have significant 
potential to stimulate economic growth, and raise productivity. ATP 
enters into cooperative agreements with United States joint research 
and development ventures and United States businesses, especially small 
businesses. Where appropriate, Federal laboratories may be involved in 
ATP projects consistent with other authority, such as cooperative 
research and development agreements under section 12 of the Stevenson-
Wydler Technology Innovation Act of 1980.

Description of the Changes

    Changes to part 295 include revisions on the following topics 
(please see the analysis of comments below for additional details):
     The eligibility of foreign firms to participate in ATP is 
addressed in a new section 295.3 of the regulations, and a related 
definition of ``United States owned company'' is added in section 
295.2(r). These revisions follow the requirements of section 201(c)(6) 
of the American Technology Preeminence Act of 1991 (15 U.S.C. 
278n(d)(9)).
     The establishment of a patent policy different from the 
government-wide policy set out by the Bayh-Dole Act (Pub. L. 96-517, as 
amended) is set out at section 295.8(a). These revisions follow the 
requirements of section 201(c)(6) of the American Technology 
Preeminence Act of 1991 (15 U.S.C. 278n(d)(11)). That statute requires 
that title to inventions made in whole or part with Program funds 
reside with for-profit companies that have been incorporated in the 
United States. Entities that are not for-profit organizations 
incorporated in this country are not eligible to obtain title to 
inventions made under the Program.
     A new requirement that ``joint research and development 
ventures'' be industry-led, set out at Secs. 295.2(i) and 295.21, and 
the repeal of ATP authority to provide direct funding to independent 
research organizations, set out at Sec. 295.30. These revisions follow 
the requirements of section 201(c)(2) and section 201(c)(4), 
respectively, of the American Technology Preeminence Act of 1991 (15 
U.S.C. 278n(b)(1) and (b)(2)).
     Requirements for royalty-sharing by ATP recipients with 
the Federal government for inventions funded under ATP have been 
repealed, and are thus removed from existing Sec. 295.7(c) of the 
regulations. This revision follows the requirements of section 
201(c)(6) of the American Technology Preeminence Act of 1991.
     Finally, changes not required by the Act are made to the 
selection criteria, and to the internal operations of ATP, including 
the selection process. These changes particularly include revisions to 
the remaining definitions in Sec. 295.2, changes to the selection 
process described in Secs. 295.4 and 295.5, changes to the selection 
criteria as set out in Sec. 295.6, and changes to program 
administration found in Secs. 295.7 and 295.14.

Summary of Comments

    On August 2, 1993, the Technology Administration published a notice 
of proposed rulemaking in the Federal Register (55 FR 41069). In 
response to this notice forty-four letters were received; twenty-nine 
from universities, ten from other not-for-profit research organizations 
and industry associations, one from a state agency, one from a U.S.-
owned for-profit company, one from a U.S. subsidiary of a foreign-owned 
corporation, one from a member of the U.S. House of Representatives, 
and one from a member of the NIST staff.
    All but four of the forty-four respondents, including all twenty-
nine from universities and all ten from other not-for-profit 
organizations, commented on the proposed revision to the treatment of 
patent rights found in Sec. 295.8. An additional two dozen comments 
were received concerning proposed changes to the proposed definitions 
set out in Sec. 295.2. The remaining comments were scattered among 
several sections, including: five concerning new Sec. 295.14, which 
deals with special financial reporting requirements; three on the 
revisions to the selection criteria found in Sec. 295.5; two on the use 
of abbreviated proposals proposed in Sec. 295.5; and one each on the 
provisions on the eligibility and qualification of applicants found in 
Secs. 295.3 and 295.31. No comments were received in response to 
proposed changes to the following: Sec. 295.1, pertaining to the 
purpose of the regulation; Sec. 295.4, the selection process; 
Sec. 295.7, pertaining to notices of availability of funds; 
Sec. 295.21, on qualification of applicants; Sec. 295.22, dealing with 
limitations on assistance; Sec. 295.24, concerning registration under 
the antitrust laws; and Sec. 295.30, which describes the types of 
assistance available.
    The following is a section-by-section description of the comments 
received by NIST, and NIST's response to those comments.

Section 295.2  Definitions--Comment Summary (24 Comments)

    Twenty-three respondents, all universities or other nonprofit 
organizations, questioned whether the definition of ``United States-
owned company'' found in Sec. 295.2(r) of the proposed rule reflected 
the actual intent of Congress as stated in the American Technology 
Preeminence Act of 1991. The definition of United States-owned company 
set out in Sec. 295.2(r) is used in section 295.8 to determine 
eligibility to obtain title to inventions arising from assistance under 
ATP. A consolidated analysis of the issues raised by Sec. 295.2(r) and 
295.8 is presented in the discussion of Sec. 295.8 later in this 
notice, and the reader is asked to refer to that discussion.
    In addition to the issue described above, one respondent questioned 
the exclusion (by omission) of independent research and development 
(IR&D) costs in the definition of matching funds found in 
Sec. 295.2(1). IR&D funds are generally generated through contracts 
funded by the federal government. The financial assistance regulations 
which are applicable to ATP awards, and particularly Attachment E to 
OMB Circular A-110, prohibit the use of federal funds as cost share or 
match unless specifically authorized by federal law. The rule follows 
closely the wording of the 1988 legislation and hence cannot be changed 
without congressional action. The purpose of the limitations on 
qualified matching funds is to obtain a meaningful and significant 
commitment of company resources towards ATP objectives, including 
support to additional R&D beyond that which would have occurred without 
the ATP award.

Section 295.3  Eligibility of United States and foreign-owned 
businesses--(1 Comment)

    One U.S. subsidiary of a foreign-owned company requested that both 
eligibility requirements and cancellation requirements for foreign-
owned applicants be made clearer and that they be consistent with 
present law and with H.R. 820. In response, NIST notes that H.R. 820 is 
not law, but rather is pending legislation in the Congress. NIST cannot 
base changes in rules upon proposed legislation that has not been 
enacted.

Section 295.5  Use of Abbreviated Proposals in the Selection Process--
(2 Comments)

    Two respondents endorsed the use of abbreviated proposals. One 
respondent further proposed that abbreviated proposals address, and 
thus be evaluated on, scientific and technical criteria only. NIST has 
determined that business and economic factors are important factors in 
assessing the potential for success of a proposed project, and 
therefore must be considered in addition to the scientific and 
technical merit of the proposal.

Section 295.6  Criteria for Selection--(3 Comments)

    Two respondents endorsed the increased emphasis on ``scientific and 
technical merit'', one of whom suggested increasing its weight further 
to 40 percent. Another respondent took issue with the reduced weight 
for two proposers ``level of commitment'' and suggested increasing the 
weight for the ``commitment'' criteria to 30 percent by eliminating 
``experience and qualifications'' as a separate criteria.
    In response to these comments, Sec. 295.5 has been modified to 
increase the weight of the ``level of commitment'' to 20 percent, the 
level that exists in the regulation as it was promulgated in 1990. The 
weight given ``experience and qualifications'' has been reduced from 20 
percent to 10 percent.

Section 295.8(a)  Patent Rights--(40 Comments)

    Forty comments were received concerning the proposed revision to 
Sec. 295.8(a)(1), thirty-nine from universities and other nonprofit 
organizations opposed to the proposal, and one from a business 
supporting the proposal. Also, twenty-three of the thirty-nine 
commentors described above objected to the definition of ``United 
States-owned company'' found in Sec. 295.2(r) of the proposed rule.
    The term ``United States-owned company'' defined in Sec. 295.2(r) 
is used in Sec. 295.8(a)(1) to determine who is eligible to obtain 
title inventions arising from assistance under ATP. The definition 
states that an entity must be organized for profit-making purposes to 
be deemed a United States-owned company, and Sec. 295.8(a)(1) states 
that only United States-owned companies may take title to inventions 
arising under the ATP. Taken together, the two sections prevent 
universities and other nonprofit organizations from obtaining title to 
inventions arising under the ATP.
    The thirty-nine universities and nonprofit commentors are strongly 
opposed to this outcome. The following objection is typical: ``The ATP 
legislation enables universities to participate in research funded 
through the program, and (we have) taken advantage of the opportunity 
to do so. However, the problem is that NIST has interpreted the ATP 
legislation to exclude universities from ownership of intellectual 
property resulting from ATP funded research.''
    In the view of NIST, the decision to prevent universities and other 
nonprofit organizations from taking title to inventions is embedded in 
statute, and NIST has no alternative but to follow the law as it 
presently is written. As a result of comments received from both for-
profit and nonprofit organizations, NIST recognizes that one ingredient 
for the successful implementation of joint ventures under ATP is a 
flexible patent policy. The participants in ATP joint ventures need the 
flexibility to determine for themselves the best means of 
commercializing the technology they develop. This, in turn, requires 
the flexibility to allocate intellectual property rights as the joint 
ventures best see fit. Accordingly, NIST is working with the Congress 
in an attempt to enact a patent policy for ATP that leaves the 
decisions on patent ownership to joint venture members. Should a change 
in the law be enacted, NIST would immediately implement it. In that 
case, NIST would rely on the ATP proposal evaluation criteria to assess 
the probability of subsequent commercialization based on the proposed 
intellectual property rights arrangement.
    Section 201(c)(6) of the American Technology Preeminence Act of 
1991 (15 U.S.C. 278n(d)(11)) states that intellectual property rights 
developed under ATP ``shall vest in a company or companies incorporated 
in the United States.'' In reaching the conclusion that the term 
``company or companies'' refers to profit-making entities, NIST has 
been guided by the broader context of changes made to the ATP by the 
American Technology Preeminence Act. NIST believes that it was the 
intent of Congress to provide title to inventions directly to U.S. 
companies as the most effective means of assuring that research results 
enter the marketplace rapidly, and in the way most beneficial to United 
States businesses. In this context, NIST notes that the Act contains a 
new requirement that ``joint research and development ventures'' funded 
by ATP must be industry-led. NIST also notes the repeal of ATP 
authority to provide direct funding to nonprofit independent research 
organizations. (See sections 201(c)(2) and section 201(c)(4), 
respectively, of the American Technology Preeminence Act of 1991 (15 
U.S.C. 278n(b)(1) and (b)(2)).
    Thus, NIST believes that the only reasonable reading of section 
201(c)(6) is to interpret the term ``United States-owned company'' as 
referring to businesses, and specifically, to for-profit entities.

Section 295.8 (b) and (c)  Copyright and Publication--(24 Comments)

    A number of universities have expressed fear that the new ATP rules 
will prevent universities or their employees from copyrighting their 
works. The fear is also raised that the ATP rule will require 
universities to get the permission of their for-profit collaborators 
before publishing their research findings. In response, NIST notes that 
the parts of the ATP rule dealing with the questions raised by these 
comments on copyright and publication were not proposed to be 
substantively changed in the Federal Register notice of August 2, 1993. 
In the old rule, the provision on copyright was found in Sec. 295.5(b), 
and the treatment of publication of research results was found at 
Sec. 295.8(d). In the new rule, the provision on copyright is found in 
Sec. 295.8(b), and the treatment of publication of research results is 
at Sec. 295.8(c).
    Except for renumbering, the only change that NIST proposed for the 
old Sec. 295.5(b) concerned the governmental use license that each ATP 
funding recipient is required to provide to NIST for any copyrighted 
data first produced in the performance of the ATP award. The scope of 
the governmental use license has been truncated by deleting the 
authority of the government to distribute computer programs first 
produced in the performance of the ATP award to users in the United 
States. The ability of funding recipients to copyright the works of 
their employees remains unchanged. Both the old and new versions of the 
ATP regulation state that ``funding recipients'' can copyright works 
made under ATP. Universities that receive funds under ATP are ``funding 
recipients''. They are funding recipients if they are members of joint 
ventures. They are funding recipients if they are subcontractors. 
Universities get copyright. Accordingly, no change is made to 
Sec. 295.8(c) of the regulation based upon the comments described 
above.
    Except for renumbering, the only change that NIST proposed for the 
old Sec. 295.5(d) was to delete the first part of the first sentence. 
That sentence originally read: ``Although the program will encourage 
the timely publication of research results by funding recipients, the 
decision on whether to publish or not will be made by the funding 
recipient(s).'' In the proposed revision, the sentence was revised to 
read simply ``The decision on whether to publish or not will be made by 
the funding recipient(s).'' NIST believes that the regulation is very 
clear that the decision to publish shall be made by negotiated 
agreement of the funding recipients and that the for-profit members of 
a joint venture will not be able to dictate to universities on this 
matter. This provision has been part of every ATP award made since 
1990, and no difficulties have arisen under it. Accordingly, no change 
is made to section 295.8(c) of the proposed regulation based upon the 
comments described above.

Section 295.14  Special Financial Reporting--(5 Comments)

    Two universities and three other not-for-profit organizations 
commented on proposed section 295.14, which would increase the 
flexibility of financial reporting requirements and encourage award 
recipients to retain independent CPA firms to perform audit services, 
while reserving the right of the Department of Commerce's Office of the 
Inspector General to determine the timing and nature of these services, 
and to conduct its own audit. The comments suggested a need for greater 
specificity as to the applicable OMB regulations which might apply and 
the conditions under which the Departmental Inspector General would 
exercise his authority in setting the time frame and scope of audit 
services.
    In response, the regulations have been amended to state that the 
audit principles to be applied to ATP awards are the Generally Accepted 
Accounting Principles (GAAP) according to the General Accounting 
Office's ``Government Auditing Standards'' subtitled ``Standards for 
Auditing Government Organization, Program, Activities and Functions''. 
Clarifying changes have also been made to the definitions of ``direct 
costs'' found at Sec. 295.2(c) and ``indirect costs'' found at 
Sec. 295.2(h).

Section 295.31  Qualification of Applicants--(1 Comment)

    One respondent urged that state and local governments and U.S. 
universities and non-profit research institutes working independently 
should be eligible to receive individual ATP awards outside of joint 
ventures. No change has been made to the regulation based upon this 
comment because eligibility for individual awards is expressly limited 
to United States companies by section 278n(b)(2) of title 15 of the 
United States Code.

Effective Date of the Final Rule

    This final rule relating to grants, benefits, and contracts is 
exempt from the delayed effective date requirement, and accordingly, 
under section 553(a)(2) of the Administrative Procedure Act (5 U.S.C. 
553), is therefore being made effective immediately without a 30 day 
delay in effective date.

Classification

    This document was not reviewed by the Office of Management and 
Budget under Executive Order 12866. The General Counsel certified to 
the Chief Counsel for Advocacy, Small Business Administration, at the 
time this rule was proposed that, if it were adopted as proposed it 
would not have a significant economic effect on a substantial number of 
small entities requiring a flexibility analysis under the Regulatory 
Flexibility Act. This is because there are only a small number of 
awardees and thus only a small number of awards will be given to small 
businesses. The program is entirely voluntary for the participants that 
seek funding. It is not a major federal action requiring an 
environmental assessment under the National Environment Policy Act. 
This rule contains collection of information requirements subject to 
the Paperwork Reduction Act approved by OMB under control number 0693-
0009. The Advanced Technology Program does not involve the mandatory 
payment of any matching funds from a state or local government, and 
does not affect directly any state or local government. Accordingly, 
the Technology Administration has determined that Executive Order 12372 
is not applicable to this program. This notice does not contain 
policies with Federalism implications sufficient to warrant preparation 
of a Federalism assessment under Executive Order 12612.

List of Subjects in 15 CFR Part 295

    Inventions and patents, Laboratories, Research, Science and 
technology, Scientists.

    Dated: December 27, 1993.
Arati Prabhakar,
Director.
    For reasons set forth in the preamble, title 15, part 295 of the 
Code of Federal Regulations is amended as follows:

PART 295--ADVANCED TECHNOLOGY PROGRAM

    1. The authority citation for part 295 is revised to read as 
follows:

    Authority: 15 U.S.C. 278n.

    2. Section 295.1 is revised to read as follows:


Sec. 295.1  Purpose.

    (a) The purpose of the Advanced Technology Program (ATP) is to 
assist United States businesses to carry out research and development 
on pre-competitive generic technologies. These technologies are: (1) 
Enabling, because they offer wide breadth of potential application and 
form an important technical basis for future commercial applications; 
and (2) high value, because when applied, they offer significant 
benefits to the U.S. economy. Precompetitive technology is defined in 
Sec. 295.2(n) and generic technology is defined in Sec. 295.2(e).
    (b) In the case of joint research and development ventures 
involving potential competitors, the willingness of firms to commit 
significant amounts of corporate resources to the venture is evidence 
that the proposed research and development is precompetitive. For joint 
ventures that involve firms and their customers or suppliers or for 
single firms not proposing cooperative research and development, a 
quantified description of the expected broad applicability of the 
technology and adequate assurances that the technology being developed 
will be utilized widely can provide evidence that the proposed research 
and development is pre-competitive.
    (c) These rules prescribe policies and procedures for the award of 
cooperative agreements under the advanced Technology Program in order 
to ensure the fair treatment of all proposals. While the Advanced 
Technology Program is authorized to enter into grants, competitive 
agreements, and contracts to carry out its mission, these rules address 
only the award of cooperative agreements. The Program employs 
cooperative agreements rather than grants because such agreements allow 
ATP to exercise appropriate management oversight of projects and also 
to link ATP-funded projects to ongoing R&D at the National Institute of 
Standards and Technology wherever such linkage would increase the 
likelihood of success of the project.
    3. Section 295.2 is amended by revising paragraph (a), 
redesignating paragraphs (d) through (i) as paragraphs (k) through (p), 
redesignating paragraph (b) as paragraph (e) , redesignating paragraph 
(c) as paragraph (h), and adding new paragraphs (b), (c), (d), (f), 
(g), (i), and (j) to read as follows:


Sec. 295.2  Definitions.

    (a) For the purposes of the ATP, the term award means Federal 
financial assistance made under a grant or cooperative agreement.
* * * * *
    (b) The term cooperative agreement refers to a Federal assistance 
instrument used whenever the principal purpose of the relationship 
between the Federal Government and the recipient is the transfer of 
money, property, or services, or anything of value to the recipient to 
accomplish a public purpose of support or stimulation authorized by 
Federal statute, rather than acquisition by purchase, lease, or barter, 
of property or services for the direct benefit or use of the Federal 
Government; and substantial involvement is anticipated between the 
executive agency, acting for the Federal Government, and the recipient 
during performance of the contemplated activity.
    (c) The term direct costs means costs that can be identified 
readily with activities carried out in support of a particular final 
objective. Because of the diverse characteristics and accounting 
practices of different organizations, it is not possible to specify the 
types of costs which may be classified as direct costs in all 
situations. However, typical direct costs could include salaries of 
personnel assigned to the ATP project and associated normal fringe 
benefits such as medical insurance. Direct costs might also include 
supplies and materials, special equipment required specifically for the 
ATP project, and travel associated with the ATP project. ATP shall 
interpret direct costs in accordance with 48 CFR part 31 or OMB 
Circular A-122, attachment B.
    (d) The term foreign-owned company means a company other than a 
United States-owned company as defined in Sec. 295.2(r).
* * * * *
    (f) The term grant means a Federal assistance instrument used 
whenever the principal purpose of the relationship between the Federal 
Government and the recipient is the transfer of money, property, 
services, or anything of value to the recipient in order to accomplish 
a public purpose of support or stimulation authorized by Federal 
statute, rather than acquisition by purchase, lease, or barter, of 
property or services for the direct benefit or use of the Federal 
Government; and no substantial involvement is anticipated between the 
executive agency, acting for the Federal Government, and the recipient 
during performance of the contemplated activity.
    (g) The term independent research organization (IRO) means a 
nonprofit research and development corporation or association organized 
under the laws of any state for the purpose of carrying out research 
and development on behalf of other organizations.
* * * * *
    (i) The term industry-led joint research and development venture 
means a joint research and development venture that consists of at 
least two separately-owned businesses that contribute matching funds to 
the project, perform research and development in the project, and 
control the venture's membership, research directions and funding 
priorities. The venture may include additional companies, independent 
research organizations, universities, and/or government laboratories 
which may or may not contribute funds to the project and perform 
research and development. An independent research organization may 
perform administrative tasks on behalf of an industry-led joint 
research and development venture, such as handling receipts and 
disbursements of funds and making antitrust filings.
    (j) The term intellectual property means an invention patentable 
under title 35, United States Code, or any patent on such an invention.
* * * * *
    4. The newly designated Sec. 295.2(h) is revised to read as 
follows:


Sec. 295.2  Definitions.

* * * * *
    (h) The term indirect costs means those costs incurred for common 
or joint objectives that cannot be readily identified with activities 
carried out in support of a particular final objective. A cost may not 
be allocated to an award as an indirect cost if any other cost incurred 
for the same purpose in like circumstances has been assigned to an 
award as a direct cost. Because of diverse characteristics and 
accounting practices it is not possible to specify the types of costs 
which may be classified as indirect costs in all situations. However, 
typical examples of indirect costs include general administration and 
general expenses, such as the salaries and expenses of executive 
officers, personnel administration, maintenance, library expenses, and 
accounting. ATP shall interpret indirect costs in accordance with 48 
CFR part 31 or OMB Circular A-122, Attachment C.
    5. The newly designated Sec. 295.2(k)(1)(v) is revised and 
(k)(1)(vi) is added, to read as follows:


Sec. 295.2  Definitions.

* * * * *
    (k)(1) * * *
* * * * *
    (v) The production of any product, process, or service; or
    (vi) any combination of the purposes specified in paragraphs 
(k)(1), (i), (ii), (iii), (iv) and (v) of this section, and may include 
the establishment and operation of facilities for the conducting of 
research, the conducting of such venture on a protected and proprietary 
basis, and the prosecuting of applications for patents and the granting 
of licenses for the results of such venture, but does not include any 
activity specified in paragraph (k)(2) of this definition.
* * * * *
    6. The newly designated Sec. 295.2(l) is revised to read as 
follows:


Sec. 295.2  Definitions.

* * * * *
    (l) The term matching funds includes the following: (1) Dollar 
contributions from state, county, city, company, or other non-federal 
sources; (2) in-kind contributions of full-time personnel (i.e., 
persons employed full time by the joint venture or one of the joint 
venture members); (3) in-kind contributions of a pro-rata share of 
part-time personnel that the Program deems essential to carrying out 
the proposed experimental work program and who devote at least 50% of 
their time to the program; and (4) in-kind value of equipment that the 
Program deems essential to carrying out the proposed experimental work 
program, which may include either the purchase cost of new equipment or 
the depreciated value of previously purchased equipment. The 
depreciation method to be used for the matching fund determination 
shall be the internal depreciation accounting method used by the 
applicant for that equipment prior to the award. The value of equipment 
will be further pro-rated according to the share of total use dedicated 
to carrying out the proposed ATP work program. The total value of 
equipment expenditures allowable under the match may be applied in the 
award year expended or pro-rated over the duration of award years. The 
total in-kind value of equipment expenditures can not exceed 30% of the 
applicant's total annual share of matching funds. The total in-kind 
value of part-time personnel can not exceed 20% of the applicant's 
total annual share of matching funds.
* * * * *
    7. The newly designated Sec. 295.2(p) is revised to read as 
follows:


Sec. 295.2  Definitions.

 * * * * *
    (p) The term Secretary means the Secretary of Commerce or the 
Secretary's designee.
    8. Section 295.2 is amended by adding paragraphs (q) through (r) to 
read as follows:


Sec. 295.2  Definitions.

 * * * * *
    (q) The term small business means a business that is independently 
owned and operated, is organized for profit, and is not dominant in the 
field of operation in which it is proposing, and meets the other 
requirements found in 13 CFR part 121.
    (r) The term United States-owned company means a for-profit 
organization, including sole proprietors, partnerships, or 
corporations, that has a majority ownership or control by individuals 
who are citizens of the United States.


Secs. 295.3-295.10  [Redesignated as Secs. 295.6-295.13]

    9. Sections 295.3 through 295.10 are redesignated as Secs. 295.6 
through 295.13, and newly designated Secs. 295.3 through 295.5 are 
added to read as follows:


Sec. 295.3  Eligibility of United States- and foreign-owned businesses.

    (a) A company shall be eligible to receive an award from the 
Program only if:
    (1) The Program finds that the company's participation in the 
Program would be in the economic interest of the United States, as 
evidenced by investments in the United States in research, development, 
and manufacturing (including, for example, the manufacture of major 
components or subassemblies in the United States); significant 
contributions to employment in the United States; and agreement with 
respect to any technology arising from assistance provided by the 
Program to promote the manufacture within the United States of products 
resulting from that technology (taking into account the goals of 
promoting the competitiveness of United States industry), and to 
procure parts and materials from competitive suppliers; and
    (2) Either the company is a United States-owned company, or the 
Program finds that the company is incorporated in the United States and 
has a parent company which is incorporated in a country which affords 
to United States-owned companies opportunities, comparable to those 
afforded to any other company, to participate in any joint venture 
similar to those authorized under the Program; affords the United 
States-owned companies local investment opportunities comparable to 
those afforded to any other company; and affords adequate and effective 
protection for the intellectual property rights of United States-owned 
companies.
    (b) The Program may, within 30 days after notice to Congress, 
suspend a company or joint venture from continued assistance under the 
Program if the Program determines that the company, the country of 
incorporation of the company or a parent company, or the joint venture 
has failed to satisfy any of the criteria contained in paragraph (a) of 
this section, and that it is in the national interest of the United 
States to do so.


Sec. 295.4   The selection process.

    (a) The selection process for awards is a multi-step process based 
on the criteria listed in Sec. 295.6. In the first step, called 
``preliminary screening,'' proposals are eliminated that do not meet 
the requirements of this rule or the program announcement. Typical but 
not exclusive of the reasons for eliminating a proposal at this stage 
is that the proposal: is deemed to have serious deficiencies in either 
the technical or business plan; or does not meet the definition of 
precompetitive, generic technology; or, is not industry-led; or is 
significantly overpriced or underpriced given the scope of the work; or 
does not meet the requirements set out in the Notice of Availability of 
Funds issued pursuant to Sec. 295.7; or in the case of joint ventures, 
requests more than a minority share of funding. NIST will also examine 
proposals that have been submitted to a previous competition to 
determine whether substantive revisions have been made to the earlier 
proposal, and if not, may reject the proposal or forward it to a later 
stage in the review process based upon the earlier review.
    (b) In the second step, referred to as the ``technical and business 
review,'' proposals are evaluated under the criteria found in 
Sec. 295.6. Proposals are rated as ``not recommended'' or 
``recommended.'' Proposals must have high scientific and technical 
merit to be recommended. Only those proposals rated as ``recommended'' 
are considered further. These applicants are referred to as 
``semifinalists.''
    (c) In the third step, referred to as ``selection of finalists,'' 
the Program prepares a final scoring and ranking of semifinalist 
proposals. During this step, the semifinalist proposers may be asked to 
make oral presentations on their proposals at NIST, and in some cases 
site visits may be required. Subject to the provisions of Sec. 295.6, a 
list of ranked finalists is submitted to the selecting official.
    (d) In the final step, referred to as ``selection of awardees,'' 
the Selecting Official selects funding recipients from among the 
finalists, based upon (1) the rank order of the applications on the 
basis of all selection criteria (Sec. 295.6); (2) assuring an 
appropriate distribution of funds among technologies and activities, 
and (3) the availability of funds. The Program reserves the right to 
withhold awards in any case where a search of Federal records discloses 
information that raises a reasonable doubt as to the responsibility of 
the applicant. The decision of the Selecting Official is final.
    (e) If a joint venture is ranked as a finalist, but the Program 
determines that the joint venture contains weaknesses in its structure 
or cohesiveness that may substantially lessen the probability of the 
proposed program being completed successfully, the Program may inform 
the applicant of the deficiencies and enter into negotiations with the 
applicant in an effort to remedy the deficiencies. If appropriate, 
funding up to 10 percent of the amount originally requested by the 
applicant may be awarded by the Program to the applicant to assist in 
overcoming the organizational deficiencies. If the Program determines 
within six months of this award that the organizational deficiencies 
have been corrected, the Program may award the remaining funds 
requested by the applicant to that applicant.
    (f) NIST reserves the right to negotiate with applicants selected 
to receive awards the cost and scope of the proposed work, e.g., to add 
or delete a task to improve the probability of success.


Sec. 295.5  Use of abbreviated proposals in the selection process.

    To reduce proposal preparation costs incurred by applicants and to 
make the selection process more efficient, NIST may use a preliminary 
qualification process based on abbreviated proposals. Announcements 
requesting abbreviated proposals will be published as indicated in 
Sec. 295.7, seeking proposals that address all of the selection 
criteria, but in considerably less detail than full proposals. The 
Program will review the abbreviated proposals and select those that 
best meet the selection criteria. Submitters of abbreviated proposals 
will be notified in writing whether their proposals are recommended for 
full proposal, or, not recommended for full proposal. Those whose 
proposals are recommended for full proposal submission will be invited 
to prepare and submit full proposals. Those not invited to submit 
proposals may nonetheless elect to do so, and will have an equal 
opportunity for selection. When the full proposals are received, the 
review and selection process will continue as described in Sec. 295.4.
    10. Section 295.6 is revised to read as follows:


Sec. 295.6  Criteria for selection.

    The evaluation criteria to be used in selecting any proposal for 
funding under this program, and their respective weights, are listed in 
this section. No proposal will be funded unless the Program determines 
via the technical review that it has high scientific and technical 
merit, no matter how meritorious the proposal might be with respect to 
the other selection criteria.
(a) Scientific and Technical Merit of the Proposal (30 Percent)
    (1) Quality, innovativeness, and cost-effectiveness of the proposed 
technical program, i.e. uniqueness with respect to current industry 
practice. Applicants shall compare and contrast their approaches with 
those taken by other domestic and foreign companies working in the same 
field.
    (2) Appropriateness of the technical risk and feasibility of the 
project; that is, is there a sufficient knowledge base to justify the 
level of technical risk involved, and is the risk commensurate with the 
potential payoff. Projects should press the state of the art while 
still demonstrating feasibility.
    (3) Coherency of technical plan and clarity of vision of technical 
objectives, and the degree the technical plan meets Program goals.
    (4) Adequacy of systems-integration and multi-disciplinary planning 
including integration of appropriate downstream or upstream production, 
manufacturing, quality assurance, and customer service requirements.
    (5) Potential broad impact on U.S. technology and knowledge base.
(b) Potential Broad-based Economic Benefits of the Proposal (20 
Percent)
    (1) Potential to improve U.S. economic growth.
    (2) Timeliness of proposal; that is, the potential project results 
will not occur too late or too early to be competitively useful.
    (3) Degree to which ATP support is essential for the achievement of 
the broad-based benefits from the proposed R&D and appropriateness of 
proposed R&D for ATP support. This factor takes into consideration the 
likelihood of the results being achieved in the same general time frame 
by the applicant or by other U.S. researchers without ATP support, and 
whether other Federal agencies or other sponsors are already funding 
very similar kinds of work.
    (4) Cost-effectiveness of proposal.
(c) Adequacy of Plans for Eventual Commercialization (20 Percent)
    (1) Evidence that if the project is successful, the applicants will 
pursue further development of the technology toward commercial 
application, either through their own organization(s) or through 
others.
    (2) Degree to which proposal identifies potential applications of 
the technology and provides evidence that the applicant has credible 
plans to assure prompt and widespread use of the technology if the R&D 
is successful and to ensure adequate protection of the intellectual 
property by the participant(s) and, as appropriate, by other U.S. 
businesses.
(d) Proposer's Level of Commitment and Organizational Structure (20 
Percent)
    (1) Level of commitment of proposer as demonstrated by contribution 
of personnel, equipment, facilities, and cost-sharing. Extent to which 
the proposer assigns the company's best people to the project. Priority 
given to this work vis-a-vis other projects.
    (2) For joint ventures, the extent to which the joint venture has 
been structured (vertical integration, horizontal integration, or both) 
so as to include sufficient participants possessing all of the skills 
required to complete successfully the proposed work.
    (3) For joint ventures, appropriate participation by small 
businesses. ``Small business'' is defined in Sec. 295.2(q).
    (4) Appropriateness of subcontractor/supplier/collaborator 
participation and relationships (where applicable).
    (5) Clarity and appropriateness of management plan. Extent to which 
the proposers have clarified who is responsible for each task, and the 
chain of command. Extent to which those responsible for the work have 
adequate authority and access to higher level management.
(e) Experience and Qualifications of the Proposing Organization (10 
Percent)
    (1) Adequacy of proposer's facilities, equipment, and other 
technical, financial, and administrative resources to accomplish the 
proposed program objectives. This factor includes consideration of 
resources possessed by subcontractors to the applicant or other 
collaborators.
    (2) Quality and appropriateness of the technical staff to carry out 
the proposed work program and to identify and overcome barriers to 
meeting project objectives.
    (3) Past performance of the company or joint venture members in 
carrying out similar kinds of efforts successfully, including 
technology application. Consideration of this factor in the case of a 
start-up company or new joint venture, will take into account the past 
performance of the key people in carrying out similar kinds of efforts.
    11. Newly designated Sec. 295.7 is revised to read as follows:


Sec. 295.7  Notice of availability of funds.

    (a) The Program shall publish at least annually a Federal Register 
notice inviting interested parties to submit proposals, and may more 
frequently publish invitations for proposals in the Commerce Business 
Daily, based upon the annual notice. Potential applicants must request 
a proposal preparation kit from the Program. Applications will only be 
considered for funding when submitted in response to an invitation 
published in the Federal Register, or a related announcement in the 
Commerce Business Daily.
    (b) All notices published in accord with Sec. 295.7(a) shall 
include the amount of funds available, the approximate number of 
awards, types of awards, closing dates, the name, address and telephone 
number of the contact person, a requirement that proposals be submitted 
with a NIST Form 1262 (for single applicants), or NIST Form 1263 (for 
joint ventures), and any other appropriate guidance.
    (c) Notices issued under Sec. 295.7(a) shall also state that awards 
under the Program shall be subject to all Federal laws and Federal and 
Departmental regulations, policies and procedures applicable to 
financial assistance awards, and shall require that funds awarded by 
the Program under subpart C (single applicants) shall be used only for 
direct costs and not for indirect costs, profits, or management fees of 
the funding recipients. Notices shall also include the notification 
that section 319 of Public Law 101-121 prohibits recipients of Federal 
contracts, grants, and loans from using appropriated funds for lobbying 
the Executive or Legislative Branches of the Federal Government in 
connection with a specific contract, grant, or loan.
    12. Newly designated Sec. 295.8 is revised to read as follows:


Sec. 295.8  Intellectual property rights; Publication of research 
results.

    (a)(1) Patent rights: Title to inventions arising from assistance 
provided by the Program must vest in a company or companies 
incorporated in the United States. The United States may reserve a non-
exclusive, nontransferable, irrevocable paid-up license to practice or 
have practiced for or on behalf of the United Sates any such 
intellectual property, but shall not, in the exercise of such license, 
publicly disclose proprietary information related to the license. Title 
to any such intellectual property shall not be transferred or passed, 
except to a company incorporated in the United States, until the 
expiration of the first patent obtained in connection with such 
intellectual property. Nothing in this paragraph shall be construed to 
prohibit the licensing to any company of intellectual property rights 
arising from assistance provided under this section.
    (2) Patent procedures: Each award by the Program will contain 
procedures regarding reporting of inventions by the funding recipient 
to the Program; determinations by the Program as to whether it will 
retain a governmental use license; march-in rights, and other matters.
    (b) Copyrights: Except as otherwise specifically provided for in an 
Award, funding recipients under the Program may establish claim to 
copyright subsisting in any data first produced in the performance of 
the award. When claim is made to copyright, the funding recipient shall 
affix the applicable copyright notice of 17 U.S.C. 401 or 402 and 
acknowledgment of Government sponsorship to the data when and if the 
data are delivered to the Government, are published, or are deposited 
for registration as a published work in the U.S. Copyright Office. The 
funding recipient shall grant to the Government, and others acting on 
its behalf, a paid up, nonexclusive, irrevocable, worldwide license for 
all such data to reproduce, prepare derivative works, perform publicly 
and display publicly, and for data other than computer software to 
distribute to the public by or on behalf of the Government.
    (c) Publication of research results: The decision on whether or not 
to publish research results will be made by the funding recipient(s). 
Unpublished intellectual property owned and developed by any business 
or joint research and development venture receiving funding or by any 
member of such a joint venture may not be disclosed by any officer or 
employee of the Federal Government except in accordance with a written 
agreement between the owner or developer and the Program. The licenses 
granted to the Government under Sec. 295.8(b) shall not be considered a 
waiver of this requirement.
    13. Section 295.14 is added to read as follows:


Sec. 295.14  Special financial reporting requirements.

    Each award by the Program shall contain procedures regarding 
financial reporting to ensure that awards are being used in accordance 
with Office of Management and Budget Circular A-122--``Cost Principles 
for Non-Profit Organizations'', Federal Acquisition Regulation (FAR) 
part 31--``Contract Cost Principles and Procedures'', or other sound 
accounting practices to be specified in the Cooperative Agreement. The 
audit principles to be applied to ATP awards are the Generally Accepted 
Accounting Principles (GAAP) according to the General Accounting 
Office's ``Government Auditing Standards'' subtitled ``Standards for 
Auditing Government Organization, Program, Activities and Functions''. 
Each award will be subject to an Attestation Engagement (i.e., 
providing assurance on representations of compliance with statutory, 
regulatory, and contractual requirements) or an audit in conjunction 
with the recipient's annual audit at least every two years. In the 
interest of efficiency, the recipients are encouraged to retain their 
own independent CPA firm to perform these services. The Department of 
Commerce's Office of Inspector General (OIG) reserves the right to 
determine the time frame and/or level of service of financial audit 
reports that are to be delivered and to determine how the close-out 
audit is to be conducted. The use of an independent CPA firm does not 
preclude the OIG's right to conduct its own audit.
    14. The heading for subpart B is revised to read as follows:

Subpart B--Assistance to United States Industry-Led Joint Research 
and Development Ventures

    15. Section 295.21 is revised to read as follows:


Sec. 295.21  Qualification of applicants.

    (a) Assistance under this subpart is available to industry-led 
joint research and development ventures only, subject to the 
limitations set out in Sec. 295.3 of these regulations. These ventures 
may include universities, independent research organizations, and 
governmental entities; however, the Program will not provide funding 
directly to any university or governmental organization.
    (b) Applications for funding under this subpart may be submitted on 
behalf of an industry-led joint research and development venture by one 
or more businesses or independent research organizations that are 
members of the venture. Applications must, however, include letters of 
commitment from all proposed members of the venture, verifying the 
availability of matching funds, and authorizing the party or parties 
submitting the proposal to act on behalf of the venture with the 
Program on all matters pertaining to the proposal.
    16. Section 295.22 is revised to read as follows:


Sec. 295.22  Limitations on assistance.

    An award will be made under this subpart only if the award will 
facilitate the formation of a joint venture or the initiation of a new 
research and development project by an existing joint venture.
    17. Section 295.24 is revised to read as follows:


Sec. 295.24  Registration.

    Joint research and development ventures selected for funding must 
notify the Department of Justice or the Federal Trade Commission under 
the National Cooperative Research Act of 1984. No funds will be 
released prior to receipt by the Program of copies of such 
notification.
    18. The heading for subpart C is revised to read as follows:

Subpart C--Assistance to Single-Applicant U.S. Businesses

    19. Section 295.30 is revised to read as follows:


Sec. 295.30  Types of assistance available.

    This subpart describes the types of assistance that may be provided 
under the authority of 15 U.S.C. 278n(b)(2). Such assistance includes 
but is not limited to entering into cooperative agreements with United 
States businesses, especially small businesses.
    20. Section 295.31 is revised to read as follows:


Sec. 295.31  Qualification of applicants.

    Awards under this subpart will be available to all businesses, 
subject to the limitations set out in Sec. 295.3 of these regulations. 
The Program will not directly provide funding under this subpart to any 
governmental entity, academic institution or independent research 
organization.

[FR Doc. 94-69 Filed 1-5-94; 8:45 am]
BILLING CODE 3510-13-M