[Federal Register Volume 62, Number 236 (Tuesday, December 9, 1997)]
[Rules and Regulations]
[Pages 64682-64687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32215]


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DEPARTMENT OF COMMERCE

National Institute of Standards and Technology

15 CFR Part 295

[Docket No. 970822200-7272-02]
RIN 0693-AB44


Advanced Technology Program

AGENCY: National Institute of Standards and Technology, Technology 
Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The National Institute of Standards and Technology (NIST) is 
issuing a final rule which amends the implementing regulations for the 
Advanced Technology Program (ATP). Major changes include an increase in 
the cost-sharing requirement for large companies applying as single 
proposers in future competitions; modification of the ATP evaluation 
criteria for project selection to place greater emphasis on joint 
ventures and consortia with a broad range of participants; and a new 
rule for the valuation of transfers between separately-owned joint 
venture members which applies to transfers of goods, including computer 
software, and services provided by the transferor related to the 
maintenance of those goods, when those goods or services are 
transferred from one joint venture member to other separately-owned 
joint venture members.

EFFECTIVE DATE: This rule is effective December 9, 1997.

FOR FURTHER INFORMATION CONTACT:
To receive additional program information, contact Barbara Lambis at 
(301) 975-4447.

SUPPLEMENTARY INFORMATION: The National Institute of Standards and 
Technology is issuing a final rule which amends regulations found at 
part 295 of title 15 of the Code of Federal Regulations, which 
implements the Advanced Technology Program (ATP). In a statement to 
Congress in March of 1997, Secretary of Commerce William M. Daley 
announced a Departmental study of several issues raised by Members of 
Congress and others concerning the policies and procedures of the ATP. 
The study was designed to make recommendations for possible changes to 
improve the effectiveness of the program. Following issuance of a 30-
day notice of opportunity for public comment on ways to improve the 
operation of the ATP, recommendations for possible changes were made to 
improve the effectiveness of the program.
    In order to implement the recommendations and the decisions of 
Secretary Daley, the National Institute of Standards and Technology is 
today issuing changes to the operating procedures of the Advanced 
Technology Program found at part 295 of title 15 of the Code of Federal 
Regulations. These changes strengthen the fundamental mission of the 
ATP: for Government to work in partnership with industry to foster the 
development and broad dissemination of challenging, high-risk 
technologies that offer the potential for significant, broad-based 
economic benefits for the nation. Such a unique government-industry 
research partnership fosters the acceleration not only of dramatic 
gains in existing industries, but also acceleration of the development 
of emerging or enabling technologies leading to revolutionary new 
products, industrial processes and services for the world's markets and 
work to spawn industries of the 21st century. Furthermore, the changes 
also ensure that the fundamental strengths of the ATP remain unchanged, 
especially the requirement that the ATP continue to be a wholly merit-
driven program based on peer review.

Description of the Changes

    Changes to part 295 include revisions on the following topics 
(please see the analysis of comments below for additional details):
     Revised section 295.32(b) increases the cost-sharing 
requirement for large companies applying as single proposers in future 
competitions. ``Large businesses,'' as the term is defined in the 
revised Sec. 295.2(k), are required to cost-share at a minimum of 60 
percent.
     The term ``large business'' is defined as including any 
business, including any parent company plus related subsidiaries, 
having annual revenues in excess of the amount published by ATP in the 
relevant annual notice of availability of funds. In establishing this 
amount, ATP may consider the dollar value of the total revenues of the 
500th company in Fortune Magazine's Fortune 500 listing.
     The ATP evaluation criteria for project selection are 
modified to: (1) place greater emphasis on joint ventures and consortia 
with a broad range of participants; and (2) better define the multi-
step selection process based on all of the criteria in Sec. 295.6.
     A new rule is established in Sec. 295.25 regarding the 
valuation of transfers between separately-owned joint venture members. 
The rule applies to transfers of goods, including computer software, 
and services provided by the transferor related to the maintenance of 
those goods, when those goods or services are transferred from one 
joint venture member to other separately-owned venture members.
     Also, a number of administrative and clerical changes are 
proposed to be implemented to part 295 for consistency and clarity.

Summary of Comments

    On September 17, 1997, NIST published a notice of proposed 
rulemaking in the Federal Register (62 FR 48802). In response to this 
notice three letters were received; one from a not-for-profit research 
organization, one from a U.S.-owned for-profit company, and one from an 
individual. An analysis of the comments follows.

Section 295.2  Definitions--(1 Comment)

    One commenter stated that the definition of ``matching funds'' 
under Section 295.2(1) eliminates reference to in-kind contribution of 
personnel and requested clarification on whether NIST considers 
personnel costs to be a cash contribution that would not be subject to 
the 30 percent limitation on in-kind.
    NIST Response: Under the ATP program, personnel contributions are

[[Page 64683]]

considered as ``cash'' contributions when made by funding recipients 
and, therefore, would not be subject to the 30 percent limitation.

Section 295.3  Eligibility of United States and Foreign-Owned 
Businesses--(1 Comment)

    One commenter stated that Section 295.3, ``Eligibility of United 
States and foreign-owned business'', is unfair to U.S. citizens and 
makes the goal outlined in Section 295.1 ``Purpose'', nearly impossible 
to achieve. The commenter believes that we should use the best 
technology in the world to achieve the ATP goals of ``high pay-off.'' 
The commenter suggests that the ownership rule be changed to that of 
individual representatives who must be U.S. citizens regardless of 
employer, and believes this would be fair to all U.S. citizens, who 
have a right to be employed in the U.S. by any legal entity. The 
commenter concludes that change would make it possible for 
participating coalitions to consider the best technology in the world 
to help the U.S. develop the best economic growth in a competitive, 
global economy.
    NIST Response: The statutory authority for the ATP, Section 28 of 
the NIST Act (15 U.S.C. 278n), stipulates ATP eligibility requirements. 
Only Congress has the authority to amend this statute. We therefore 
cannot make any changes based on these comments.

Section 295.6  Criteria for Selection--(1 Comment)

    One commenter requested clarification of what it meant by ``cost-
sharing'' in section 295.6(d)(1), Level of commitment of proposer, 
which refers to contributions of personnel, equipment, facilities, and 
cost-sharing.
    NIST Response: The ``level of commitment'' criterion reflects the 
extent to which a proposer has demonstrated a commitment to the project 
with, for example, cash, personnel, scientific equipment, and research 
facilities. Cost-sharing as used in this selection criteria includes 
cash and in-kind contributions and the level of the total contribution, 
i.e., low, average, or high.

Section 295.12  Special Reporting and Auditing Requirements--(2 
Comments)

    One commenter suggested that the ATP award stipulate the reporting 
requirements needed and stated that the audit requirements are a 
duplication of government surveillance and are not in the spirit of 
contractor self governance programs. Companies which have resident 
cognizant Federal auditors should be allowed to utilize such auditors 
to conduct the audits rather that having to incur additional expenses 
to hire an outside Certified Public Account (CPA). The commenter 
recommends that the audit requirement apply on an as-needed basis for 
firms who do not have systems to support government contracting.
    NIST Response: Each ATP award includes guidance on the financial, 
business, and technical reporting requirements. The audit requirement 
is not meant to be duplicative of existing government audit surveys. 
Resident cognizant Federal auditors may conduct the required audits in 
lieu of a private CPA firm.
    A second commenter noted that 295.12 is noted as being revised and 
then removed.
    NIST Response: This is a typographical error. Section 295.12 is 
being revised; however, section 295.14 is being removed.

Section 295.25  Special Rule for the Valuation of Transfers Between 
Separately-Owned Joint Venture Members--(1 Comment)

    One commenter stated that section 295.25 will serve as a 
disincentive for small companies to become joint venture partners and 
they will likely only provide products and services as subcontractors. 
The commenter further stated that the proposed special rule is not 
mandated under the ATP statute and further appears to be at odds with 
the ATP objective and with all other government pricing principles. The 
commenter supports the use of GSA schedule price as a method of valuing 
products and services and asserts that the use of other pricing methods 
for the ATP program could jeopardize preexisting agreements. He also 
disagrees that transferred services should be included in the 30 
percent restriction on in-kind contributions.
    NIST Response: The ATP is a cost-shared, high-risk research and 
development program and, therefore, it is expected that participants 
share in risk taking. The issues related to an equitable valuation of 
transfers among joint venture participants appear to be unique to this 
program, therefore, guidelines from other Federal programs would not 
necessarily apply. In the ATP, reimbursement of the government's share 
of the costs is based on actual costs incurred during the period of 
cost sharing rather than on recovering sunk costs (previously incurred 
R&D costs). The Department of Commerce deems this approach to be a 
reasonable compromise between a very strict interpretation of the 
intent of the ATP legislation and the more traditional policy of using 
GSA Schedule pricing as the basis for valuation. The strict 
interpretation would, for example, result in a transfer of previously-
developed software from one joint venture participant to another being 
valued for matching funds purposes essentially at zero. We recognize 
that such an interpretation would cause hardship for many ATP 
proposers, hence the compromise. ATP recognizes that some small 
companies may not have the resources to contribute a significant 
portion of the cost-sharing, however, joint ventures often have a mix 
of other medium and/or large businesses that, in the aggregate, can 
provide the required cost-sharing.

Section 295.32  Limitations on Assistance--(1 Comment)

    Section 295.32(b), which raises the cost sharing of a single 
company to 60 percent, and Section 295.6, regarding the evaluation 
criteria, will make it more difficult for single companies to 
participate. The commenter further states that no rationale is given 
for the changes.
    NIST Response: ATP agrees that the change could make it more 
difficult for some large businesses to participate in ATP as single 
company proposers. There has been much heated debate in the Congress 
and elsewhere concerning cost sharing in ATP and the role of large 
firms applying as single company proposers. Many people have expressed 
the viewpoint that large businesses should be expected to support more 
than 50 percent of the total project cost. (Under the previous rule, 
large companies with very low indirect costs could recover more than 50 
percent of total project costs.) DOC believes that the change will 
result in a broader consensus that the ATP's policies for large 
businesses are fair and appropriate.

Additional Information

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.

Executive Order 12866

    This rule has been determined not to be significant under section 
3(f) of Executive Order 12866.

Executive Order 12612

    This rule does not contain policies with Federalism implications 
sufficient

[[Page 64684]]

to warrant preparation of a Federalism assessment under Executive Order 
12612.

Regulatory Flexibility Act

    The Assistant General Counsel for Legislation and Regulation of the 
Department of Commerce certified to the Chief Counsel for Advocacy, 
Small Business Administration, that this rule will not have a 
significant economic effect on a substantial number of small entities. 
(5 U.S.C. 605(b)). 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. Specifically, based on past experience and currently 
foreseen budges, the ATP would expect to receive only a few hundred 
proposals annually from small businesses, and from these, to make under 
100 awards. The program is entirely voluntary for the participants that 
seek funding.

Paperwork Reduction Act

    Notwithstanding any other provisions of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection-of-information, subject to the 
requirements of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) control number.
    This rule contains collection of information requirements subject 
to review and approval by the Office of Management and Budget under the 
Paperwork Reduction Act (PRA). The collection of information 
requirements have been approved under OMB Control Number 0693-0009. The 
public reporting burden per respondent is estimated to range between 20 
and 30 hours per submission of the proposal and 3 hours annually for 
recipients of financial assistance to provide monitoring reports. This 
estimate includes the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collections of information. Comments on 
the burden estimates, or any other aspect of the information 
requirements, should be addressed to Barbara Lambis, Room A333, 
Administration Building National Institute of Standards and Technology, 
Gaithersburg, MD 20899.

National Environmental Policy Act

    This rule will not significantly affect the quality of the human 
environment. Therefore, an environmental assessment or Environmental 
Impact Statement is not required to be prepared under the National 
Environmental Policy Act of 1969.

Executive Order 12372

    Executive Order 12372 ``Intergovernmental Review of Federal 
Programs'' does not apply to this program.

List of Subjects in 15 CFR Part 295

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

    Dated: December 3, 1997.
Elaine Bunten-Mines,
Director, Program Office.
    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 continues 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 
assisted United States businesses to carry out research and development 
on high risk, high pay-off, emerging and enabling technologies. These 
technologies are:
    (1) High risk, because the technical challenges make success 
uncertain;
    (2) High pay-off, because when applied they offer significant 
benefits to the U.S. economy; and
    (3) Emerging and enabling, because they offer wide breadth of 
potential application and form an important technical basis for future 
commercial applications.
    (b) The rules in this part 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, 
cooperative agreements, and contracts to carry out its mission, the 
rules in this part 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.
    (c) In carrying out the rules in this part, the Program endeavors 
to put more emphasis on joint ventures and consortia with a broad range 
of participants, including large companies, and less emphasis on 
support of individual large companies.
    3. Section 295.2(c) is revised to read as follows:


Sec. 295.2  Definitions.

* * * * *
    (c) The term direct costs means costs that can be identified 
readily with activities carried out in support of a particular final 
objective. A cost may not be allocated to an award as a direct cost if 
any other cost incurred for the same purpose in like circumstances has 
been assigned to an award as an indirect cost. 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 working on the ATP project and associated 
reasonable 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 determine the allowability of direct costs in 
accordance with applicable Federal cost principles.
* * * * *
    4. Section 295.2 is further amended by revising the reference 
``Sec. 295.2(r)'' in paragraph (d) to read ``Sec. 295.2(q)'' and by 
removing paragraph (e), redesignating paragraphs (f) through (k) as 
paragraphs (e) and through (j), removing paragraph (n), redesignating 
paragraphs (o) through (r) as paragraphs (n) through (q), and adding 
new paragraph (k) to read as follows:


Sec. 295.2  Definitions.

* * * * *
    (k) The term large business for a particular ATP competition means 
any business, including any parent company plus related subsidiaries, 
having annual revenues in excess of the amount published by ATP in the 
relevant annual notice of availability of funds required by 
Sec. 295.7(a). In establishing this amount, ATP may consider the dollar 
value of the total revenues of the 500th company in Fortune Magazine's 
Fortune 500 listing.
* * * * *
    5. The newly designated Sec. 295.2(g) is revised to read as 
follows:


Sec. 295.2  Definitions.

* * * * *

[[Page 64685]]

    (g) 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 
expenses, such as the salaries and expenses of executive officers, 
personnel administration, maintenance, library expenses, and 
accounting. ATP shall determine the allowability of indirect costs in 
accordance with applicable Federal cost principles.
* * * * *
    6. The newly designated Sec. 295.2(h) is revised to read as 
follows:


Sec. 295.2  Definitions.

* * * * *
    (h) The term industry-led joint research and development venture 
means a joint research and development venture that consists of two or 
more separately-owned, for-profit businesses that perform research and 
development in the project; control the venture's membership, research 
directions, and funding priorities; and share total project costs with 
the Federal government. The venture may include additional companies, 
independent research organizations, universities, and/or governmental 
laboratories (other than NIST) which may or may not contribute funds 
(other than Federal 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.
* * * * *
    7. Redesignated Sec. 295.2(j)(1)(vi) is revised to read as follows:


Sec. 295.2  Definitions.

* * * * *
    (j) * * *
    (1) * * *
    (vi) Any combination of the purposes specified in paragraphs (j)(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 (j)(2) of this section.
* * * * *
    8. Section 295.2(l) is revised to read as follows:


Sec. 295.2  Definitions.

* * * * *
    (l) The term matching funds or cost sharing means that portion of 
project costs not borne by the Federal government. Sources of revenue 
to satisfy the required cost share include cash and in-kind 
contributions. Cash contributions can be from recipient, state, county, 
city, or other non-federal sources. In-kind contributions can be made 
by recipients or non-federal third parties (except subcontractors 
working on an ATP project) and include but are not limited to 
equipment, research tools, software, and supplies. Except as specified 
at Sec. 295.25, the value of in-kind contributions shall be determined 
in accordance with OMB Circular A-110, Subpart C, Section 23. The value 
of in-kind contributions will be prorated according to the share of 
total use dedicated to the ATP program. ATP restricts the total value 
of in-kind contributions that can be used to satisfy the cost share by 
requiring that such contributions not exceed 30 percent of the non-
federal share of the total project costs. ATP shall determine the 
allowability of matching share costs in accordance with applicable 
federal cost principles.
* * * * *
    9. Section 295.3(c) is added as follows:


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

* * * * *
    (c) Companies owned by legal residents (green card holders) may 
apply to the Program, but before an award can be given, the owner(s) 
must either become a citizen or ownership must be transferred to a U.S. 
citizen(s).
    10. Section 295.4 is revised to read as follows:


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. A source evaluation board (SEB) 
is established to ensure that all proposals receive careful 
consideration. In the first step, called ``preliminary screening,'' 
proposals are eliminated that do not meet the requirements of this part 
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; involves product development rather than high risk R&D is not 
industry-led; is significantly overpriced or underpriced given the 
scope of the work; 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 judged to have the highest merit based on the 
selection criteria receive further consideration and 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 proposals on the basis 
of all selection criteria (Sec. 295.6);
    (2) Assuring an appropriate distribution of funds among 
technologies and their applications; and
    (3) The availability of funds. The Selecting Official is 
responsible for ensuring that only proposals that meet the Program 
selection criteria receive awards. 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 proposer. 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 proposer of the deficiencies and enter into negotiations with the 
proposer in an effort to remedy the deficiencies. If appropriate, 
funding up

[[Page 64686]]

to 10 percent of the amount originally requested by the proposer may be 
awarded by the Program to the proposer 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 
proposer to that proposer.
    (f) NIST reserves the right to negotiate with proposers selected to 
receive awards the cost and scope of the proposed work, e.g., to add or 
delete a task(s) to improve the probability of success or to make the 
proposal more consistent with ATP's mission.
    11. 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 
that it has high scientific and technical merit, no matter how 
meritorious the proposal might be with respect to the other selection 
criteria. Similarly, no proposal will be funded that does not require 
Federal support or that is product development rather than high risk 
R&D. Each of the subfactors within a selection criterion shall be 
weighted equally.
    (a) Scientific and technical merit (30 percent).
    (1) Quality, innovativeness, and cost-effectiveness of the proposed 
technical program, that is, uniqueness with respect to current industry 
practice. Proposers 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 having credibility with regard to technical approach.
    (3) Coherency of the technical plan and clarity of vision of the 
technical objectives, and the degree to which the technical plan meets 
the project and, in the case of focused program competitions, program 
goals.
    (4) Integrated, forward-looking, team approach to the project. This 
factor includes the extent to which the R&D team will take into account 
aspects such as research and raw material suppliers and considerations 
of manufacturability and requirements of customers, regulatory 
concerns, safety issues, and environmental impacts. It also includes 
the extent to which all of the necessary technical disciplines will be 
brought into the R&D and how R&D, manufacturing, and marketing will 
work together in an integrated fashion.
    (5) Potential broad impact on U.S. technology and knowledge base.
    (b) Potential net broad-based economic benefits (20 percent). 
Potential to improve U.S. economic growth, taking into account the 
timeliness of the proposal; that is, the potential project results will 
not occur too late or too early to be competitively useful, and the 
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 criterion takes into consideration 
the likelihood of the results being achieved in the same general time 
frame by the proposer 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. Projects will not be selected if 
the Program judges that Federal support is not needed. In assessing the 
potential for broad-based economic benefits, emphasis is placed on a 
strong potential for spillover benefits extending well beyond those 
accruing to the awardee(s). Benefits are compared against the costs of 
the proposal to determine cost-effectiveness of the proposal.
    (c) Adequacy of plans for eventual commercialization (20 percent).
    (1) Evidence that if the project is successful, the proposers 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 proposer 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) Level of commitment and organization 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 in relation to other company activities.
    (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, the extent to which participation by small 
businesses is encouraged and is a key component of the proposal.
    (4) Appropriateness of subcontractor/supplier/collaborator 
participation and relationships (where applicable). For large company 
single proposers, the extent to which subcontractor teaming 
arrangements are featured and are a key component of the proposal.
    (5) Clarify 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 (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 proposer 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.
    12. Section 295.12 is revised to read as follows:


Sec. 295.12  Special reporting and auditing requirements.

    Each award by the Program shall contain procedures regarding 
technical, business, and financial reporting and auditing requirements 
to ensure that awards are being used in accordance with the Program's 
objectives and applicable Federal cost principles. The purpose of the 
technical reporting is to monitor ``best effort'' progress toward 
overall project goals. The purpose of the business reporting system is 
to monitor project performance against the Program's mission as 
required by the Government Performance and Results Act (GPRA) mandate 
for program

[[Page 64687]]

evaluation. The audit standards to be applied to ATP awards are the 
``Government Auditing Standards'' (GAS) issued by the Comptroller 
General of the United States (also known as yellow book standards) and 
the ATP program-specified audit guidelines. The ATP program-specific 
audit guidelines include guidance on the number of audits required 
under an award. In the interest of efficiency, the recipients are 
encouraged to retain their own independent CPA firm to perform these 
audits. The Department of Commerce's Office of Inspector General (OIG) 
reserves the right to conduct audits as deemed necessary and 
appropriate.
    13. Section 295.14 is removed.
    14. Section 295.22 is revised to read as follows:


Sec. 295.22  Limitations on assistance.

    (a) 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.
    (b) The total value of any in-kind contributions used to satisfy 
the cost sharing requirement may not exceed 30 percent of the non-
federal share of the total project costs.
    15. Section 295.25 is added to subpart B as follows:


Sec. 295.25  Special rule for the valuation of transfers between 
separately-owned joint venture members.

    (a) Applicability. This section applies to transfers of goods, 
including computer software, and services provided by the transferor 
related to the maintenance of those goods, when those goods or services 
are transferred from one joint venture member to other separately-owned 
joint venture members.
    (b) Rule. The greater amount of the actual cost of the transferred 
goods and services as determined in accordance with applicable Federal 
cost principles, or 75 percent of the best customer price of the 
transferred goods and services, shall be deemed to be allowable costs; 
provided, however, that in no event shall the aggregate of these 
allowable costs exceed 30 percent of the non-Federal share of the total 
cost of the joint research and development program.
    (c) Definition. The term ``best customer price'' shall mean the GSA 
schedule price, or if such price is unavailable, the lowest price at 
which a sale was made during the last twelve months prior to the 
transfer of the particular good or service.
    16. Sections 295.31 and 295.32 are revised to read as follows:


Sec. 295.31  Qualification of proposers.

    Awards under this subpart will be available to all businesses, 
subject to the limitations set out in Secs. 295.3 and 295.32.


Sec. 295.32  Limitations on assistance.

    (a) The Program will not directly provide funding under this 
subpart to any governmental entity, academic institution or independent 
research organization.
    (b) For proposals submitted to ATP after December 31, 1997, awards 
to large businesses made under this subpart shall not exceed 40 percent 
of the total project costs of those awards in any year of the award.
    (c) Awards under this subpart may not exceed $2,000,000, or be for 
more than three years, unless the Secretary provides a written 
explanation to the authorizing committees of both Houses of Congress 
and then, only after thirty days during which both Houses of Congress 
are in session. No funding for indirect costs, profits, or management 
fees shall be available for awards made under this subpart.
    (d) The total value of any in-kind contributions used to satisfy a 
cost sharing requirement may not exceed 30 percent of the non-federal 
share of the total project costs.
    17. In part 295 remove the word ``applicants'' or ``applicant'' and 
add in its place the word ``proposers'' or ``proposer'' in the 
following places: Sec. 295.7(a), (b) and (c); Sec. 295.21 section 
heading; subpart C heading; and Sec. 295.31 section heading.

[FR Doc. 97-32215 Filed 12-8-97; 8:45 am]
BILLING CODE 3510-13-M