Advanced Technology Program

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