1. INTRODUCTION TO THE FEDERAL ACQUISITION REGULATIONS Kathy Lorenzi Associate Director Office of Contracts and Grants The University of Colorado Boulder 303-492-2692 Kathleen.lorenzi@colorado.edu

2. Greetings from Boulder 2

3. WORKSHOP DESCRIPTION Introduction to the Federal Acquisition Regulations (FAR) Negotiating contracts under the Federal Acquisition Regulations (FAR) can be challenging for even the most experienced Research Administrator. This workshop will introduce participants to the FAR's purpose and organization, and explain how it works. Learning Outcomes Participants will be able to: – Describe the structure of the FAR and demonstrate the relationship between prescriptions and clauses; – Identify contract types e.g. cost reimbursement, fixed-price, time and materials) and explain how and when they are used; – Understand the federal contracting process 3

4. TODAY’S TOPICS  What are the basics of Federal contracting?  What is the purpose for the FAR?  How is the FAR organized?  What are the most important things in the FAR?  What is the Federal contracting process? 4

5. CONTRACTING BASICS 5

6. CONTRACT BASICS: DEFINITIONS Federal Grant and Cooperative Agreement Act 31 USC 6304 and 6305  The purpose is to transfer money, property, services or anything of value to recipient in order to accomplish a public purpose.  Considered to be Financial Assistance – not a procurement. 6

7. CONTRACT BASICS: DEFINITIONS  Grant – project is implemented independently of the Sponsor and there is no anticipated involvement between the sponsor and recipient during performance of an activity  Cooperative Agreement – Substantial Involvement is anticipated between Sponsor and Recipient during the performance of the Activity. 7

8. CONTRACT BASICS: DEFINITIONS Contract  The principal purpose is to acquire property or services for direct benefit or use of the Sponsor.  The Sponsor determines that a procurement contract is appropriate.  The Sponsor prepares the Scope of Work. The University responds with a proposal.  By FAR definition, a contract is not a grant or cooperative agreement. 8

9. CONTRACT BASICS: DEFINITIONS So, what is a contract… A document that describes a relationship between two parties, such as a buyer and seller, that is defined by an agreement that makes a promise and creates an obligation. A written contract will memorialize the agreements made between the parties about their respective rights and responsibilities. BEWARE, contracts are: More difficult to negotiate; More difficult to administer because they are governed by specific terms and conditions; Require specific standards of performance; Are subject to change; and Are LEGALLY BINDING. 9

10. CONTRACT BASICS: DEFINITIONS Essential Elements of a Contract:  Offer: one party to another  Acceptance: formal or informal  Consideration: anything of value  Competent Parties: 18 years old, authority, sound mind  Lawful Purpose: activity must be legal 10

11. CONTRACT BASICS: DEFINITIONS Contracts may masquerade as:  Memorandum of Understanding  Teaming Agreements  Agreements with funds – grants with terms and conditions, purchase orders, intergovernmental agreements  Agreements without funds – material transfer agreements, nondisclosure agreements, data transfer agreements Remember: The content of the Agreement will determine if it is a contract, not the title. 11

12. PURPOSE FOR THE FAR 12

13. PURPOSE FOR THE FAR The Government is a sovereign entity  It can only contract for items for which a need has been determined (defense, disaster relief, public good, etc.).  It can only operate through its authorized officials (the Contracting Officer) determined by legislative authority.  Contracting Officer authority is strictly defined.  Acquisitions are funded with taxes collected from you and me; this creates a strong fiduciary responsibility of people in public acquisition and procurement and federal contractors/subcontractors.  The FAR governs the Federal procurement process. 13

14. PURPOSE FOR THE FAR What is the FAR?  The FAR is a system of uniform policies and procedures governing the acquisition or contracting actions of all federal executive agencies.  The underlying regulation for all federal contracts  A tool for federal Contract Officers  A “How To Contract with the Federal Government” manual for everyone 14

15. PURPOSE FOR THE FAR Is the FAR the law? United States Code (U.S.C.) “The Codification by subject matter of the general and permanent laws of the United States” Code of Federal Regulations (C.F.R.) “The CFR is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government. It is divided into 50 titles that represent broad areas subject to Federal regulation.” Title 48 C.F.R. Implements the FAR and the Agency acquisition regulations 15

16. PURPOSE FOR THE FAR The Contracts Officer selects the clauses based upon:  Purpose of the contract (e.g. R&D, Supplies, Services)  Nature of the Contractor (e.g. for-profit, non-profit, educational institution, state)  Method of financing (e.g. fixed-price, cost reimbursement, time and materials) 16

17. PURPOSE FOR THE FAR 3 Things to know about the FAR:  The FAR is written for journeyman or contract administrators with less than 2 years experience.  The FAR is written ambiguously on purpose so it is flexible.  There is a 91% success rate by industry in alternative dispute resolution – 9 our of 10 times the Government will give you some relief. Mark Lumer Principal Assistant for Contracting (PARC), Retired US Army Space & Missile Defense Systems 17

18. ORGANIZATION OF THE FAR 18

19. ORGANIZATION OF THE FAR How is the FAR organized?  The FAR consists of 61 chapters.  Chapter 1 represents the “Basic FAR”.  Chapters 2 - 57 represent the specific Executive agency supplements to the basic FAR.  Each chapter of the FAR is divided into Subchapters and Parts addressing a particular contracting topic (e.g. procurement, property, termination, inspection, audit). 19

20. ORGANIZATION OF THE FAR Agency Supplements:  Each Agency has the authority to issue a supplement, subject to review.  Agency Supplemental Clauses either – Implement existing, basic FAR clauses, or – Supplement existing, basic FAR parts, subparts, sections or subsections. 20

21. ORGANIZATION OF THE FAR Subchapter A – General Parts 1 – 4 Subchapter B – Competition and Acquisition Planning Parts 5–12 Subchapter C – Contracting Methods and Contract Types Parts 13–18 Subchapter D – Socioeconomic Programs Parts 19–26 Subchapter E – General Contracting Requirements Parts 27–33 Subchapter F – Special Categories of Contracting Parts 34–41 Subchapter G – Contract Management Parts 42–51 Subchapter H – Clauses and Forms Parts 52, 53, Appendix and Index 21

22. ORGANIZATION OF THE FAR Numbering system for prescriptions: 27.303-(a) Numbering system for Clauses: __ 52.227-11 27.303-(a) PartSubpartSectionSubsection Chapter52.2.27-11 AgencyPartSubpartSectionSubsection 22

23. ORGANIZATION OF THE FAR WHAT ARE THE PRESCRIPTIONS AND THE CLAUSES?  Prescriptions = instructions regarding which clauses to include in which kind of contracts (Parts 1 – 51)  Clauses = rules guiding the implementation of the contract (Part 52) 23

24. ORGANIZATION OF THE FAR The Prescription : 49.502 Termination for Convenience of the Government. (b) Fixed-price contracts that exceed the simplified acquisition threshold— (1)(i) General use. The contracting officer shall insert the clause at 52.249- 2, Termination for Convenience of the Government (Fixed-Price), in solicitations and contracts when a fixed-price contract is contemplated and the contract amount is expected to exceed the simplified acquisition threshold except in contracts for —52.249- 2 (B) Research and development work with an educational or nonprofit institution on a no-profit basis... 49.503 Termination for Convenience of the Government and default. (a) Cost-reimbursement contracts— (1) General use. Insert the clause at 52.249-6, Termination (Cost- Reimbursement), in solicitations and contracts when a cost- reimbursement contract is contemplated, except contracts for research and development with an educational or nonprofit institution on a no- fee basis.52.249-6 24

25. ORGANIZATION OF THE FAR 49.502 Termination for convenience of the Government. d) Research and development contracts. The contracting officer shall insert the clause at 52.249-5, Termination for the Convenience of the Government (Educational and Other Nonprofit Institutions), in solicitations and contracts when either a fixed-price or cost- reimbursement contract is contemplated for research and development work with an educational or nonprofit institution on a nonprofit or no-fee basis.52.249-5 25

26. IMPORTANT THINGS IN THE FAR RELATED TO RESEARCH ADMINISTRATION 26

27. IMPORTANT THINGS IN THE FAR Subchapter A - General Part 1 – Federal Acquisition Regulation System Part 2 – Definitions of Words and Terms Part 3 – Improper Business Practices and Personal Conflicts of Interest Part 4 – Administrative Matters 27

28. IMPORTANT THINGS IN THE FAR Subpart 1.102 Statement of guiding principles for the Federal Acquisition System (a)The vision for the Federal Acquisition System is to deliver on a timely basis the best value product or service to the customer, while maintaining the public’s trust and fulfilling public policy objectives. Participants in the acquisition process should work together as a team and should be empowered to make decisions within their area of responsibility. Note: The Government preference for supplier selection is competition. 28

29. IMPORTANT THINGS IN THE FAR Subpart 1.102 Statement of guiding principles for the Federal Acquisition System (b) The Federal Acquisition System will — (1) Satisfy the customer in terms of cost, quality, and timeliness of the delivered product or service by, for example— (i) Maximizing the use of commercial products and services; (ii) Using contractors who have a track record of successful past performance or who demonstrate a current superior ability to perform; and (iii) Promoting competition; (2) Minimize administrative operating costs; (3) Conduct business with integrity, fairness, and openness; and (4) Fulfill public policy objectives. 29

30. IMPORTANT THINGS IN THE FAR Subpart 1.102 Statement of guiding principles for the Federal Acquisition System (c) The Acquisition Team consists of all participants in Government acquisition including not only representatives of the technical, supply, and procurement communities but also the customers they serve, and the contractors who provide the products and services. (d) The role of each member of the Acquisition Team is to exercise personal initiative and sound business judgment in providing the best value product or service to meet the customer’s needs. In exercising initiative, Government members of the Acquisition Team may assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority. 30

31. IMPORTANT THINGS IN THE FAR Subpart 3.10 CONTRACT CODE OF BUSINESS ETHICS AND CONDUCT 3.1002 Policy. (a) Government contractors must conduct themselves with the highest degree of integrity and honesty. (b) Contractors should have a written code of business ethics and conduct. To promote compliance with such code of business ethics and conduct, contractors should have an employee business ethics and compliance training program and an internal control system that— (1) Are suitable to the size of the company and extent of its involvement in Government contracting; (2) Facilitate timely discovery and disclosure of improper conduct in connection with Government contracts; and (3) Ensure corrective measures are promptly instituted and carried out. 31

32. IMPORTANT THINGS IN THE FAR Subpart 3.10 CONTRACT CODE OF BUSINESS ETHICS AND CONDUCT 3.1004 Contract clauses. (a) Insert the clause at FAR 52.203-13, Contractor Code of Business Ethics and Conduct, in solicitations and contracts if the value of the contract is expected to exceed $5,000,000 and the performance period is 120 days or more.52.203-13 (Cumulative Value) 32

33. IMPORTANT THINGS IN THE FAR Subpart 3.10 CONTRACT CODE OF BUSINESS ETHICS AND CONDUCT (b) Code of business ethics and conduct. (1)Within 30 days after contract award, unless the Contracting Officer establishes a longer time period, the Contractor shall— (i) Have a written code of business ethics and conduct; and (ii) Make a copy of the code available to each employee engaged in performance of the contract. (2) The Contractor shall— (i) Exercise due diligence to prevent and detect criminal conduct; and (ii) Otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law. 33

34. IMPORTANT THINGS IN THE FAR SUBCHAPTER B – COMPETITION AND ACQUISITION PLANNING Part 5 – Publicizing Contract Actions Part 6 – Competition Requirements Part 7 – Acquisition Planning Part 8 – Required Sources of Supplies and Services Part 9 – Contractor Qualifications Part 10 – Market Research Part 11 – Describing Agency Needs Part 12 – Acquisition of Commercial Items 34

35. IMPORTANT THINGS IN THE FAR Subpart 6.1 – Full and Open Competition 6.101 Policy. (a) 10 U.S.C. 2304 and 41 U.S.C. 253 require, with certain limited exceptions (see Subpart 6.2 and 6.3), that contracting officers shall promote and provide for full and open competition in soliciting offers and awarding Government contracts.10 U.S.C. 230441 U.S.C. 253Subpart 6.26.3 (b) Contracting officers shall provide for full and open competition through use of the competitive procedure(s) contained in this subpart that are best suited to the circumstances of the contract action and consistent with the need to fulfill the Government’s requirements efficiently (10 U.S.C. 2304 and 41 U.S.C. 253).10 U.S.C. 230441 U.S.C. 253 35

36. IMPORTANT THINGS IN THE FAR 6.102 Use of competitive procedures. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Sealed bids. (See 6.401(a).)6.401 (b) Competitive proposals. (See 6.401(b).) If sealed bids are not appropriate under paragraph (a) of this section, contracting officers shall request competitive proposals or use the other competitive procedures under paragraph (c) or (d) of this section.6.401 (c) Combination of competitive procedures. If sealed bids are not appropriate, contracting officers may use any combination of competitive procedures (e.g., two-step sealed bidding). 36

37. IMPORTANT THINGS IN THE FAR (d)Other competitive procedures. (1) Selection of sources for architect-engineer contracts in accordance with the provisions of 40 U.S.C. 1102 et seq. is a competitive procedure (see Subpart 36.6 for procedures).40 U.S.C. 1102Subpart 36.6 (2) Competitive selection of basic and applied research and that part of development not related to the development of a specific system or hardware procurement is a competitive procedure if award results from— (i) A broad agency announcement that is general in nature identifying areas of research interest, including criteria for selecting proposals, and soliciting the participation of all offerors capable of satisfying the Government’s needs; and (ii) A peer or scientific review. (3) Use of multiple award schedules issued under the procedures established by the Administrator of General Services consistent with the requirement of 41 U.S.C. 259(b)(3)(A) for the multiple award schedule program of the General Services Administration is a competitive procedure. 41 U.S.C. 259(b)(3)(A) 37

38. IMPORTANT THINGS IN THE FAR Subpart 12.2 – Special Requirements for the Acquisition of Commercial Items 12.203 Procedures for solicitation, evaluation, and award. Contracting officers shall use the policies unique to the acquisition of commercial items prescribed in this part in conjunction with the policies and procedures for solicitation, evaluation and award prescribed in Part 13, Simplified Acquisition Procedures; Part 14, Sealed Bidding; or Part 15, Contracting by Negotiation, as appropriate for the particular acquisition.Part 13Part 14Part 15 38

39. IMPORTANT THINGS IN THE FAR Subpart 12.3—Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items (a)In accordance with Section 8002 of Public Law 103-355 (41 U.S.C. 264, note), contracts for the acquisition of commercial items shall, to the maximum extent practicable, include only those clauses—41 U.S.C. 264 (1)Required to implement provisions of law or executive orders applicable to the acquisition of commercial items; or (2)Determined to be consistent with customary commercial practice. (b)Insert the following provisions in solicitations for the acquisition of commercial items, and clauses in solicitations and contracts for the acquisition of commercial items... 3) The clause at 52.212-4, Contract Terms and Conditions—Commercial Items. This clause includes terms and conditions which are, to the maximum extent practicable, consistent with customary commercial practices and is incorporated in the solicitation and contract by reference (see Block 27, SF 1449).52.212-4 SF 1449 39

40. IMPORTANT THINGS IN THE FAR SUBCHAPTER C – CONTRACTING METHODS AND CONTRACT TYPES Part 13 – Simplified Acquisition Procedures Part 14 – Sealed Bidding Part 15 – Contracting By Negotiation Part 16 – Types of Contracts Part 17 – Special Contracting Methods Part 18 – Emergency Acquisitions 40

41. IMPORTANT THINGS IN THE FAR Contract Types and Financing Alternatives; How to chose?  Competition  Price Analysis / Cost Analysis  Type and Complexity of the Requirement  Urgency of the Requirement  Period of Performance or Length of Production Run  Contractor’s technical capability and financial responsibility.  Adequacy of the contractor’s accounting system  Concurrent Contracts  Extent and Nature of Proposed Subcontracting  Acquisition History 41

42. IMPORTANT THINGS IN THE FAR Subpart 15.002 Types of negotiated acquisition (a) Sole source acquisitions. When contracting in a sole source environment, the request for proposals (RFP) should be tailored to remove unnecessary information and requirements; e.g., evaluation criteria and voluminous proposal preparation instructions. (b) Competitive acquisitions. When contracting in a competitive environment, the procedures of this part are intended to minimize the complexity of the solicitation, the evaluation, and the source selection decision, while maintaining a process designed to foster an impartial and comprehensive evaluation of offerors’ proposals, leading to selection of the proposal representing the best value to the Government (see 2.101).2.101 42

43. IMPORTANT THINGS IN THE FAR Subpart 15.101 Best value continuum An agency can obtain best value in negotiated acquisitions by using any one or a combination of source selection approaches. In different types of acquisitions, the relative importance of cost or price may vary. where the requirement is clearly definable and the risk…is minimal, cost or price may play a dominant role in source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection. 43

44. IMPORTANT THINGS IN THE FAR Subpart 15.4—Contract Pricing 15.400 Scope of subpart. This subpart prescribes the cost and price negotiation policies and procedures for pricing negotiated prime contracts (including subcontracts) and contract modifications, including modifications to contracts awarded by sealed bidding. 44

45. IMPORTANT THINGS IN THE FAR 15.400 Contracting officers shall— (a) Purchase supplies and services from responsible sources at fair and reasonable prices. (b) Price each contract separately and independently 15.403-4 (a)(1) The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies.15.403-1 (adequate competition, prices set by law or regulation, purchasing a commercial item, waiver) 45

46. IMPORTANT THINGS IN THE FAR 15.404-1 Proposal analysis techniques. (a) General. The objective of proposal analysis is to ensure that the final agreed-to price is fair and reasonable. (1) The contracting officer is responsible for evaluating the reasonableness of the offered prices. The analytical techniques and procedures described in this subsection may be used, singly or in combination with others, to ensure that the final price is fair and reasonable. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required. 46

47. IMPORTANT THINGS IN THE FAR (2) Price analysis shall be used when certified cost or pricing data are not required (see paragraph (b) of this subsection and 15.404- 3).15.404- 3 (3) Cost analysis shall be used to evaluate the reasonableness of individual cost elements when certified cost or pricing data are required. Price analysis should be used to verify that the overall price offered is fair and reasonable. 47

48. IMPORTANT THINGS IN THE FAR The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price: (i ) Comparison of proposed prices received in response to the solicitation (ii) Comparison of the proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items (iii) Use of parametric estimating methods/application of rough yardsticks (such as dollars per pound or per horsepower, or other units) to highlight significant inconsistencies that warrant additional pricing inquiry. 48

49. IMPORTANT THINGS IN THE FAR (iv) Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements. (v) Comparison of proposed prices with independent Government cost estimates. (vi) Comparison of proposed prices with prices obtained through market research for the same or similar items. (vii) Analysis of data other than certified cost or pricing data (as defined at 2.101) provided by the offeror.2.101 49

50. IMPORTANT THINGS IN THE FAR Cost analysis is the review and evaluation of any separate cost elements and profit or fee in an offeror’s or contractor’s proposal, as needed to determine a fair and reasonable price or to determine cost realism, and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency. 50

51. IMPORTANT THINGS IN THE FAR The Government may use various cost analysis techniques and procedures to ensure a fair and reasonable price, given the circumstances of the acquisition. (i)Verification of cost data or pricing data and evaluation of cost elements (necessity, reasonableness) (ii) Evaluating the effect of the offeror’s current practices on future costs (efficiencies, economies) 51

52. IMPORTANT THINGS IN THE FAR (iii) Comparison of costs proposed by the offeror for individual cost elements with— (A) Actual costs previously incurred by the same offeror; (B) Previous cost estimates from the offeror or from other offerors for the same or similar items; (C) Other cost estimates received in response to the Government’s request; (D) Independent Government cost estimates by technical personnel; and (E) Forecasts of planned expenditures. 52

53. IMPORTANT THINGS IN THE FAR (e) Technical analysis. (1) The contracting officer should request that personnel having specialized knowledge, skills, experience, or capability in engineering, science, or management perform a technical analysis of the proposed types and quantities of materials, labor, processes, special tooling, equipment or real property, the reasonableness of scrap and spoilage, and other associated factors set forth in the proposal(s) in order to determine the need for and reasonableness of the proposed resources, assuming reasonable economy and efficiency. (2) At a minimum, the technical analysis should examine the types and quantities of material proposed and the need for the types and quantities of labor hours and the labor mix. Any other data that may be pertinent to an assessment of the offeror’s ability to accomplish the technical requirements or to the cost or price analysis of the service or product being proposed should also be included in the analysis. (3) The contracting officer should request technical assistance in evaluating pricing related to items that are “similar to” items being purchased, or commercial items that are “of a type” or requiring minor modifications, to ascertain the magnitude of changes required and to assist in pricing the required changes. 53

54. IMPORTANT THINGS IN THE FAR Subpart 16.2 Fixed-Price  Acquisition of supplies or services is on the basis of reasonably definite functional or detailed specifications.  When costs can be estimated reasonably accurately – normal for supplies and services and for use in FAR 12 commercial purchases.  Imposes on the contractor maximum incentive to control costs, but with minimum administrative burden. 54

55. IMPORTANT THINGS IN THE FAR Why might you want one?  Freedom to rebudget (no A-21)  Limited financial reporting  Keep it if you don’t spend it  Period of Performance not tied to allowable cost Why might you not want one?  Payments is tied to deliverables (e.g., full payment upon receipt of final report-cash flow/nonpayment problems)  Must perform regardless of cost of performance  Universities are not good at managing contract changes 55

56. IMPORTANT THINGS IN THE FAR Subpart 16.3 Cost-Reimbursement  Used for procurement of non-commercial items which cannot be based on reasonably definite functional or detailed specifications (i.e., R&D, due to higher performance risks).  There is no incentive for contractor to control costs, thus Government imposes tighter controls.  Cost must be determined to be allowable, allocable and reasonable under the appropriate cost principles.  This is the typical contract type for universities and nonprofits 56

57. IMPORTANT THINGS IN THE FAR Why might you want one?  Best/reasonable efforts basis: when you run out of funds, you stop working  FAR clauses are more favorable (Ex: Termination) Why might you not want one?  Tighter rebudgeting controls  More frequent financial reports  Closer scrutiny (e.g. audits)  More administrative oversight required  Challenge to determine if directed changes are in scope or out of scope (when can/should you ask for more money) 57

58. IMPORTANT THINGS IN THE FAR Cost Plus Fixed Fee  A cost reimbursable contract with a fixed negotiated fee is based on an initial estimate of costs.  The fee does not vary with cost incurred – once the cost estimate is achieved, no more fee is allowable unless new tasks are added to the contract.  Cost Plus Percentage of Cost contracts are prohibited by law.  Danger Will Robinson! Fee cannot exceed 15% for R&D and 10% for “other”. 58

59. IMPORTANT THINGS IN THE FAR Subpart 16.6 Time & Material / Labor-  Reimbursement of hours worked, not costs incurred  Fixed hourly rate incorporating salary, fringe benefits, F&A, and fee  Rates invoiced must match proposed rates.  Audit - Personnel effort reporting cannot meet audit requirements.  If University is a subcontractor, then have the prime propose the University as part of the “M” not “T”. 59

60. IMPORTANT THINGS IN THE FAR Subpart 16.6 Time & Material / Labor-Hour  What to do about them – Propose with disclaimer. – Don’t accept this contract type, unless accounting system can comply. – Argue on basis of cost accounting standards and A-21 guidelines. – Negotiate a buffer. 60

61. IMPORTANT THINGS IN THE FAR SUBCHAPTER D – SOCIOECONOMIC PROGRAMS Part 19 – Small Business Programs Part 20 – Reserved Part 21 – Reserved Part 22 – Applications of Labor Laws to Government Acquisitions Part 23 Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace Part 24 – Protection of Privacy and Freedom of Information Part 25 – Foreign Acquisitions Part 26 – Other Socioeconomic Programs 61

62. IMPORTANT THINGS IN THE FA R Subpart 19.7 Subcontracting Plans  What are they?  Established goals for including a minimum percentage of small business concerns, small disadvantaged business concerns, and women-owned small business concerns in any subcontracting activity under a specific contract. The Subcontracting Plan is incorporated into the contract. 62

63. IMPORTANT THINGS IN THE FAR  Required at the request of the Contracting Officer, if contract and modifications exceed $650,000.  Process to create an individual plan:  Obtain detailed budget,  Work with PI to determine possible vendors for subcontracting,  Establish estimates by percentages for large, small, small disadvantaged, and woman owned businesses.  Master institutional plan is another option  Reports must be filed on an annual basis  Material breach 63

64. IMPORTANT THINGS IN THE FAR Subpart 23.5: 23.504 Policy (Drug Free Workplace) No offeror other than an individual shall be considered a responsible source (see 9.104-1(g) and 19.602-1(a)(2)(i)) for a contract that exceeds the simplified acquisition threshold, unless it agrees that it will provide a drug- free workplace by—9.104-119.602-1 (1) Publishing a statement notifying its employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the contractor’s workplace, and specifying the actions that will be taken against employees for violations of such prohibition; (2) Establishing an ongoing drug-free awareness program... (3) Providing all employees engaged in performance of the contract with a copy of the statement required by paragraph (a)(1) of this section; (4) Notifying all employees in writing in the statement required by paragraph (a)(1) of this section, that as a condition of employment on a covered contract, the employee will... (5) Notifying the contracting officer in writing within 10 days after receiving notice under subdivision (a)(4)(ii) of this section, from an employee or otherwise receiving actual notice of such conviction. 64

65. IMPORTANT THINGS IN THE FAR (6) Within 30 days after receiving notice under paragraph (a)(4) of this section of a conviction, taking one of the following actions with respect to any employee who is convicted of a drug abuse violation occurring in the workplace... (7) Making a good faith effort to maintain a drug-free workplace through implementation of paragraphs (a)(1) through (a)(6) of this section. (b) No individual shall be awarded a contract of any dollar value unless that individual agrees not to engage in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance while performing the contract. (c) For a contract of 30 days or more performance duration, the contractor shall comply with the provisions of paragraph (a) of this section within 30 days after contract award, unless the contracting officer agrees in writing that circumstances warrant a longer period of time to comply. 65

66. IMPORTANT THINGS IN THE FAR Subpart 24.2 Freedom of Information Act 24.201 Authority. The Freedom of Information Act provides that information is to be made available to the public either by— (a) Publication in the Federal Register; (b) Providing an opportunity to read and copy records at convenient locations; or (c) Upon request, providing a copy of a reasonably described record. 24.202 Prohibitions. (a) A proposal in the possession or control of the Government, submitted in response to a competitive solicitation, shall not be made available to any person under the Freedom of Information Act. 66

67. IMPORTANT THINGS IN THE FAR 24.203 Policy. (a) The Act specifies, among other things, how agencies shall make their records available upon public request, imposes strict time standards for agency responses, and exempts certain records from public disclosure. (b) Contracting officers may receive requests for records that may be exempted from mandatory public disclosure. The exemptions most often applicable are those relating to classified information, to trade secrets and confidential commercial or financial information, to interagency or intra- agency memoranda, or to personal and medical information pertaining to an individual. 67

68. IMPORTANT THINGS IN THE FAR SUBCHAPTER E – GENERAL CONTRACTING REQUIREMENTS Part 27 – Patents, Data, and Copyright Part 28 – Bonds and Insurance Part 29 – Taxes Part 30 – Cost Accounting Standards Administration Part 31 – Contract Cost Principles and Procedures Part 32 – Contract Financing Part 33 – Protests, Disputes, and Appeals 68

69. IMPORTANT THINGS IN THE FAR Public Law 96-517, Patent and Trademark Act Amendments of 1980 (Bayh – Dole) United States Code; Title 35, Patents, Part 2, Chapter 18, PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE Code of Federal Regulations: Title 37, Part 401 – RIGHTS TO INVENTIONS MADE BY NONPROFIT ORGANIZATIONS AND SMALL BUSINESS (“Standard IP Clause” in 37 CFR 401.14 ) Presidential memorandum on Government Patent Policy to the Heads of Executive Departments and Agencies, 18 February 1983 Executive Order 12591, Facilitating Access to Science and Technology, 10 April 1987 69

70. IMPORTANT THINGS IN THE FAR Subpart 27.3 Intellectual Property 52.227-11 Patents Rights -- Ownership by the Contractor is intended for contracts with non-profit entities and small businesses. 52.227-13 Patent Rights -- Ownership by the Government is for when Government requires greater rights - almost never used with non-profits, except in very exceptional circumstances. 70

71. IMPORTANT THINGS IN THE FAR 52.227-11 – Patents (Short Form ), The contractor retains rights to inventions but has obligations to the Government, including:  Unrestricted, non-exclusive, royalty-free license,  Disclosure and notification deadlines,  Due diligence in disclosure and otherwise complying with the law (Bayh-Dole) and pursuing commercialization as appropriate for the nature of the invention,  March-in rights for Government if the Institution does not meet requirements for retaining rights. 71

72. IMPORTANT THINGS IN THE FAR Subpart 27.4 Data Rights 52.227-14 Rights in Data – General (Alt IV) is the preferable clause for universities.  The provision allows for the assertion of limited or restricted rights of data developed with private funds.  The Contractor retains rights to data and copyrights first generated, but has obligations to Government, including:  Royalty-free, non-exclusive license,  Unlimited rights, unless specified otherwise.  Note: Without Alt IV, the institution may assert copyrights only to papers published in technical journals; with Alt IV the institution may assert copyright on all data and software. 72

73. IMPORTANT THINGS IN THE FAR 52.227-17 is for Special Works (e.g., work- for-hire); the Government owns and controls the data. 52.227-18 is for Existing Works; the Government asserts rights to use existing works. 73

74. IMPORTANT THINGS IN THE FAR 74 Cost Principles FAR Part 31 Contract Cost Principles and Procedures: FAR 31.2 Contracts with Commercial Organizations FAR 31.3 Contracts with Educational Institutions FAR 31.303 – Determines that the allowability of cost for universities will be determined by OMB Circular A-21. Note: Per OMB A-21, Agencies are not expected to place additional restrictions on individual items of cost.

75. IMPORTANT THINGS IN THE FAR Cost Principles in Part 31 are found in 48 CFR 99, Cost Accounting Standards Board, OFPP and OMB.  48 CFR 9903 – Contract Coverage  48 CFR 9905 – Cost Accounting Standards, Educational Institutions Overhead Rates are to be verified with the subcontractor’s primary audit agency (DCAA, DHHS), but you will probably have to go through your ACO due to confidentiality considerations and competitive sensitive information. 75

76. IMPORTANT THINGS IN THE FAR SUBCHAPTER F – SPECIAL CATEGORIES OF CONTRACTING Part 34 – Major System Acquisition Part 35 – Research and Development Contracting Part 36 – Construction and Architect-Engineer Contracts Part 37 – Service Contracting Part 38 – Federal Supply Schedule Contracting Part 39 – Acquisition of Information Technology Part 40 – Reserved Part 41 – Acquisition of Utility Services 76

77. IMPORTANT THINGS IN THE FAR FUNDAMENTAL RESEARCH Broad Agency Announcement DARPA-BAA-09-66 As of the date of publication of this BAA, DARPA expects that program goals for this BAA may be met by proposers intending to perform 'fundamental research,' i.e., basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research and from industrial development, design, production, and product utilization the results of which ordinarily are restricted for proprietary or national security reasons. 77

78. IMPORTANT THINGS IN THE FAR 35.001 Definitions Applied research” means the effort that (a) normally follows basic research, but may not be severable from the related basic research; (b) attempts to determine and exploit the potential of scientific discoveries or improvements in technology, materials, processes, methods, devices, or techniques; and (c) attempts to advance the state of the art. When being used by contractors in cost principle applications, this term does not include efforts whose principal aim is the design, development, or testing of specific items or services to be considered for sale; these efforts are within the definition of “development,” given below. 78

79. IMPORTANT THINGS IN THE FAR Definitions “Development,” as used in this part, means the systematic use of scientific and technical knowledge in the design, development, testing, or evaluation of a potential new product or service (or of an improvement in an existing product or service) to meet specific performance requirements or objectives. It includes the functions of design engineering, prototyping, and engineering testing; it excludes subcontracted technical effort that is for the sole purpose of developing an additional source for an existing product. 79

80. IMPORTANT THINGS IN THE FAR 35.002 General  The primary purpose of contracted R&D is to advance scientific and technical knowledge and apply that knowledge to the extent necessary to achieve agency and national goals.  Unlike Contracts for supplies and services, most R&D contracts are directed toward objectives for which the work or methods cannot be precisely described in advance.  R&D contracting focuses on the Statement of Work. 80

81. IMPORTANT THINGS IN THE FAR SUBCHAPTER G – CONTRACT MANAGEMENT Part 42 – Contract Administration and Audit Services Part 43 – Contract Modifications Part 44 – Subcontracting Policies and Procedures Part 45 – Government Property Part 46 – Quality Assurance Part 47 – Transportation Part 48 – Value Engineering Part 49 – Termination of Contracts Part 50 – Extraordinary Contractual Actions and the Safety Act Part 51 – Use of Government Sources by Contractors 81

82. IMPORTANT THINGS IN THE FAR Requirements for Subcontracts Subcontracts are developed to reflect the needs of the project and the University’s requirements under the prime contract. These needs include: Requirements of the Prime Contract, Type of effort and amount of risk (technical and costs), Subcontractor capability (small business, large business), Size and complexity of the project, Past performance, General business considerations. Subcontracts are not required to be the same form, format or type as the prime contract. Note: Subcontracts are subject to state law because of privity of contract between the Prime and the Government. 82

83. IMPORTANT THINGS IN THE FAR Many Institutions use a checklist for each subcontract due to documentation requirements in FAR for Subcontracts: Source Selection Due Diligence – Responsible Contractor Statement of Work Request for Proposal Subcontractor Proposal Technical Analysis Cost/Price Analysis – Negotiation memo Organizational Conflict of Interest – Reps and Certs Advance Notice Requirements Certification of Cost or Pricing Data if required 83

84. IMPORTANT THINGS IN THE FAR Prior Notification & Consent Required by FAR 52.244-2 44.201-1: Consent 44.201-2: Notification Requirement determined by: Approved/Disapproved purchasing system (CPSR) Contracting Officer stating in contract that a subcontract requires special attention Type/Amount of subcontract to be issued Request Alt I If consent is required, you must notify the Government reasonably in advance, and provide the documentation specified in (f)(1). 84

85. IMPORTANT THINGS IN THE FAR Contract Clause Flow-down Requirements for Subcontracts  Some FAR clauses state that they must be flowed-down in a specific way:  “The Contractor agrees to incorporate the substance of this clause, including this paragraph (c), in all subcontracts under this contract which exceed the simplified acquisition threshold.”  “…will include the language of this certification in all subcontract awards at any tier and require that all recipients of subcontract awards in excess of $100,000 shall certify and disclose accordingly.”  Specific Flow-down clause are mandatory if required by statute, Executive Order, or procurement regulation. 85

86. IMPORTANT THINGS IN THE FAR Common mandatory flowdown clauses:  52.215-2 “Audit and Records-Negotiation”  52.227-11 “Patent Rights-Retention by the Contractor”  52.230-3 “Cost Accounting Standards”  52.245- 1 “Government Property”  Various ethical and socio-economic requirements:  Equal Employment Opportunity  Anti-kickback  Gratuities  Representations and Certifications  Special Provisions 86

87. IMPORTANT THINGS IN THE FAR Non-mandatory clauses that are necessary to add to Subcontract to ensure that the Prime Contractor can adequately meet its contractual obligations (business issues) examples:  52.249-1 thru 6 “Termination for Convenience”  52.242.15 “Stop Work”  52.243-2 “Changes”  52.216-7 “Allowable Cost and Payment”  52.232-20 “Limitation of Cost”  52.232-22 “Limitation of Funds”  52.246-9 “Inspection of R&D  52.204-2 “Security Requirements”  52.233-1 “Disputes”***  Special Provisions 87

88. IMPORTANT THINGS IN THE FAR The Christian Doctrine  provides that if a statute or a regulation with the “force and effect of law” mandates the inclusion of the related clause in a Government contract, the contract will be interpreted as if the contract contains the clause, even if it was intentionally negotiated out of the contract.  Not every regulation is “read” into the contract, only if the regulation is issued pursuant to a statute that reasonably contemplates the regulation.  For example, Termination for Convenience is a “deeply ingrained strand of public procurement policy.” 88

89. IMPORTANT THINGS IN THE FAR Why is the Christian Doctrine important?  First, your negotiated Government contract may contain clauses in the contract by operation of this Doctrine (mandatory and non-mandatory) that are not actually listed in the contract.  Second, this Doctrine does not extend to Subcontracts. If a clause is omitted from the prime, it will be read in to the prime, but not the subcontract. 89

90. IMPORTANT THINGS IN THE FAR Substitution of Nomenclature Flow-down clauses must accurately reflect the relationship between the parties. Flow-Down clauses can be effected by using an introductory paragraph to the flow down clauses. 90

91. IMPORTANT THINGS IN THE FAR Substitution of Nomenclature Example This Appendix contains 1) full text clauses from the Prime Award, and 2) Federal Acquisition Regulation clauses (including Agency FARs) incorporated by reference from the Prime Contract with the same force and effect as if they were given in full text, that shall apply to the Subcontractor. For the purposes of appropriately reflecting the subcontracting relationship between the University and Subcontractor, the following substitution of nomenclature shall apply to the Prime Award terms incorporated into this Subcontract in the Articles and by this Appendix unless the context requires otherwise: Contractor, shall mean the Subcontractor Contract shall mean this Subcontract, Subcontractor shall mean Lower Tier Subcontractor, Government or Contracting Officer shall include or be replaced by University and University’s authorized representative. With respect to the Patent Rights and Data Rights clauses noted herein, the substitution of nomenclature will apply except Government and Contracting Officer shall mean only Government and Contracting Officer and not University or University’s Representative. With respect to the Patent Rights and Data Rights clauses, University requests and Subcontractor hereby provides to University a royalty free, world-wide, non-transferable, nonexclusive, irrevocable license to use, reproduce, copy, create derivative works, display, and perform publicly the intellectual property developed pursuant to this Subcontract for 1) internal research and/or academic purposes (e.g. non-commercial use), and 2) to meet the University’s requirements to the Government and Prime Contract. Any questions regarding the proper interpretation of a specific clause incorporated herein should be referred to the contracts and grants administrator at University. 91

92. IMPORTANT THINGS IN THE FAR Representations and Certifications  Make sure you require that the subcontractor completes the same set of Representations and Certifications that were required of your institution in the prime award.  False statements on Representations and Certifications can have civil and criminal penalties.  Certification requirements flow up – the subcontractor should certify before the prime. 92

93. IMPORTANT THINGS IN THE FAR FAR 45.101, Definitions  “Equipment” means a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment or special tooling.  “Material” means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end-item. Material does not include equipment, special tooling, special test equipment or real property.  “Property” means all tangible property, both real and personal. 93

94. IMPORTANT THINGS IN THE FAR 52.245-1 Government Property (Aug 2010) Alternate II (June 2007). As prescribed in 45.107(a)(3), substitute the following for paragraph (e)(3) of the basic clause:45.107 (e)(3) Title to property (and other tangible personal property) purchased with funds available for research and having an acquisition cost of less than $5,000 shall vest in the Contractor upon acquisition or as soon thereafter as feasible; provided that the Contractor obtained the Contracting Officer’s approval before each acquisition. Title to property purchased with funds available for research and having an acquisition cost of $5,000 or more shall vest as set forth in this contract.….The Contractor shall furnish the Contracting Officer a list of all property to which title is vested in the Contractor under this paragraph within 10 days following the end of the calendar quarter during which it was received. 94

95. IMPORTANT THINGS IN THE FAR (e)(3) Title under Cost-Reimbursement or Time-and-Material Contracts or Cost- Reimbursable contract line items under Fixed-Price contracts. (original) (i) Title to all property purchased by the Contractor for which the Contractor is entitled to be reimbursed as a direct item of cost under this contract shall pass to and vest in the Government upon the vendor’s delivery of such property. (ii) Title to all other property, the cost of which is reimbursable to the Contractor, shall pass to and vest in the Government upon— (A) Issuance of the property for use in contract performance; (B) Commencement of processing of the property for use in contract performance; or (C) Reimbursement of the cost of the property by the Government, whichever occurs first. (iii) All Government-furnished property and all property acquired by the Contractor, title to which vests in the Government under this paragraph (e)(3)(iii) (collectively referred to as “Government property”), are subject to the provisions of this clause. 95

96. IMPORTANT THINGS IN THE FAR SUBCHAPTER H – CLAUSES AND FORMS Part 52 – Solicitation Provisions and Contract Clauses Part 53 – Forms Appendix Index 96

97. 97 FEDERAL CONTRACTING PROCESS

98. Solicitation and Amendments (RFP) Pre-Bid Conference Prime Proposal Subcontract Proposal - (Technical, Cost and Management Proposals) Submission or Exceptions Letter Proposal Review Verification/Negotiation Best and Final Offer More Negotiation??? Acceptance 98

99. FEDERAL CONTRACTING PROCESS REQUEST FOR PROPOSAL (RFP)  Specific instructions for technical and cost proposals  Includes a sample contract or “schedule” with expected terms and conditions  Institutional endorsement of the proposal is considered an official offer, which may not be able to be changed once the proposal is submitted.  Some RFP’s may be converted into a contract with only the buyers signature (SF-33). 99

100. 52.215-8 Order of Precedence—Uniform Contract Format Part I Section A: Cover (Signature) Page Section B: Supplies/Services & Prices/Costs Section C: Descriptions, Specifications, Scope of Work Section D: Packaging and Marking Section E: Inspection and Acceptance Section F: Deliveries or Performance Section G: Contract Administration Data Section H: Special Contract Requirements 100

101. 52.215-8 Order of Precedence—Uniform Contract Format Part II Section I: Contract Clauses Part III Section J: List of Attachments PART IV Section K: Representations/Certifications Section L: Instructions, Attachments Section M: Evaluation Factors for Award 101

102. FEDERAL CONTRACTING PROCESS The Submittal or Exceptions Letter: The exceptions letter documents the University’s concerns with the proposed terms and conditions. If these issues are not specified when submitting the proposal, then they may not be eligible for negotiation after the award is made. 102

103. FEDERAL CONTRACTING PROCESS WHICH CLAUSES ARE ACCEPTABLE?  Read the clause - can you live with it?  Read the prescription - does it apply?  Contract type (FP, CR, T&M)  Contract purpose (R&D, Supply, Service)  Recipient type (for-profit, non-profit, educational)  Is there a trigger, or does it apply no matter what?  Is it Required or Optional (see ONR matrix) 103

104. 104 STANDARD CLAUSES

105. 52.215-02 Audit and Records - Negotiation Purpose: Establishes Government’s right to access and to audit contractor records; outlines contractor’s requirements for retention of records. Issue: Which audit requirements apply? How long are we required to keep the records? (3 years after final payment, or settlement... ) Action: Request Alternate II, which incorporates OMB A-133. 105

106. 52.215-08 Order of Precedence - Uniform Contract Format Purpose: Establishes the order of precedence for various sections of the contract when the Uniform Contract Format applies. Issue: The clause will help determine precedence of conflicting clauses. Action: Ensure that the order is fair and appropriate. 106

107. 52.215-8 Order of Precedence—Uniform Contract Format As prescribed in 15.209(h), insert the following clause:15.209 Order of Precedence—uniform Contract Format (Oct 1997) Any inconsistency in this solicitation or contract shall be resolved by giving precedence in the following order: (a) The Schedule (excluding the specifications) (b) Representations and other instructions. (c) Contract clauses. (d) Other documents, exhibits, and attachments. (e) The specifications. 107

108. 52.216-07 Allowable Costs and Payment Purpose: Establishes which cost principles will apply and outlines the terms of payment. Issue: Defaults to commercial cost principles (31.2). Action: Request that reference to 31.2 in first paragraph be changed to 31.3 (which incorporates A-21). 108

109. 52.216-08 Fixed-Fee Purpose: To establish that a “fee/profit” will be an allowable item of expense. Issue: Although this clause only applies in the event you are charging a fee, the agency may be treating this particular contract as if it were being issued to a commercial concern, which means there may be other commercially oriented clauses. Action: Remove if you are not asking for a fee. Look for other inappropriate commercial-oriented clauses. 109

110. 52.216-11 Cost Contract - No Fee Purpose: To establish a cost-based contract with no fee; establishes a reserve or holdback to protect the Government’s interests. Issue: The type of contract determines other contract requirements; reserve can be reduced (non-profits) or removed (educational R&D). Action: Try to get the reserve (holdback) removed (Alternate 1). Otherwise, try to get reserve reduced to $10,000. 110

111. 52.216-15 Predetermined Indirect Cost Rates Purpose: To establish your negotiated rate agreement as the appropriate overhead rates to use. Issues: The clause does not track with 2 CFR 220 in terminology Action: Make sure you know how to manage changes to your rate agreement. 111

112. 52.219-09 Small Business Subcontracting Plan Purpose: To establish the requirement for a Contractor to submit a Subcontracting Plan. Issue: Requires preparation and submission prior to award if requested; requires reporting. Plan is incorporated into contract; violation is a material breach. Action: Coordinate with your purchasing department. If the project budget does not meet the threshold, ask to remove the clause. 112

113. 52.227-1 Authorization and Consent Purpose: The basic clause provides for Contractor to utilize any patented invention to accomplish the contract - subject to any patent indemnity clause also included in contract. Alternate I is available for R&D contracts, and precludes use of patent indemnity clause. Issue: Government indemnifies contractor for patent infringement in contractor’s performance of contract. Action: Make sure to get Alternate I added and to request removal of Patent Indemnity clause, if included. 113

114. 52.227-11 Patent Rights – Ownership by the Contractor Purpose: Establishes patent terms, which implement Bayh- Dole for federal contractors. Issue: Allows some federal contractors to elect ownership of patents developed under the contract. Action: Ensure that your institution follows disclosure requirements, if it intends to take title to inventions developed under contract 114

115. 52.230-05 Cost Accounting Standards – Educational Institutions Purpose: To establish which Cost Accounting Standards will apply to contracts with educational institutions (see A-21). Issue: Make sure this CAS clause is only CAS included, or you may find yourself subject to additional standards. Action: CAS applies to negotiated contracts over $650K. Since these standards are already incorporated into the contract via 31.3 (A-21), don’t worry about getting this clause in, unless you see other CAS clauses already in contract. 115

116. 52.232-20 Limitation of Costs Purpose: Requires notification of the Government when contractor expenditures reach a specified threshold or when expenditures will be substantially more or less than total estimated cost. Issue: Puts government on notice that contractor is coming to end of contract. Government must respond or Contractor is no longer responsible to continue work. Action: Provide notification. 116

117. 52.232-22 Limitation of Funds Purpose: Requires notification of the Government when contractor expenditures reach a specified threshold or are expected to exceed total obligated funds. Issue: Puts Government on notice that Contractor is coming to end of obligated funding and establishes a 60 day deadline for supplemental or extension requests. Action: Provide notification. 117

118. 52.244-2 Subcontracts Purpose: Establishes prior approval requirements for issuance of subcontracts and contractor documentation. Issue: Prior approval may be required (even if subcontract was in budget) if you do not have an approved purchasing system. Action: Document! Note that previous versions of this clause, if applicable to your contract, may have imposed more stringent prior approval requirements. 118

119. 52.245-1 Government Property Purpose: Defines property; establishes title and management standards. Issue: Alternate II allows educational institutions to retain title to property if under $5,000, provided prior approval was obtained. Title to property over $5,000 shall vest as set forth in the contract. Action: Alternate II is the university default. If buying high dollar equipment or fabricating equipment, state in the contract who holds title and when the title transfers (at purchase or at delivery) 119

120. 52.247-34 F.o.b. Destination. Purpose: Designate who is responsible for risk of loss in transit Issue: Supplies shall be delivered to the destination consignee’s wharf, warehouse unloading platform, or receiving dock, at the expense of the Contractor. The Government shall not be liable for any delivery, storage, demurrage, accessorial, or other charges involved before the actual delivery of the supplies to the destination, unless such charges are caused by an act or order of the Government acting in its contractual capacity. Action: If shipping instruments or other high value hardware deliverables ask for FOB Origin 120

121. 52.247-63 Preference for U.S.-Flag Air Carriers Purpose: Imposes requirement to use only U.S-flag air carriers for government-funded travel. Issue: Foreign travel becomes an unallowable cost if U.S. flag air carrier is not used, except under certain predefined situations. Action: Educate your researchers. International Air Transportation Fair Competitive Practices Act of 1974 (49 U.S.C. 40118) (Fly America Act)49 U.S.C. 40118 121

122. 52.246-9 Inspection of Research and Development – Short Form Purpose: Establishes conditions under which Government may inspect/evaluate work. Issue: This clause is only available for R&D, and when delivery of designs and reports is the objective. Other inspection clauses require establishment and maintenance of an inspection system and, under some circumstances, re- performance. Action: Argue that contract is for basic R&D and only deliverables are technical reports or fabrications/prototypes. 122

123. 52.249-5 Termination for Convenience of the Government (Educational and other Nonprofit Institutions) Purpose: Specifies actions the Contractor must take when it receives a termination notice from Government. Issue: This is the only termination clause prescribed for use with universities performing R&D (either CR or FP). Termination for Default becomes a possibility on non- R&D contracts. Action: Make sure the contract is for Research and Development. 123

124. 124 APPENDIX

125. 52.204-02 Security Requirements Purpose: Establishes protocols which will apply to the contract if it involves classified information. Issue: Security controls; classified information. Action: Request Alternate I, which provides educational institutions the opportunity to revise SOW or terminate if the level of classification increases. 125

126. 52.212-04 Contract Terms and Conditions Commercial Items Purpose: Sets forth abbreviated set of fixed-price terms and conditions for the acquisition of commercial supplies and services. Note the C.O. may use FAR 12 because it may contain the only tools the agency knows how to use, e.g. purchase orders. Issue: Often used by contracting activities not accustomed to working with educational institutions. Includes warranty, patent indemnity, T for D and default. Action: Negotiate out unacceptable terms. 126

127. 52.227-3 Patent Indemnity Purpose: Establishes the Government’s right to be indemnified for patent infringement by Contractor, if Contractor is delivering supplies and/or services normally offered for sale in the open market. See prescription for exclusions. Issue: Many universities will not/can not provide patent indemnity. Action: Should not be included in R&D contract; also see Authorization & Consent (52.227-1, Alt 1). 127

128. 52.227-14 Rights in Data - General Purpose: Establishes ownership of data and copyrights. Issue: Basic clause allows contractors to establish copyright only on publications first produced under the contract. For educational institutions, Alternate IV will allow ownership of all data and software. Action: Request that Alternate IV be included. 128

129. 52.227-17 Rights in Data - Special Works Purpose: Establishes that contract deliverables are for sole use of the Government (e.g., work-for-hire). Issue: All data and deliverables are owned by the Government. Contractor may not publish or release without prior approval; must request permission for ownership and/or use. Action: The prescription is very clear about the few situations for which the Government may invoke this clause – unless you intend to accept this restriction, get it removed. 129

130. 52.242-15 Stop-Work Order Purpose: Establishes responsibilities of each party when government issues a stop-work order. Issue: Contractor must stop work on date stated. Government has up to 90 days to cancel the order, extend it, or terminate the contract. Contractor will be reimbursed for allowable cost incurred prior to effective date and allowable, non-cancellable obligations. Action: Request reduction of 90-day suspension to 30 days. 130

131. 52.243-2 Changes - Cost Reimbursement Purpose: Establishes conditions under which Government may direct changes to SOW. Issue: Only the Contract Officer may direct changes. These changes are unilateral. If changes increase cost and/or time, contract officer may make equitable adjustment to cost based upon Contractor’s request for adjustment. Action: Submit adjustment request within 30 days of change notice to request an equitable adjustment. Request Alt V. 131

132. 252.204-7000 Disclosure of Information Purpose: To safeguard classified or other sensitive information. Issue: Requires government prior approval to publish or disseminate. Purpose is not apparent from prescription. Action: Refer to 27.404(g)(2)&(3) and NSDD-189 as justification for getting restriction removed. Also, note IRS Ruling 76-296. 132

133. 252.223-7004 Drug-Free Workforce Purpose: Requires contractor to maintain certain anti-drug polices and procedures. Issue: Intended for contracts utilizing classified information and to protect national security. Unlike basic federal requirement, this clause adds random drug testing. May violate institutional policy; union contracts. Action: Get it removed or contact University Counsel. 133

134. OTHER POTENTIALLY PROBLEMATIC FAR CLAUSES 52.216-12, Cost Sharing Contract-No Fee, Alt I 52.217-09, Option to Extend the Term of the Contract 52.222-50, Combating Trafficking in Persons 52.224-01, Privacy Act Notification 52.224-02, Privacy Act 52.232-12, Advance Payments, Alt II, IV, V 52.232-17, Interest 52.233-01, Disputes 52.249-08, Default (Fixed-Price Supply and Service) 52.249-09, Default (Fixed Price Research and Development) 52.252-02, Clauses incorporated by Reference 52.252-04, Alterations in Contract 52.252-06, Authorized Deviations in Clauses 134

135. 135 THANK YOU