(ii) Any special or unusual significance attributable to the prospective contractor's know-how, technical capabilities or the like, as they bear on the proposed work, including any other factors that render the prospective contractor particularly important to the objectives of the proposed work;

(iii) The past economic contribution of the prospective contractor to work closely related to the proposed work; particularly as such past contribution relates to the prospective Government contribution under the proposed contract. The prospective contractor may, of course, present either other or additional circumstances which it considers to justify its request.

(7) Any departures from the policy, procedures and clauses of 41 CFR Part 1-9 shall be subject to the provisions of FPR 1-1.009.

(8) Any invention reported during the course of the contract shall be forwarded to the EPA Patent Counsel for appropriate action.

(9) When a contractor requests a determination that it retain greater rights in an identified invention than the nonexclusive license, normally called for in the Patent Rights clause set out in FPR 1-9.107-5 (a) or (c) or in FPR 1-9.107-6, the contracting officer shall forward the request to the Contracts Management Division (PM214) who in turn shall forward it to the EPA Patent Counsel for review of the request and the development of a recommendation to the Administration as to whether or not the request should be granted. The final decision shall be made by the Administrator or his designee.

§ 15-9.107-50 Background Patent Rights Clause.

It is EPA policy that a contractor's Background Patents may be required to be made available in the manner prescribed in the clause below. This policy is founded on the concept that contractor owned Background Patents should not ordinarily be permitted to be used to enjoin or unduly inhibit utilization of either, inventions made in the course of or under EPA contracts, or products, processes or the like which are the object on which an EPA sponsored research or demonstration

project is performed. To this end, the clause set forth below will normally be included in any EPA contract that includes a "Patent Rights-Acquisition by the Government" clause as prescribed in § 15-9.107-4:

BACKGROUND PATENT RIGHTS

(a) Definitions.

Those definitions set forth in the clause of this contract entitled Patent Rights, and those set forth below apply to this Background Patent Rights clause.

(1) "Background Patent" means a foreign or domestic patent (regardless of its date of issue relative to the date of this contract):

(i) which the Contractor, but not the Government, has the right to license to others, and

(ii) infringement of which cannot be avoided upon the practice of a Subject Invention or Specified Work Object.

(2) "Commercial Item" means

(i) any machine, manufacture or composition of matter which, at the time of a request for a license pursuant to section (b) of this clause, has been sold, offered for sale or otherwise made available commercially to the public in the regular course of business, at terms reasonable in the circumstances, and

(ii) any process which, at the time of a request for a license, is in commercial use, or is offered for commercial use, so the results of the process or the products produced thereby are or will be accessible to the public at terms reasonable in the circumstances.

(3) "Specified Work Object" means the specific processes, methods, machines, manufacture or compositions of matter (including relatively minor modifications thereof) which is the subject of the experimental, developmental, or research work performed under this contract.

(4) "Contractor" as applicable to this clause only, means any individual, partnership, public or private corporation, association, institution or other entity which is a party to this contract and includes entities controlled by the Contractor. The term "controlled" means the direct or indirect ownership of more than 50 percent of the outstanding stock entitled to vote for the election of directors, or a directing influence over such stock; Provided However, That foreign entities not wholly owned by the Contractor shall not be considered as "controlled" for purposes of this patent clause. (5) "Government" means the Federal Government of the United States of Amer

ica.

(6) To "practice an invention or patent" means the right of a licensee on his own behalf to make, have made, use or have

used, sell or have sold, or otherwise dispose of according to law, any machine, design, manufacture or composition of matter physically embodying the invention, or to use or have used the process or method comprising the invention.

(7) “Administrator" means the Administrator of the U.S. Environmental Protection Agency or his authorized designee.

(8) "General Counsel" means the General Counsel of the Environmental Protection Agency or his authorized designee.

(b) Licenses Under Background Patents. (1) The Contractor agrees that it will make its Background Patent(s) available for use in conjunction with a Subject Invention or Specified Work Object for use in the specific field of technology in which the purpose of this Contract or the work called for or required thereunder falls. This may be done (i) by making available, in quality, quantity and price all of which are reasonable in the circumstances, an embodiment of the Subject Invention or Specified Work Object, which incorporates the invention covered by such Background Patent, as a Commercial Item, or (ii) by the sale of an embodiment of such Background Patent as a Commercial Item in a form which can be employed in the practice of a Subject Invention or Specified Work Object or can be so employed with relatively minor modifications, or (iii) by the licensing of the domestic Background Patent(s) at reasonable royalty to responsible applicants on their request.

(2) If the Administrator determines after a hearing that the quality, quantity, or price of embodiments of the Subject Invention or Specified Work Object sold or otherwise made available commercially as set forth in paragraph (b)(1)(i) is unreasonable in the circumstances, he may require the Contractor to license such domestic Background Patent to a responsible applicant at reasonable terms, including a reasonable royalty, but for use only in the specific field of technology in which the purpose of this contract or the work called for thereunder falls, and for use only in connection with (i) a Specified Work Object, or (ii) a Subject Invention.

(3)(i) When a license to practice a domestic Background Patent in conjunction with a Subject Invention or Specified Work Object is requested, in writing by a responsible applicant, for use in the specific field of technology in which the purpose of this contract or the work called for thereunder falls, and such Background Patent is not available as set forth in paragraph (b)(1)(i) or (ii), the Contractor shall have six (6) months from the date of his receipt of such request to decide whether to make such Background Patent so available. The Contractor shall promptly notify the Contracting Officer, in writing, of any request for a

license to practice a Background Patent in conjunction with a Subject Invention or Specified Work Object; such notification shall indicate if the Contractor or his exclusive licensee will comply with (b)(1) (i) or (ii).

(ii) If the Contractor decides to make such domestic Background Patent so available either by himself or by either an exclusive or nonexclusive licensee, he shall so notify the Administrator within the said six (6) months, whereupon the Administrator shall then designate the reasonable time within which the Contractor must make such Background Patent available in reasonable quantity and quality, and at a reasonable price. If the Contractor or his exclusive licensee decides not to make such Background Patent so available, or fails to make it available within the time designated by the Administrator, the Background Patent shall be licensed to a responsible applicant at reasonable terms, including a reasonable royalty, for practice in conjunction with (A) a Specified Work Object, or (B) a Subject Invention, and shall be limited to a specific field of technology in which the purpose of this Contract or the work called for thereunder falls.

(iii) The Contractor agrees to grant or have granted to a designated applicant, upon the written request of the Government, a nonexclusive license at reasonable terms, including reasonable royalties, under any foreign Background Patent in furtherance of any treaty or agreement between the Government of the United States and a foreign government for practice by or on the behalf of such foreign government, if an embodiment of the Background Patent is not commercially available in that country, provided however that no such license will be required unless the Administrator determines that issuance of such license is in the national interest. Such license may be limited by the licensor to the practice of such Background Patent in conjunction with a Subject Invention or a Specified Work Object and for use in only the specific field of technology in which the purpose of this contract or the work called for thereunder falls.

(iv) The Contractor agrees it will not seek injunctive relief or other prohibition of the use of a domestic Background Patent in enforcing its rights against any responsible applicant for such license and that it will not join with others in any such action. It is understood and agreed that the foregoing shall not affect the Contractor's right to injunctive relief or other prohibition of the use of Background Patents in areas not connected with the practice of a Subject Invention or Specified Work Object in the specific field of technology in which the purpose of this contract or the work called for there

under falls, or where the Contractor has made available a Commercial Item as set out in paragraph (b)(1)(i) or (ii).

(4) For use in the specific field of technology in which the purpose of this Contract or the work called for thereunder falls, and in conjunction with a Subject Invention or a Specified Work Object, the Contractor agrees to grant to the Government a license under any Background Patent. Such license shall be nonexclusive, nontransferable, royalty-free and world wide to practice such Patent which is not available as a Commercial Item as specified in paragraph (b)(1)(ii) for use of the Federal Government in connection with pilot plants, demonstration plants, test beds, and test modules. For all other Government uses, any royalty charged the Government under such license shall be reasonable and shall give due credit and allowance for the Government's contribution, if any, toward the making, commercial development or enhancement of the invention(s) covered by the Background Patent.

(5) Any license granted under a process Background Patent for use with a Specified Work Object shall be additionally limited to employment of the Background Patent under conditions and parameters reasonably equivalent to those called for or employed under this contract.

(6) It is understood and agreed that the Contractor's obligation to grant licenses under Background Patents shall be limited to the extent of the Contractor's right to grant the same without breaching any unexpired contract it had entered into prior to this contract or prior to the identification of a Background Patent, or without incurring any obligation to another solely on account of said grant. However, where such obligation is the payment of royalties or other compensation, the Contractor's obligation to license his Background Patents shall continue and the reasonable license terms shall include such payments by the applicant as will at least fully compensate the Contractor under said obligation to another.

(7) On the request of the Contracting Officer the Contractor shall identify and describe any license agreement which would limit his right to grant licenses under any Background Patent.

written request of the Government, recommend to his parent company, or affiliated company, as the case may be, the granting of the requested license on reasonable terms, including reasonable royalties, and actively assist and participate with the Government and such applicant, as to technical matters and in liaison functions between the parties, as may reasonably be required in connection with any negotiations for issuance of such license. For the purpose of this paragraph, a parent company is one which owns or controls, through direct or indirect ownership of more than 50 percent of the outstanding stock entitled to vote for the election of directors, another company or other entity and; affiliated companies are companies or other entities owned or controlled by the same parent company.

(c) Subcontractors.

(8) In the event the Contractor has a parent or an affiliated company, which has the right to license a patent which would be a Background Patent if owned by the Contractor, but which is not available as a Commercial Item as specified in paragraph (b)(1) (i) or (ii), and a qualified applicant requests a license under such patent for use in the specific field of technology in which the purpose of this contract or the work called for thereunder falls, and in connection with the use of a Subject Invention or Specified Work Object, the Contractor shall, at the

feror is ineligible, he shall notify the bidder or offeror promptly in writing and inform it:

(1) That it does not meet the eligibility requirements and provide the reason(s) for ineligibility;

(2) That it may protest the determination and submit evidence of eligibility to the contracting officer; and

(3) That if after review of the evidence submitted, the contracting officer still deems the bidder or offeror ineligible, he will forward the protest, together with pertinent material to the Wage and Hour Division, U.S. Department of Labor, Washington, D.C. 20210 for a final determination.

(b) Protests by other bidders or offerors-(1) Before award. (i) When another bidder or offeror challenges the eligibility of the apparently successful bidder or offeror prior to award, the contracting officer shall:

(A) Notify the protestant in writing that it may submit written evidence concerning the alleged ineligibility of the apparently successful bidder or offeror.

(B) Provide the apparently successful bidder or offeror with the written allegations of the protestant and inform it that it may submit evidence supporting its eligibility.

(C) Notify both the protestant and the apparently successful bidder or offeror that after reviewing all evidence submitted, the contracting officer shall make a decision and if that decision is adverse to the protestant, the protest together with all pertinent material will be forwarded to the Administrator, Wage and Hour Division, U.S. Department of Labor, Washington, D.C. 20210 for a final determination.

(D) Other bidders or offerors whose bids or offers might become eligible for award shall be notified when award is being withheld pending the disposition of a protest. Such bidders or offerors shall be requested to extend the acceptance period of their bids or offers.

(ii) Where a protest against award has been lodged no award shall be made unless the contracting officer determines that:

(A) The items to be procured are urgently required; or

(B) Delivery or performance will be unduly delayed by failure to make award promptly; or

(C) A prompt award will otherwise be advantageous to the Government. If award under paragraph (b)(1)(ii)(A), (B), or (C) of this section is contemplated, the contracting officer shall obtain the approval of the Director, Contracts Management, before proceeding with the award; the file shall be documented to explain the need for making an award prior to the receipt of a determination from the Department of Labor; and written notice of the decision to proceed shall be given to the Administrator, Wage and Hour Division, U.S. Department of Labor, the protestant, and to others concerned when appropriate.

(2) After award. A protest received after award shall be forwarded to the Wage and Hour Division, U.S. Department of Labor, Washington, D.C. 20210, if the contract has not been completed. The protestant shall be notified of the submission to the Department of Labor. If the contract has been completed, the protestant shall be notified that no action shall be taken on the protest.

tion and administration of fixed-price, cost-reimbursement, and other types of contracts, the pricing of contracts and contract modifications whenever cost analysis is performed, and the determination, negotiation, or allowance of cost when such action is required by a contract clause.

Subpart 15-15.6-Contracts with
Nonprofit Organizations

§ 15-15.601 Scope of subpart.

This subpart provides principles for determining the costs applicable to contracts performed by non-profit organizations. The cost principles are in addition to those established by the Office of Management and Budget in Circular No. A-122 dated June 27, 1980.

§ 15-15.605 Selected costs.

§ 15-15.605-3 Bidding costs.

Bidding costs are the costs of preparing bids or proposals on potential Government and non-Government contracts or projects, including the development of engineering data and cost data necessary to support the contractor's bids or proposals. Bidding costs of the current accounting period of both successful and unsuccessful bids and proposals normally will be treated as allowable indirect costs, in which event no bidding costs of past accounting period shall be allowable in the current period to the EPA contract. However, if the contractor's established practice is to treat bidding costs by some other method, the results obtained may be accepted only if found to be reasonable and equitable.

§ 15-15.605-35 Research and development costs.

severable from the related basic research, (2) attempts to determine and expand the potentialities of new scientific discoveries or improvements in technology, materials, processes, methods, devices, and techniques, and (3) attempts to "advance the state-ofthe-art." Applied research does not include any such efforts when their principal aim is the design, development, or test of specific articles or services to be offered for sale, which are within the definition of the term development as hereinafter provided.

(b) "Development" is the systematic use of scientific knowledge which is directed toward the production of, or improvements in, useful products to meet specific performance requirements, but exclusive of manufacturing and production engineering.

(c) A contractor's independent research and development is that research and development which is not sponsored by a contract, grant, or other arrangement.

(d) A contractor's costs of independent research as defined in paragraphs (a) and (c) of this section shall be allowable as indirect costs (subject to paragraph (h)), provided they are allocated to all work of the contractor.

(e) Costs of Contractor's independent development, as defined in paragraphs (b) and (c) of this section (subject to paragraph (h)), are allowable to the extent that such development is related to the product line for which the EPA has contracts, provided the costs are reasonable in amount and are allocated as indirect costs to all work of the contractor on such product lines. In cases where a contractor's normal course of business does not involve production work, the cost of independent development is allowable to the extent that such development is related and allocated as an indirect cost to the field of effort of EPA research and development contracts.

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(f) Independent research and development costs shall include an amount for the absorption of their appropriate share of indirect and administrative costs, unless the contractor, in accordance with his accounting practices consistently applied, treats such costs