(c) Recommendations by technical personnel. Recommendations as to which potential sources are technically qualified shall be made by cognizant technical personnel after review of the information obtained as a result of advance publicity (see § 4.203) and as appropriate, on the basis of discussion with potential sources (either singly or in a group), correspondence, or suitable surveys.

(d) Research and development pools. See § 1.302-3 of this chapter.

(e) Unsolicited proposals. Unsolicited proposals may be the product of original thinking and generally are the property of the organization or individual who presents them. They are offered in the hope that the Government will contract with the offeror for further research on, or development of, the ideas they contain. Extreme care must be exercised by the Government not to disclose to third parties any proprietary information contained in unsolicited proposals. Unsolicited proposals received by procuring activities shall be handled in a manner which will encourage prospective contractors to disclose to the Government ideas which they have originated, conceived, or developed.

(a) In order to minimize the preparation of technical proposals, which can be both costly and wasteful of scientific or engineering manpower, contracting officers should request proposals only from sources which have been technically evaluated and found qualified to perform research or development in the specific field of science or technology involved. Where there is no substantial question as to the choice of the source, as where only one source is found fully qualified as a result of thorough technical evaluation or the purpose of the contract is to explore an idea or initial development submitted in confidence by one firm, solicitations may be limited to a single source. Where several sources are found fully qualified technically, proposals generally shall be solicited from each such source. Sources which become known as a result of synopses or other means of publicizing requirements shall be sent requests for proposals if such sources have been technically evaluated and determined reasonably qualified to perform, and possess any necessary security clearance. When a source

not initially solicited requests a copy of a solicitation and such source has been technically evaluated and determined not qualified, he shall be so advised and his request shall be denied. In the event such source has not been technically evaluated, a copy of the request for proposal shall be furnished but only after advice has been given to the firm making the request as to the reasons for the limited solicitation and the unlikelihood of any other firm being able to qualify for a contract award under the circumstances. In all procurements of research or development in which no small business firm was solicited for a proposal, a statement shall be included in the solicitation file setting forth the reasons for not soliciting small business.

(b) In addition to paragraph (a) of this section, exploratory requests may be used to determine the existence of ideas or prior work in specific fields of research. However, the request for such information shall clearly state that it does not impose any obligation on the Government or signify a firm intention of the Government to enter into a contract.

[28 F.R. 12562, Nov. 23, 1963]

§ 4.205-3 Conduct of negotiations.

See § 3.804 of this chapter. The contracting officer should make certain that each prospective contractor fully understands the details of the various phases of the Government's requirement, especially the statement of work. This may be best accomplished by conferences between a prospective contractor, the contracting officer, and appropriate technical personnel, particularly where there is doubt that a work statement is understood or will be interpreted correctly by prospective contractors.

consider most technically competent, cognizant technical personnel shall consider the following:

(1) The contractor's understanding of the scope of the work as shown by the scientific or technical approach proposed;

(2) Availability and competence of experienced engineering, scientific, or other technical personnel;

(3) Availability, from any source, of necessary research, test, and production facilities;

(4) Experience or pertinent novel ideas in the specific branch of science or technology involved; and

(5) The contractor's willingness to devote his resources to the proposed work with appropriate diligence.

(c) In determining to whom the contract shall be awarded, the contracting officer shall consider not only technical competence, but also all other pertinent factors including management capabilities, cost controls, and past performance in adhering to contract requirements, weighing each factor in accordance with the requirements of the particular procurement (see § 1.903 of this chapter). The contracting officer shall notify those sources whose proposals or offers have been determined to be unacceptable of that decision in accordance with § 3.106 of this chapter.

[Paragraph (c) amended, 28 F.R. 4885, May 16, 1963]

§ 4.205-5 Evaluation of price and costs.

(a) While cost or price should not be the controlling factor in selecting a contractor for a research or development contract, cost or price should not be disregarded in the choice of the contractor. It is important to evaluate a proposed contractor's cost or price estimate, not only to determine whether the estimate is reasonable, but also to determine his understanding of the project and ability to organize and perform the contract. The most useful tools for this purpose are price analysis and cost analysis (see § 3.807-2).

[Paragraph (a) amended, 28 F.R. 2097, Mar. 5, 1963]

(b) Price analysis generally considers the overall reasonableness of the proposals in relation to the total contemplated expenditures and the extent and nature of the tasks scheduled to be accomplished. In most research and development contracts, the inability to define specifications and the nature of the

end items prevent the effective use of certain techniques of price analysis, such as comparisons with prior quotations and current prices and evaluations in terms of quantitative yardsticks. The conclusions reached by price analysis techniques must be supported by cost analysis procedures, used to examine the details of the offeror's proposals.

A

(c) The analysis of cost factors begins with an evaluation of the reliability of the offeror's cost estimating procedures and the dependability of his cost controls, as demonstrated by his history of cost management in the performance of other contracts or by his establishment of sound practices for this purpose. The cost analysis proceeds with a critical examination of the composition of each cost element in terms of its expected application to the objectives of the contract, and its conformance to the accepted principles of allocability and reasonableness. (See Subpart C, Part 15, and § 15.201 of this subchapter.) Government cost estimate may help in projecting tools for these purposes and may develop the expected incidence of various cost factors in relation to performance phases, planned segments, or identifiable "milestones". This estimate should provide a summary forecast of the time, effort, materials, equipment, and services necessary to accomplish the research or development objective. The comparison and reconciliation of the Government cost estimate with the offeror's cost estimate for the same phases, segments, or events should bring into focus any areas of excessive or insufficient emphasis and provide a foundation for meaningful discussions with the offeror.

(d) Special care should be exercised to comply with §§ 15.205-1 and 15.20533 of this chapter in the allowances of advertising costs under § 15.307-3 of this chapter.

§ 4.205-6 Profit or fee.

See §§ 3.405-1(c), 3.405-5(c), 3.805–2, 3.806, 3.807-10(d), and 3.808 of this chapter.

CODIFICATION: In § 4.205-6, the reference "3.807-5(d)" was changed to "3.807-10 (d)”, 28 F.R. 2097, Mar. 5, 1963. § 4.205-7

Documentation.

Contract files for research and development procurement shall be fully documented to include the basis and reasons for the selection of the sources so

Grants are authorized under 42 U.S.C. 1891 for basic research at educational institutions and other nonprofit organizations whose primary purpose is the conduct of scientific research. The policies and procedures for grants are prescribed by other Department of Defense directives as implemented in Departmental procedures.

§ 4.207 Types of contracts most applicable for research and development. See Subpart D, Part 3 of this chapter. § 4.208 Cost sharing practices.

It is not uncommon that certain advantages accrue to contractors performing research or development. Increased technical knowledge useful in commercial operations, adding to technical knowhow and training of employees, opportunity to benefit through patent rights, and use of background knowledge in future production contracts, are examples of advantages which contractors may receive from performing Government research or development. Because of these advantages, cost sharing arrangements should be negotiated, when appropriate, in research and development procurements. Cost sharing arrangements may be accomplished in a number of ways; for example, by the use of a reduced overhead rate, by eliminating charges for certain direct costs (e.g., salaries of technical personnel), by eliminating particular material or equipment charges, or by eliminating other forms of charges or by acceptance of various types of contributions by the contractor in the performance of the contract. § 4.209 Special use allowances for research facilities acquired by educational institutions.

(a) Definitions. As used in this section:

(1) "Special use allowance" means a negotiated direct or indirect allowance for buildings, structures, and real property, other than land, computed at an annual rate in excess of the rate which

normally would be allowed under Subpart C, Part 15 of this chapter.

(2) "Research facility" means real property, other than land, and includes structures, alterations, and improvements, acquired for the purpose of conducting scientific research under contracts with agencies of the Department of Defense.

(b) Policy. The expanding requirements of the Department of Defense for the performance of scientific research programs by the educational institutions may create special situations wherein the acquisition or construction of additional research facilities by such institutions is essential for the effective performance of scientific research programs of major importance to the Department of Defense. Educational institutions are expected to furnish facilities required for the performance of Defense contracts, and the extent of reimbursement by the Government for the research programs of such institutions shall be governed by the principles set forth in Subpart C, Part 15 of this chapter. However, in certain limited situations an educational institution may be unable to provide capital for new laboratories or other expanded facilities necessitated by Defense contracts unless the institution is given governmental assistance in return for the risks and expenses it assumes in acquiring or constructing such facilities. Special use allowances constitute a means for recognizing these risks and expenses on the part of the educational institution and also provide a basis for permitting essential governmental research programs to go forward. The resort to special use allowances as provided by this section is an extraordinary type of arrangement and constitutes an exception to the provisions for normal use allowances contained in § 15.304 (e) of this chapter. Any specific agreement providing for a special use allowance shall be negotiated on a caseby-case basis using the criteria established herein.

(c) Authorization of special use allowances. The Secretary concerned, or his sole designee for the purpose, may approve special use allowances for the acquisition or construction costs of research facilities financed by educational institutions only when all of the following conditions are met:

(1) The research facility is essential to the performance of Department of Defense contracts;

(2) The program requirements cannot be met practically and effectively by existing facilities, either Government or non-Government;

(3) The proposed agreement for the special use allowances represents a sound business arrangement;

(4) It is undesirable or impractical for the Government to provide Government-owned facilities for the performance of the research; and

(5) The proposed use of the research facility is in consonance with the underlying objective of the Government in granting the special use allowance.

(d) Negotiation and administration of contracts providing for special use allowances. The negotiation and administration of contracts providing for special use allowances are subject to the conditions set forth in subparagraph (1) through (13) of this paragraph.

(1) The terms of the agreement for special use allowances authorized herein shall be specified or incorporated by reference in the applicable contracts.

(2) Where the special use allowance is based on the total acquisition cost, no normal use allowance or other use or depreciation charge will apply during the special allowance period nor after the educational institution has recovered the total acquisition cost under Government contracts or from other users. Where the special use allowance is based on less than total acquisition cost of the research facility, the agreement will specify whether any normal use allowance or other use or depreciation charge will apply to the balance during the special use allowance period; however, no more than the normal use allowance computed in accordance with Subpart C, Part 15 of this chapter may be applied thereafter to the balance.

Any

(3) During the period of the special use allowance, and for subsequent periods to the extent agreed upon, the research facility shall be available for Government research use on a priority basis over non-Government use. significant use during such period other than that which justified the special use allowance shall be subject to prior consent of the cognizant approval authority specified in this section.

(4) Special use allowances are applicable only in years in which the Government has contracts in effect with the educational institution for research to be conducted in the facility. The Government has no liability to the educa

tional institution for the special use allowance in any year in which there is no Government contract. In any year when the level of research effort under Government contracts has been reduced to a point where the special use allowance is excessive in relation to the extent of the Government research funding, the parties may negotiate a special use allowance for that year at a mutually acceptable rate.

(5) Where more than one Government contract is to be performed in the research facility, special use allowances generally should be allocated to using contracts on an equitable basis.

(6) If during the period when a special use allowance is in effect, any substantial use is made of the research facility for parties other than the Government, only an allocable share of the special use allowance shall be charged to the Government.

(7) Special use allowances shall not include any maintenance, utilities, or other operational costs.

(8) Generally, the period for which a special use allowance is authorized shall be at least ten years. However, a shorter period of time is authorized where the total amount to be allowed is less than acquisition cost for the research facility.

(9) Reimbursements under contracts for special use allowances shall not commence until the research facility is occupied and used for research under the contract. However, equitable adjustments may be made in the special use allowance during the construction period if the research facility is partially used for research under the contract.

(10) Determination of the amount of a special use allowance shall be based on the comparative need for the research facility by the Department of Defense and by the educational institution. In no event shall the institution be paid more than the acquisition costs.

(11) In establishing the annual special use allowance, due consideration shall be given to rental costs for similar space in the area where the research facility is to be located.

(12) No payment shall be made to the educational institution for costs of land or interest charges on capital, used or borrowed, for the acquisition of the research facility.

(13) Information copies of each special use allowance agreement negotiated shall be furnished to each authorizing

Since the selection of research or development contractors is based upon seeking the best scientific and technological sources, it is important that the contractor selected on this basis does not in turn subcontract technical or scientific work without prior approval of the contracting officer. The clause prescribed in § 7.402-8 of this chapter for cost-reimbursement type research and development contracts, requires prior written consent of the contracting officer for the placement of any subcontract which has experimental, developmental, or research work as one of its purposes. During the negotiation of the contract, it is imperative that the contracting officer obtain complete information concerning the contractor's plans for subcontracting any portion of the research or development effort. See §§ 1.906, 3.807-10, and 3.903-2 of this chapter.

CODIFICATION: In $4.210, the reference "3.807-5" was changed to "3.807-10", 28 F.R. 2097, Mar. 5. 1963.

§ 4.211

Scientific and technical reports.

(a) Research and development contracts are required to contain appropriate data clauses as prescribed in Subpart B, Part 9 of this chapter, which usually provide, among other things, for the reproduction and use for any purpose of the Government of any or all of the information to be provided under the contract. Contracting officers shall require contractors to furnish all such information resulting from research or development contracts. Scientific and technical reports should be reproduced as economically as practicable, consistent with the reporting needs of the Government.

(b) It is important that the results of research and development contracts be made readily available to Government activities, and to non-Government organizations and persons who have a need to know in accordance with procedures of the Military Departments. The Armed Services Technical Information Agency, Arlington Hall Station, Arlington 12, Virginia, provides a central service for the interchange of scientific

and technical information of value to Department of Defense agencies and contractors.

§ 4.212 Data under research and development contracts.

(a) It is imperative that all research and development contracts carefully specify the data to be delivered under the contract since the Basic Data clause requires delivery only of "Subject Data" and defines "Subject Data" as data to be delivered under the contract.

(b) In planning a developmental procurement, when subsequent production contracts are contemplated, consideration should be given to the need and time required for obtaining a procurement package. The term "procurement package" means plans, drawings, specifications and other descriptive information and data necessary to achieve competition in production contracts.

§ 4.213 Insurance under research and development contracts.

See Part 10 of this chapter.

§ 4.213-1 Contractor immunity from liability for torts.

In the case of cost-reimbursement type contracts where nonprofit educational institutions or other contractors do not carry insurance either because as charitable organizations they claim immunity from liability for torts or, in the case of state institutions, because the state law does not permit them to expend their funds for insurance premiums, the requirements of the Insurance-Liability clause, § 7.203-22 of this chapter, may be modified to recognize a claim of partial immunity as provided in 7.402-26(a) or for a claim of total immunity as provided in § 7.402-26(b). § 4.213-2 Indemnification against unusually hazardous risks.

Under the authority provided by 10 U.S.C. 2354, research and development contracts may specifically include language to indemnify contractors against liability on account of claims by third parties (including those of contractor's employees) for death, bodily injury, and loss or damage to property, and for loss of or damage to the contractor's property, to the extent such liabilities arise out of the direct performance of the contract involved and from a risk defined in the contract as unusually hazardous.