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  • Question

    1) Does FAR 3,101-2 distinguish between the individual employee and the government? That is, the software isn't being provided to me, it is being provided to the government. Because the software isn't provided to an individual, does FAR 3,101-2 apply? 2) If the above answer is yes, then an alternate is for us to just buy the software. How do we arrive at a fair price? Can the vendor offer reduced government pricing?


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.

    FAR 2.101 -- Definitions
    “Acquisition” means the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, … .

    FAR Part 3 -- Improper Business Practices and Personal Conflicts of Interest
    FAR 3.000 -- Scope of Part
    This part prescribes policies and procedures for avoiding improper business practices and personal conflicts of interest and for dealing with their apparent or actual occurrence.

    FAR 3.101-1 -- General
    Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. … While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition, be such that they would have no reluctance to make a full public disclosure of their actions.

    FAR 3.101-2 -- Solicitation and Acceptance of Gratuities by Government Personnel
    As a rule, no Government employee may solicit or accept, directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who (a) has or is seeking to obtain Government business with the employee’s agency, (b) conducts activities that are regulated by the employee’s agency, or (c) has interests that may be substantially affected by the performance or nonperformance of the employee’s official duties.

    2. The following references quoted in pertinent part are also applicable to this response:

    a. 31 USC § 6303 - Using procurement contracts
    http://www.law.cornell.edu/uscode/text/31/6303

    An executive agency shall use a procurement contract as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when—
      (1) the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; or
      (2) the agency decides in a specific instance that the use of a procurement contract is appropriate.

    b. The Federal Technology Transfer Act (FTTA), 15 U.S.C. § 3710a
    http://www.law.cornell.edu/uscode/text/15/3710a

    (a) General authority. Each Federal agency may permit the director of any of its Government-operated Federal laboratories —
      (1) to enter into cooperative research and development agreements on behalf of such agency … with industrial organizations (including corporations, partnerships, and limited partnerships, and industrial development organizations);

    (d) Definitions. As used in this section—
      (1) the term “cooperative research and development agreement” means any agreement between one or more Federal laboratories and one or more non-Federal parties under which the Government, through its laboratories, provides personnel, services, facilities, equipment, intellectual property, or other resources with or without reimbursement (but not funds to non-Federal parties) and the non-Federal parties provide funds, personnel, services, facilities, equipment, intellectual property, or other resources toward the conduct of specified research or development efforts which are consistent with the missions of the laboratory; except that such term does not include a procurement contract or cooperative agreement as those terms are used in sections 6303, 6304, and 6305 of title 31;

    c. Spire Corporation, Comp. Gen. Dec. B-258267, December 21, 1994
    http://www.gao.gov/products/401080#mt=e-report

    The GAO ruled that: “As a general matter, CRADAs under the FTTA may only be used where the purpose of the agreement is to transfer technology from a federal laboratory to a nonfederal entity for the purpose of conducting specified scientific research or development work in collaboration with the nonfederal entity. 15 U.S.C. Secs. 3702, 3710a(c)(2) (1988).”

    3. In response to the first part of this inquiry, based on the plain language as set forth in FAR 3.000, FAR 3.101-1 and FAR 3.101-2, we believe that FAR 3.101-2 only governs the conduct of individual Government employees in the performance of their official duties. However, we feel that any discussion of whether the contemplated transaction would constitute the acceptance of an “unethical gift” by a Government employee is really beside the point. We believe that the real issue in this case is what legal instrument is appropriate to these circumstances based on an analysis of pertinent law and regulation.

    4. The second part of this inquiry involves whether a procurement contract could be used to buy the software in question in order to enable a subsequent Government technical evaluation of this software for the benefit of the developing company.  As set forth in 31 USC § 6303, an executive agency shall use a procurement contract as the legal instrument when the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government. This law is confirmed in FAR 2.101, under the definition of “Acquisition” which means the procuring by contract with appropriated funds of supplies or services by and for the use of the Federal Government through purchase or lease in order to satisfy agency needs. Therefore, procurement contracts can only be used for “acquisitions” as defined in the FAR.

    5. On the other hand, it is the Federal Technology Transfer Act (FTTA), 15 U.S.C. § 3710a(a)(1), that permits Federal agencies to enter into CRADAs with industrial organizations such as the software company in question. Pursuant to 15 U.S.C. § 3710a(d)(1), and as confirmed by the GAO as described in reference 2c. above, a CRADA is the legal instrument under which the Government is authorized to provide personnel, services, facilities, equipment, intellectual property, or other resources with or without reimbursement to the industrial organization, toward the conduct of specified research or development efforts which are consistent with the missions of the laboratory, by transferring technology from a federal laboratory to a nonfederal entity.

    6. Based on the above analysis of pertinent law and regulation, we believe that a procurement contract cannot be used to purchase the software in question for the ultimate purpose of furnishing a Government technical evaluation of this software to the company in question because such an activity would not represent an acquisition authorized by 31 USC § 6303. Instead, in accordance with 15 U.S.C. § 3710a, we believe that the contemplated transaction described in this inquiry represents a technology transfer activity using Government-provided resources and is not an "acquisition" as defined by the FAR. Therefore in this case, a CRADA must be the legal instrument executed between the parties in accordance with agency procedures to accomplish this effort.

    7. Finally, please note that our research indicates (1) that a CRADA “can be executed in a short period of time and can be easily renewed or modified as appropriate” (Ref: Air Force Technology Transfer Program at: http://www.wpafb.af.mil/shared/media/document/AFD-070905-013.pdf); or (2) “that on average, the CRADA process takes three months” (Ref: Navy Research Laboratory at: http://www.nrl.navy.mil/techtransfer/crada_faq.php).
    Therefore, given the apparent, relatively simple effort described in this inquiry, we believe that the execution of a CRADA should not require an inordinate amount of time or significant administrative cost.

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