Determination of Foreign Participation

Since 1990, the Advanced Technology Program of the National Institute of Standards and Technology has been investing in the growth of the nation's economy by cost sharing with industry in the development of high-risk, enabling technologies that form the basis for new and improved products, manufacturing processes, and services. ATP's multiyear awards are made to individual companies and to joint research and development ventures through a highly competitive, merit-based, peer-reviewed selection process. By law, only U.S.-owned companies and U.S. subsidiaries of foreign-owned companies (i.e., U.S.-incorporated companies that are majority-owned or controlled by individuals who are not citizens of the U.S.) are eligible to receive awards.

All funded projects, regardless of the ownership of the participating companies, must receive high scores against the project selection criteria published in the latest ATP Proposal Preparation Kit. The two main criteria relate to scientific and technological merit, and the potential for broad-based economic benefits.

U.S. subsidiaries of foreign-owned companies, however, must meet four additional eligibility requirements, as specified in ATP's authorizing legislation. This determination of eligibility for foreign-owned companies is referred to as the "foreign eligibility finding."

For an award to be given to a U.S. subsidiary of a foreign-owned company, the Secretary of Commerce (or the Secretary's designee) must find that four eligibility requirements are met. First, the Secretary of Commerce (or the Secretary's designee) must find that the company's participation is in the economic interest of the United States as evidenced by:

The company's investments in research, development, and manufacturing in the United States;
significant contributions by the company to employment in the United States;
an agreement by the company to promote the manufacture within the U.S. of products resulting from ATP supported technology and to procure supplies from competitive U.S. suppliers; and
other aspects relevant to the project's potential to produce net broad-based benefits for the U.S. economy.

This eligibility requirement is already largely covered under the "potential for broad-based economic benefits to the United States" project selection criterion which prospective applicants must address in their proposals. Whereas, for the project selection criterion, the emphasis is on the project's potential for providing net broad-based economic benefits to the United States, the more narrow emphasis in the foreign eligibility finding is on the effect of the participation of a specific U.S. subsidiary of a foreign-owned company in the project.

Furthermore, the Secretary of Commerce (or the Secretary's designee) must find that the country of incorporation of the foreign parent provides U.S.-owned companies:

opportunities comparable to those provided to any other company to participate in programs similar to ATP;
local investment comparable to those provided to any other company; and
adequate and effective protection of U.S.-owned intellectual property rights.

These three additional eligibility requirements pertain not to the project or the company, but rather to the national policies of the country in which the foreign parent is incorporated and are generally beyond the control of the individual applicant.

In implementing its legislative mandate, ATP initiates a foreign eligibility finding in situations where a foreign-owned company is selected as a finalist in a competition; or seeks to join an existing ATP joint venture project. A foreign eligibility finding also is initiated if a U.S.-owned company, which already is participating in a project, experiences a change in ownership, becomes majority-owned or controlled by non-U.S. citizens, and wishes to continue its participation in the project.

Implementation of this statutory requirement is carried out by the Director of ATP, the Secretary of Commerce's designee, who bases the determination of a foreign-owned company's eligibility to receive an award on evidence gathered from a number of sources.

To determine whether the participation of a particular foreign‑owned company in the project is in the economic interest of the United States, information provided in the proposal is reviewed. To clarify and/or supplement information in the proposal, the applicant may be requested to submit additional information to satisfy this requirement. Information also is obtained from other sources, including Dun & Bradstreet.

Evidence that the country of incorporation of the foreign parent affords U.S.-owned companies opportunities comparable to those afforded to any other company to participate in programs similar to ATP is derived primarily from analysis of similar program(s) in the parent country. This information is obtained from the managing organizations of the program(s), embassies, other official government sources, and public information.

Evidence that the country of incorporation of the foreign parent affords U.S.-owned companies local investment opportunities is based primarily on information supplied by the Office of the U.S. Trade Representative through its annual National Trade Estimate report, its annual "Special 301" Fact Sheet, and updates from desk officers. Additional information on barriers to investment and trade may also be obtained from other federal agencies.

Evidence that the country of incorporation of the foreign parent provides adequate and effective protection of U.S.-owned intellectual property rights is based on information supplied by the Office of the U.S. Trade Representative through its annual National Trade Estimate report, its annual "Special 301" Fact Sheet, and updates from desk officers. Note that this provision is stated in absolute terms and is not relative to how other companies are treated. Additional information also may be sought from other organizations, including the U.S. Patent and Trademark Office, the U.S. Department of State, and U.S. embassies abroad.

A positive foreign eligibility finding means that the applicant is determined eligible to participate in an ATP-supported project, provided all other requirements common to all ATP award candidates are met. For a foreign eligibility finding to be determined positive, each of the four additional eligibility requirements must be found true.

A negative decision with respect to the country-specific eligibility requirements does not preclude a positive finding in the future for the country in question. Similarly, a positive finding would not preclude a negative finding in the future for the country in question. The ATP recognizes that national policies may change over time. Therefore, it is ATP's policy to prepare a foreign eligibility finding at the time of a triggering event (defined under Implementation). The ATP does not determine in advance the countries that meet or do not meet the country-specific, foreign eligibility requirements.

For additional information on the foreign eligibility funding process, please request a copy of the report, ATP Eligibility Criteria for U.S. Subsidiaries of Foreign-Owned Companies: Legislation, Implementation, and Results (January 1998), NISTIR 6099, from Karian Forsha, (301) 975-4643. The report also can be read or downloaded as a pdf file on the ATP web site: http://www.atp.nist.gov/eao/ir-6099/contents.htm.