Billing Code 3510-13

U. S. DEPARTMENT OF COMMERCE
National Institute of Standards and Technology

15 CFR Part 295
Docket No. 980717184-8277-02
RIN: 0693-AB48
Advanced Technology Program

AGENCY: National Institute of Standards and Technology, Technology Administration, Commerce.

ACTION: Final Rule.

SUMMARY: The National Institute of Standards and Technology is today issuing a final rule which amends the implementing regulations for the Advanced Technology Program (ATP). Changes include modification of the ATP evaluation criteria and weights for project selection and clarification other sections of the rule.

EFFECTIVE DATE: This rule is effective November 20, 1998.

FOR FURTHER INFORMATION CONTACT: To receive additional program information, contact Barbara Lambis at 301-975-4447.

SUPPLEMENTARY INFORMATION: The National Institute of Standards and Technology is today issuing a final rule which amends regulations found at Part 295 of Title 15 of the Code of Federal Regulations, which implements the Advanced Technology Program (ATP). These changes strengthen the fundamental mission of the ATP; for government to work in partnership with industry to foster the development and broad dissemination of challenging, high-risk technologies that offer the potential for significant, broad-based economic benefits for the nation. Such a unique government-industry research partnership fosters dramatic gains in existing industries, accelerates the development of emerging or enabling technologies leading to revolutionary new products, industrial processes and services for the world's markets, and helps spawn new industries of the 21st century. Furthermore, the changes also ensure that the fundamental strengths of the ATP remain unchanged, especially the requirement that the ATP continue to be a wholly merit-driven program based on peer review. Changes to Part 295 include revisions on the following topics (please see the analysis of comments below for additional details):

• Section 295.2, Definitions, is modified to add a definition of "company" for clarity; revises the definition of "industry-led joint research and development venture" for clarity; and removes the definition of "joint research and development venture" or "joint venture" which is already included in the ATP statute.
• Section 295.4, The selection process, is modified to eliminate funding to assist proposers in overcoming any organizational deficiencies because the adequacy of the organizational structure is included in one of the ATP selection criteria.
• Section 295.6, Criteria for selection, is modified to place equal emphasis on the technical and economic merits of a proposal in accordance with the purpose of the Program.
• Sections 295.10 and 295.11 are removed because they are operational procedures unnecessary for inclusion in a regulation.
• Redesignated section 295.11, NIST technical and educational services for ATP recipients, is modified to add educational services to be provided to ATP recipients.
• Section 295.21, Qualifications of proposers, is modified to state that for joint ventures, costs will only be allowed after the execution of the joint venture agreement and approval by NIST.
• Also, a number of administrative and clerical changes are implemented to sections 295.5, 295.7, 295.8, and 295.24 for consistency and clarity.

Summary of Comments.

On September 25, 1998, NIST published a notice of proposed rulemaking in the Federal Register (63 FR 51307). In response to this notice three comments were received; two from associations representing universities and one from a state entity. An analysis of the comments follows.

Sec 295.2 Definitions - (2 Comments)

One commenter stated that the definition of "company" should include "limited liability company (LLC). Another commenter raised concern that the current and proposed definition of a joint venture imposes restrictions on the participation of universities and urged that it be conceptualized as broadly as possible so that universities can more fully participate in partnership with private industry.

NIST Response: ATP accepts the suggestion to include limited liability partnership in the definition and the change is reflected herein. No change is made with respect to the second comment since the definition of a joint venture already offers universities the opportunity to participate in partnership with private industry and the ATP statute requires joint ventures to be industry-led.

Sec 295.5 Use of pre-proposals in the selection process - (1 Comment)

One commenter stated that it was uncertain from the proposed change whether or not proposers are "accepted" or "rejected" at the pre-proposal stage, or whether they are just given feedback as to how they can improve their full proposal.

NIST Response: To clarify any uncertainty, the section is modified to indicate that written feedback is provided to the proposers to determine whether the proposed projects appear sufficiently promising to warrant further development into full proposals and that proposals are neither "accepted" or "rejected" at the pre-proposal stage.

Sec 295.6 Criteria for selection - (1 Comment)

One commenter stated that the criteria may be too broad and suggested that ATP add some level of breakdown of each major category to better guide proposers in the proposal development process.

NIST Response: Some level of breakdown of each of the two major categories is included in this section. The ATP Proposal Preparation Kit will help guide proposers further in the proposal development process by providing detailed information about the types of documentation that will fulfill the evaluation criteria.

Sec 295.7 Notice of availability of funds - (1 Comment)

One commenter suggested that information on pre-proposals be added to be consistent with section 295.5.

NIST Response: Since NIST may use mandatory or optional pre-proposals, the appropriate Commerce Business Daily notice and ATP Proposal Preparation Kit will provide the appropriate information.

Sec 295.8 Intellectual property rights; Publication of research results - (3 Comments)

Two commenters raised opposition to the restriction that title to inventions arising from ATP funded projects must vest in a company or companies incorporated in the United States and requested that the proposed rulemaking be deferred until this is resolved or the restriction be lifted to include universities. Another commenter suggested that this section be modified to require companies to list their "background intellectual property rights" they bring to the program at the beginning of the project, so there is no confusion as to what is actually developed in the course of the technology development.

NIST Response: The proposed rule made no change to the ATP patent policy. Since NIST did not seek public comment on the ATP patent policy, no changes are made here. No change is made with respect to the second comment because requiring the companies to list their "background intellectual property rights" they bring to the program at the beginning of the project would cause a significant burden on the companies and is unnecessary.

Additional Information:

Effective Date of the Final Rule: Pursuant to authority at 5 U.S.C. 553(a)(2), this final rule relating to grants, benefits, and contracts is exempt from the delayed effective date requirement of 5 U.S.C. 553(d), and is therefore being made effective immediately without a 30 day delay in effective date.

Executive Order 12866

This rule has been determined to be significant under section 3(f) of Executive Order 12866.

Executive Order 12612

This rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under Executive Order 12612.

Regulatory Flexibility Act

The Assistant General Counsel for Legislation and Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy, Small Business Administration, that this rule, if promulgated, will not have a significant economic effect on a substantial number of small entities. (5 U.S.C. 605(b)). This is because there are only a small number of awardees and thus only a small number of awards will be given to small businesses. Specifically, based on past experience and currently foreseen budgets, the ATP would expect to receive only a few hundred proposals annually from small businesses, and from these, to make under 100 awards. Seeking ATP funding is entirely voluntary. No comments were received regarding this certification. As such, a final regulatory flexibility analysis is not required and none has been prepared.

Paperwork Reduction Act

Notwithstanding any other provisions of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection-of-information, subject to the requirements of the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., unless that collection of information displays a currently valid Office of Management and Budget (OMB) control number.

This rule contains collection of information requirements subject to review and approval by the OMB under the PRA. The collection of information requirement applies to persons seeking financial assistance under the ATP as well as reporting requirements if financial assistance is granted. The collection of information requirements have been approved under OMB Control Number 0693-0009 and 0651-0032. The public reporting burden per respondent for the collection of information contained in this rule is estimated to range between 20 and 30 hours per submission and 3 hours annually for recipients of financial assistance to provide monitoring reports. This estimate includes the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Comments on the burden estimates, or any other aspect of the information requirements, should be addressed to Barbara Lambis, National Institutes of Standards and Technology; Advanced Technology Program; 100 Bureau Drive, Stop 4700; Administration Bldg.101, Room A333; Gaithersburg, MD 20899-4700.

National Environmental Policy Act

This rule will not significantly affect the quality of the human environment. Therefore, an environmental assessment or Environmental Impact Statement is not required to be prepared under the National Environmental Policy Act of 1969.

Executive Order 12372

Executive Order 12372 "Intergovernmental Review of Federal Programs" does not apply to this Program.

List of Subjects in 15 CFR Part 295

Inventions and Patents, Laboratories, Research and Development, Science and Technology.

Robert E. Hebner
Acting Deputy Director
National Institute of Standards and Technology
Dated: November 16, 1998

For reasons set forth in the preamble, Title 15, Part 295 of the Code of Federal Regulations is amended as follows:

PART 295 - ADVANCED TECHNOLOGY PROGRAM

1. The authority citation for Part 295 continues to read as follows:

Authority: 15 U.S.C. 278n.

2. Section 295.2 is amended by removing paragraph (j), redesignating paragraphs (b) through (i) as paragraphs (c) through (j), and adding new paragraph (b) to read as follows:

Sec. 295.2 Definitions.

* * * * *

(b) The term "company" means a for-profit organization, including sole proprietors, partnerships, limited liability companies (LLCs), or corporations.

* * * * *

3. The newly designated paragraph (i) is revised to read as follows:

Sec. 295.2 Definitions.

* * * * *

(i) The term "industry-led joint research and development venture" or "joint venture" means a business arrangement that consists of two or more separately-owned, for-profit companies that perform research and development in the project; control the joint venture's membership, research directions, and funding priorities; and share total project costs with the Federal government. The joint venture may include additional companies, independent research organizations, universities, and/or governmental laboratories (other than NIST) which may or may not contribute funds (other than Federal funds) to the project and perform research and development. A for-profit company or an independent research organization may serve as an Administrator and perform administrative tasks on behalf of a joint venture, such as handling receipts and disbursements of funds and making antitrust filings. The following activities are not permissible for ATP funded joint ventures:

(1) Exchanging information among competitors relating to costs, sales, profitability, prices, marketing, or distribution of any product, process, or service that is not reasonably required to conduct the research and development that is the purpose of such venture;

(2) Entering into any agreement or engaging in any other conduct restricting, requiring, or otherwise involving the production or marketing by any person who is a party to such joint venture of any product, process, or service, other than the production or marketing of proprietary information developed through such venture, such as patents and trade secrets; and

(3) Entering into any agreement or engaging in any other conduct:

(i) To restrict or require the sale, licensing, or sharing of inventions or developments not developed through such venture, or

(ii) To restrict or require participation by such party in other research and development activities, that is not reasonably required to prevent misappropriation of proprietary information contributed by any person who is a party to such venture or of the results of such venture.

* * * * *

4. Section 295.4 is revised to read as follows:

Sec. 295.4 The selection process.

(a) The selection process for awards is a multi-step process based on the criteria listed in section 295.6. Source evaluation boards (SEB) are established to ensure that all proposals receive careful consideration. In the first step, called "preliminary screening," proposals may be eliminated by the SEB that do not meet the requirements of this Part or the annual Federal Register Program announcement. Typical but not exclusive of the reasons for eliminating a proposal at this stage are that the proposal: is deemed to have serious deficiencies in either the technical or business plan; involves product development rather than high-risk R&D; is not industry-led; is significantly overpriced or underpriced given the scope of the work; does not meet the requirements set out in the notice of availability of funds issued pursuant to section 295.7; or does not meet the cost-sharing requirement. NIST will also examine proposals that have been submitted to a previous competition to determine whether substantive revisions have been made to the earlier proposal, and, if not, may reject the proposal.

(b) In the second step, referred to as the "technical and business review," proposals are evaluated under the criteria found in section 295.6. Proposals judged by the SEB after considering the technical and business evaluations to have the highest merit based on the selection criteria receive further consideration and are referred to as "semifinalists."

(c) In the third step, referred to as "selection of finalists," the SEB prepares a final ranking of semifinalist proposals by a majority vote, based on the evaluation criteria in section 295.6. During this step, the semifinalist proposers will be invited to an oral review of their proposals with NIST, and in some cases site visits may be required. Subject to the provisions of section 295.6, a list of ranked finalists is submitted to the Selecting Official.

(d) In the final step, referred to as "selection of recipients," the Selecting Official selects funding recipients from among the finalists, based upon (1) the SEB rank order of the proposals on the basis of all selection criteria (section 295.6); (2) assuring an appropriate distribution of funds among technologies and their applications; (3) the availability of funds; and (4) adherence to the Program selection criteria. The Program reserves the right to deny awards in any case where information is uncovered which raises a reasonable doubt as to the responsibility of the proposer. The decision of the Selecting Official is final.

(e) NIST reserves the right to negotiate the cost and scope of the proposed work with the proposers that have been selected to receive awards. For example, NIST may request that the proposer delete from the scope of work a particular task that is deemed by NIST to be product development or otherwise inappropriate for ATP support.

5. Section 295.5 is revised to read as follows:

Sec. 295.5 Use of pre-proposals in the selection process.

To reduce proposal preparation costs incurred by proposers and to make the selection process more efficient, NIST may use mandatory or optional preliminary qualification processes based on pre-proposals. In such cases, announcements requesting pre-proposals will be published as indicated in section 295.7, and will seek abbreviated proposals (pre-proposals) that address both of the selection criteria, but in considerably less detail than full proposals. The Program will review the pre-proposals in accordance with the selection criteria and provide written feedback to the proposers to determine whether the proposed projects appear sufficiently promising to warrant further development into full proposals. Proposals are neither "accepted" or "rejected" at the pre-proposal stage. When the full proposals are received in response to the notice of availability of funds described in section 295.7, the review and selection process will occur as described in section 295.4.

6. Section 295.6 is revised to read as follows:

Sec. 295.6 Criteria for selection.

The evaluation criteria to be used in selecting any proposal for funding under this program, and their respective weights, are listed in this section. No proposal will be funded unless the Program determines that it has scientific and technological merit and that the proposed technology has strong potential for broad-based economic benefits to the nation. Additionally, no proposal will be funded that does not require Federal support, that is product development rather than high risk R&D, that does not display an appropriate level of commitment from the proposer, or does not have an adequate technical and commercialization plan.

(a) Scientific and Technological Merit (50%)

The proposed technology must be highly innovative. The research must be challenging, with high technical risk. It must be aimed at overcoming an important problem(s) or exploiting a promising opportunity. The technical leverage of the technology must be adequately explained. The research must have a strong potential for advancing the state of the art and contributing significantly to the U.S. scientific and technical knowledge base. The technical plan must be clear and concise, and must clearly identify the core innovation, the technical approach, major technical hurdles, the attendant risks, and clearly establish feasibility through adequately detailed plans linked to major technical barriers. The plan must address the questions of "what, how, where, when, why, and by whom" in substantial detail. The Program will assess the proposing team's relevant experience for pursuing the technical plan. The team carrying out the work must demonstrate a high level of scientific/technical expertise to conduct the R&D and have access to the necessary research facilities.

(b) Potential for broad-based economic benefits (50%)

The proposed technology must have a strong potential to generate substantial benefits to the nation that extend significantly beyond the direct returns to the proposing organization(s). The proposal must explain why ATP support is needed and what difference ATP funding is expected to make in terms of what will be accomplished with the ATP funding versus without it. The pathways to economic benefit must be described, including the proposer's plan for getting the technology into commercial use, as well as additional routes that might be taken to achieve broader diffusion of the technology. The proposal should identify the expected returns that the proposer expects to gain, as well as returns that are expected to accrue to others, i.e., spillover effects. The Program will assess the proposer's relevant experience and level of commitment to the project and project's organizational structure and management plan, including the extent to which participation by small businesses is encouraged and is a key component in a joint venture proposal, and for large company single proposers, the extent to which subcontractor/subrecipient teaming arrangements are featured and are a key component of the proposal.

7. Section 295.7 is revised to read as follows:

Sec. 295.7 Notice of availability of funds.

The Program shall publish at least annually a Federal Register notice inviting interested parties to submit proposals, and may more frequently publish invitations for proposals in the Commerce Business Daily, based upon the annual notice. Proposals must be submitted in accordance with the guidelines in the ATP Proposal Preparation Kit as identified in the published notice. Proposals will only be considered for funding when submitted in response to an invitation published in the Federal Register, or a related announcement in the Commerce Business Daily.

8. Section 295.8(a)(1) and 295.8(a)(2) are revised to read as follows:

Sec. 295.8 Intellectual property rights; Publication of research results.

(a)(1) Patent Rights: Title to inventions arising from assistance provided by the Program must vest in a company or companies incorporated in the United States. Joint ventures shall provide to NIST a copy of their written agreement which defines the disposition of ownership rights among the members of the joint venture, and their contractors and subcontractors as appropriate, that complies with the first sentence of this paragraph. The United States will reserve a non-exclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any such intellectual property, but shall not, in the exercise of such license, publicly disclose proprietary information related to the license. Title to any such intellectual property shall not be transferred or passed, except to a company incorporated in the United States, until the expiration of the first patent obtained in connection with such intellectual property. Nothing in this paragraph shall be construed to prohibit the licensing to any company of intellectual property rights arising from assistance provided under this section.

(2) Patent Procedures: Each award by the Program shall include provisions assuring the retention of a governmental use license in each disclosed invention, and the government's retention of march-in rights. In addition, each award by the Program will contain procedures regarding reporting of subject inventions by the funding Recipient to the Program, including the subject inventions of members of the joint venture (if applicable) in which the funding Recipient is a participant, contractors and subcontractors of the funding Recipient. The funding Recipient shall disclose such subject inventions to the Program within two months after the inventor discloses it in writing to the Recipient's designated representative responsible for patent matters. The disclosure shall consist of a detailed, written report which provides the Program with the following: the title of the present invention; the names of all inventors; the name and address of the assignee (if any); an acknowledgment that the United States has rights in the subject invention; the filing date of the present invention, or, in the alternative, a statement identifying that the Recipient determined that filing was not feasible; an abstract of the disclosure; a description or summary of the present invention; the background of the present invention or the prior art; a description of the preferred embodiments; and what matter is claimed. Upon issuance of the patent, the funding Recipient or Recipients must notify the Program accordingly, providing it with the Serial Number of the patent as issued, the date of issuance, a copy of the disclosure as issued, and if appropriate, the name, address, and telephone number(s) of an assignee.

* * * * *

Sections 295.10 and 295.11 [Removed]

Sections 295.12 and 295.13 [Redesignated as sections 295.10 and 295.11]

9. Sections 295.10 and 295.11 are removed and sections 295.12 and 295.13 are redesignated as sections 295.10 and 295.11.

10. The newly redesignated section 295.11 is amended by revising the heading and by adding a new paragraph (c) to read as follows:

Sec 295.11 Technical and Educational Services for ATP Recipients.

* * * * *

(c) From time to time, ATP may conduct public workshops and undertake other educational activities to foster the collaboration of funding Recipients with other funding resources for purposes of further development and commercialization of ATP-related technologies. In no event will ATP provide recommendations, endorsements, or approvals of any ATP funding Recipients to any outside party.

11. Section 295.21 is revised to read as follows:

Sec. 295.21 Qualifications of proposers.

Subject to the limitations set out in section 295.3, assistance under this Subpart is available only to industry-led joint research and development ventures. These joint ventures may include universities, independent research organizations, and governmental entities. Proposals for funding under this Subpart may be submitted on behalf of a joint venture by a for-profit company or an independent research organization that is a member of the joint venture. Proposals should include letters of commitment or excerpts of such letters from all proposed members of the joint venture, verifying the availability of cost-sharing funds, and authorizing the party submitting the proposal to act on behalf of the venture with the Program on all matters pertaining to the proposal. No costs shall be incurred under an ATP project by the joint venture members until such time as a joint venture agreement has been executed by all of the joint venture members and approved by NIST. NIST will withhold approval until it determines that a sufficient number of members have signed the joint venture agreement. Costs will only be allowed after the execution of the joint venture agreement and approval by NIST.

12. Section 295.24 is revised to read as follows:

Sec. 295.24 Registration.

Joint ventures selected for funding under the Program must notify the Department of Justice and the Federal Trade Commission under the National Cooperative Research Act of 1984. No funds will be released prior to receipt by the Program of copies of such notification.

Date created: November 20, 1998
Last updated: April 12, 2005