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-Part 35 - Research and Development Contracting ....................................................................85+Part 35 - Research and Development Contracting
+FC 35.000 Oversight in research contracts with educational and nonprofit institutions.
+When awarding research and development (R&D) contracts to educational or nonprofit
+institutions, especially for open-ended research, clearly define the role and time commitment of
+the principal investigator (PI), who is the lead researcher responsible for managing the project
+and delivering results.
+If the contract is based on the PI’s expertise, name them in the contract as a key personnel, and
+require approval for any changes to the PI, research focus, objectives, or methods. The PI
+should maintain active engagement throughout the project and notify the contracting officer of
+any substantial reduction in level of effort. For institutions with multiple contracts, consider a
+basic agreement to promote consistency and reduce administrative workload. Review and
+update these agreements at least annually. This helps ensure the research stays aligned with
+government expectations while supporting innovation.
+Additionally, nonprofit, educational, or State institutions performing cost-reimbursement
+contracts often do not carry insurance. They may claim immunity from liability for torts, or, as
+State institutions, they may be prohibited by State law from expending funds for insurance.
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+When establishing contracts with these entities, see FAR part 28 to ensure appropriate
+insurance clause coverage.
+FC 35.002 Understanding the purpose of R&D contracts.
+The primary purpose of contracted R&D programs is to advance scientific and technical
+knowledge and apply that knowledge to the extent necessary to achieve agency and national
+goals.
+Unlike contracts for supplies and services, most R&D contracts are directed toward objectives
+for which the work or methods cannot be precisely described in advance. It is difficult to judge
+the probabilities of success or required effort for technical approaches, some of which offer little
+or no early assurance of full success.
+The contracting process shall be used to encourage the best sources from the scientific and
+industrial community to become involved in the program. The program should provide an
+environment in which the work can be pursued with reasonable flexibility and minimum
+administrative burden.
+FC 35.002 Recoupment.
+Recoupment refers to the government’s recovery of government-funded nonrecurring costs from
+contractors. This applies when contractors sell, lease, or license the resulting products or
+technology to entities other than the Federal government. If not legally mandated, recoupment
+should adhere to agency procedures.
+FC 35.1 Understanding the different approaches to R&D contracting.
+R&D contracts differ fundamentally from supply or service contracts in that they often have
+undefined or evolving methods and objectives aimed at advancing knowledge or technology.
+Federal acquisition teams should recognize this unique nature and design contracting
+approaches that encourage innovation and adaptability by avoiding overly prescriptive
+requirements.
+Create contracting environments that minimize administrative burdens to attract and retain top
+scientific and technical talent. Use outcome-focused language in contracts rather than rigid
+specifications and allow contractors space to explore alternative technical approaches that may
+lead to breakthrough solutions. Consider developing more than one source to create long-term
+competition.
+FC 35.101 Developing effective requirements documentation.
+Federal acquisition teams benefit from working with technical experts to develop clear, complete
+requirements documentation tailored to the unique goals of R&D efforts. Effective approaches
+focus on defining achievable and meaningful objectives that advance agency mission
+requirements while encouraging problem-solving rather than dictating specific methods.
+Strong requirements documentation emphasizes research objectives and provides a concise,
+well-defined understanding of the problem to solve. R&D contracts may identify goals but not
+how to reach them, as that determination is left up to the contractor – especially in the early or
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+exploratory phases. This approach allows contractors the freedom to innovate and apply
+creative approaches, which is essential to R&D.
+Requirements documentation works best when aligned with the type and form of contract being
+used. For example, level-of-effort contracts outline the required technical effort and reporting
+expectations, while completion contracts describe specific end objectives or milestones. Mixing
+language from both types within one document can create confusion.
+Well-structured R&D requirements documentation includes contextual information such as
+background on prior related work, known phenomena, relevant methodologies, and any
+constraints related to personnel, environments, or interfaces that may impact the effort. Key
+elements include clearly identified milestones like testing phases, assessment points, or
+minimum viable product demonstrations, along with deadlines for progress and delivery.
+Administrative elements like payment procedures and security requirements also merit clear
+articulation.
+Effective requirements documentation avoids rigid, overly detailed performance specifications
+that could hinder agility and adaptation. Strong documentation sets expectations and guides
+performance while empowering contractors to bring forward their best ideas and keeping
+government objectives front and center.
+FC 35.101 Subcontractor considerations.
+R&D contracts are awarded based on the contractor’s technical expertise, so it’s critical to know
+who will actually perform the work to maintain the integrity and quality of the R&D effort.
+Contractors should not subcontract technical or scientific tasks without the contracting officer’s
+prior knowledge and approval.
+This means, for cost-reimbursement contracts, this information should be gathered during
+negotiations; for fixed-price contracts, it should still be reviewed to protect the government’s
+interests. Use FAR clause 52.244-2 to require approval of key subcontracts as appropriate for
+your R&D contracts.
+FC 35.101(g) Contract types for R&D.
+The contract type should reflect the maturity and predictability of the work, balancing flexibility
+with accountability throughout the life of the R&D effort.
+Federal acquisition teams typically encounter technical uncertainty, evolving requirements, and
+cost unpredictability in the R&D context that render sealed bidding and fixed-price contract
+approaches ineffective for early-stage projects.
+Negotiation is typically required, and selecting the right contract type should involve input from
+technical experts who can assess the project’s complexity, objectives, and risks.
+Fixed-price contracts may be appropriate for R&D contracts, if the work can be divided into
+objective and measurable milestones where the technical and cost risk is reasonable. This
+approach allows for more control over budget and performance, even in R&D settings.
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+Fixed-price level-of-effort contracts can also work well for short-term or well-defined tasks like
+concept development or problem solving. As the project matures, and design stability and risk
+diminish and become more tolerable, the acquisition strategy should shift toward more fixed-
+price arrangements to encourage performance and cost discipline.
+In many cases, cost-reimbursement contracts are appropriate for R&D (e.g., research in
+advanced technology applications, early conceptual work on a complex project) because they
+offer the flexibility needed for exploratory or developmental work where uncertainty about
+needed resources make it difficult to negotiate an affordable fixed price. However, these “best
+effort” arrangements increase the government’s exposure to overspending because they
+provide little incentive to control cost. Contractors are only required to make a good-faith
+attempt within the agreed budget, so use cost-reimbursement contracts with caution, and
+consider hybrid arrangements that allow for work to go from cost-type to fixed-price as greater
+stability in requirements develops and cost profiles are established.
+FC 35.102 Peer and scientific review processes.
+Use peer or scientific review processes to evaluate submissions, which generally involves a
+panel of experts evaluating proposals based on their specialized knowledge and experience
+relevant to the subject matter.
+Expert panels may include scientists, engineers, and subject matter experts from government,
+industry, or academia to provide objective assessment of technical merit, feasibility, and
+potential impact of proposed solutions.
+Use flexible evaluation frameworks tailored to R&D complexity, recognizing that projects often
+involve unique challenges and unpredictable outcomes that require moving away from rigid,
+one-size-fits-all evaluation approaches.
+FC 35.201 How to use evaluation criteria for R&D.
+Evaluate submissions based on technical merit, including how innovative, feasible, and well-
+developed the proposed solution appears to be. Limit evaluation factors to a manageable
+number, focusing on evaluation factors that will serve as meaningful discriminators. Consider
+the submission’s connection with the agency’s problem, specifically how directly and effectively
+the proposal addresses critical agency challenges. Assess the funds available and the proposed
+price for the solution and determine whether the solution's value justifies the price while aligning
+with agency goals and resource limits. Consider the return on investment (ROI) and evaluate
+whether the project is affordable given the agency's competing priorities and available funding.
+FC 35.201 Merit-based evaluation methods.
+Choose R&D solutions based on best technical ideas and organizational competence rather
+than solely on lowest cost or traditional comparative methods. Prefer merit-based evaluation for
+R&D acquisitions, given the unique nature of innovation and the difficulty in comparing direct
+prices between fundamentally different technical approaches.
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+FC 35.201(c) Price evaluation in R&D acquisitions.
+Before heading into negotiations, think critically about the evaluation of price. Don't just focus on
+the numbers. In R&D acquisitions, price competition is often limited, and comparing proposals
+can feel like comparing apples to oranges.
+Start by asking what's the cost of walking away with no award? Would it delay the mission or
+increase costs later? Then, compare what each offer delivers for the price using practical
+alternative approaches that make sense for unique, innovative solutions.
+If your solicitation encourages multiple offerors (like in a Broad Agency Announcement, or BAA),
+that alone can create competitive pressure, fostering inherent economic competition and driving
+reasonable pricing from the start, even if the solutions differ. Still, you can and should negotiate
+further to fine-tune the final price.
+When one proposal is more expensive, ask whether the higher price is tied to real technical
+advantages. Use a "price-walk" approach: line up two solutions, break down their technical
+differences, and assign value to those differences. Look for the most similar solution with known
+pricing to help judge whether the added cost is justified. Avoid writing off solutions as "too
+different to compare." With the right questions and analysis, you can make smarter, more
+defensible price decisions.
+Think about the value of what you're buying. Will it improve performance, reduce long-term
+costs, or strengthen the mission? A return-on-investment mindset helps justify pricing when no
+clear benchmarks exist.
+Evaluate the basis of an estimate. Instead of requiring a detailed cost breakdown, look for a
+well-explained, logical estimate. How did the offeror build their price? Are the assumptions clear
+and supported by solid data?
+Finally, be cautious about using the budget ceiling as the only check on pricing. Just because a
+proposal comes in under the ceiling doesn't mean the price is right. Always combine budget info
+with a broader look at the solution's value, ROI, and pricing logic. These methods help you
+make sound, supportable decisions, even in the complex world of R&D.
+FC 35.403 Establishing and managing sponsoring agreements for Federally Funded
+Research and Development Centers (FFRDCs).
+When working with a FFRDC, a sponsoring agreement helps to establish a clear mission, define
+responsibilities, and guide the relationship over time. The agreement formalizes the relationship
+between the government and the FFRDC, defines the FFRDC’s mission, and sets the
+expectations for periodic reviews.
+While specific content in an agreement may vary depending on circumstances, the agreement
+should cover key items like the FFRDC’s mission, how to handle termination or nonrenewal,
+how to handle assets and liabilities, how to use retained earnings, and rules about competing
+for non-FFRDC federal work, which is prohibited in FAR 35.403(b)(4).
+The agreement should also state whether the FFRDC can take on work from entities other than
+the sponsor and under what conditions. Sponsoring agreements promote transparency, prevent
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+confusion, and support long-term success. Review such agreements annually and renew every
+five years, keeping expectations up to date and ensuring they remain current and relevant.