[Code of Federal Regulations]

[Title 14, Volume 5]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 14CFR1274.204]



[Page 467-469]

 

                     TITLE 14--AERONAUTICS AND SPACE

 

                          SPACE ADMINISTRATION

 

PART 1274_COOPERATIVE AGREEMENTS WITH COMMERCIAL FIRMS--Table of Contents

 

                  Subpart 1274.2_Pre-Award Requirements

 

Sec. 1274.204  Costs and payments.



    (a) Cost allowability. (1) Cooperative agreements awarded to 

commercial firms are subject to the cost accounting standards and 

principles of 48 CFR Chapter 99, as implemented by FAR Parts 30 and 31.

    (2) If the recipient is a consortium which includes non-commercial 

entities as members, cost allowability for those members will be 

determined as follows:

    (i) Allowability of costs incurred by state, local or federally-

recognized Indian tribal governments is determined in accordance with 

the provisions of OMB Circular A-87, ``Cost Principles for State and 

Local Governments.''

    (ii) The allowability of costs incurred by non-profit organizations 

is determined in accordance with the provisions of OMB Circular A-122, 

``Cost Principles for Non-Profit Organizations.''

    (iii) The allowability of costs incurred by institutions of higher 

education is determined in accordance with the provisions of OMB 

Circular A-21, ``Cost Principles for Educational nstitutions.''

    (iv) The allowability of costs incurred by hospitals is determined 

in accordance with the provisions of Appendix E of 45 CFR part 74, 

``Principles for Determining Costs Applicable to Research and 

Development Under Grants and Contracts with Hospitals.''

    (3) A recipient's method for accounting for the expenditure of funds 

must be consistent with generally accepted accounting principles.

    (b) Cost sharing. (1) Given the mutually beneficial nature of, in 

particular, potential commercially marketable products expected to 

result from the research activities of the cooperative agreement, 

resource contributions are required from the recipient. The commercial 

recipient is expected to contribute at least 50 percent of the total 

resources necessary to accomplish the cooperative agreement effort. 

Recipient contributions may be cash, non-cash (in-kind) or both. 

Acceptable non-cash or in-kind resources include such items as 

equipment, facilities, labor, office space, etc. In determining the 

incentive to the recipient to share costs, agreement officers must 

consider a variety of factors. For example, while the future 

profitability of intellectual property may serve as an incentive for 

involvement of the commercial firm in the cooperative agreement, the 

actual or imputed value of such items as patent rights, data rights, 

trade secrets, etc., included in intellectual property is generally not 

considered a reliable source for computation of the recipient's 

contributions.

    (2) In most cases these costs are not readily quantifiable. Thus, 

although the value of intellectual property rights should be factored 

into the incentive for the recipient to share at least 50 percent of 

costs, intellectual property rights do not serve as quantifiable amounts 

to determine the equitable dollar amounts of costs to be shared.

    (3) As is expected from the commercial partner, the Government's 

cost share should reflect certain non-cash as well as cash contributions 

to the most practicable extent possible. Where quantifiable, NASA will 

include in the calculation of the Government's cost share, non-cash or 

in-kind contributions, which includes the value of equipment, personnel, 

and facilities. Costs incurred by NASA to provide the services of one or 

more support contractors to perform part of NASA's requirements under a 

cooperative agreement will be counted as part of NASA's in-kind 

contributions. This approach is also supported by the initiative to 

implement full cost accounting methods within the Federal Government.

    (4) When other Government agencies act as partners along with NASA 

(e.g., Department of Defense or Federal Aviation Administration), the 

resources contributed by any Government agency shall be counted as part 

of the Government's total cost share under the cooperative agreement.

    (5) For every cooperative agreement, there should be evidence of the 

recipient's strong commitment and self-interest in the success of the 

research project. A very strong indicator of a recipient's self-interest 

is the willingness to commit to a meaningful level of cost sharing 

(i.e., 50 percent). Before considering whether it is impracticable for 

the recipient to share at least 50% of



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the performance costs, agreement officers should also consider whether 

other factors exist that demonstrate the recipient's financial stake or 

self-interest in the success of the cooperative agreement.

    (6) In cases where a contribution of less than 50 percent is 

anticipated from the commercial recipient, approval of the Assistant 

Administrator for Procurement (Code HS) is required prior to award. The 

request for approval should address the evaluation factor in the 

solicitation and how the proposal accomplishes those objectives to such 

a degree that a share ratio of less than 50 percent is warranted.

    (7) Once accepted for application to costs shared under the 

cooperative agreement, cash and in-kind contributions including 

Independent Research and Development (IR&D) costs, may not be included 

as contributions for any other federally assisted project or program.

    (c) Fixed funding. (1) Cooperative agreements are funded by NASA 

through the disbursement of agreed upon fixed payment amounts to the 

recipient. NASA makes disbursement of funds to the recipient as 

``Milestone payments'' discussed in paragraph (d) of this section. If 

the recipient achieves the final milestone, final payment is made, which 

completes NASA's financial responsibilities under the agreement.

    (2) Fixed payments on a cooperative agreement are made by NASA based 

on the accomplishment by the recipient of predetermined tangible 

milestones. Any arrangement where payments are made on a basis other 

than accomplished tangible milestones must be approved in accordance 

with the requirements of Sec. 1274.106 Deviations.

    (3) If the cooperative agreement is terminated prior to achievement 

of all milestones, NASA's funding is limited to milestone payments 

already made plus NASA's share of costs incurred to meet commitments of 

the recipient, which had in the judgment of NASA become firm prior to 

the effective date of termination. In no event, however, shall the 

amount of NASA's share of these additional costs exceed the amount of 

the next scheduled milestone payment.

    (d) Milestone obligations and payments. Agreement officers, 

technical officers, accounting and finance officials, and all other 

responsible NASA personnel shall ensure that funds for milestone 

payments are obligated, billed and expended in accordance with the 

guidance set forth by the NASA Financial Management Manual (FMM 9000).

    (1) There must always be sufficient funds obligated to cover the 

next milestone payment. In addition, funds must be made available (but 

not necessarily obligated) to cover all milestone payments expected to 

be made during the current fiscal year of performance.

    (2) Disbursement of funds to the recipient is based on the 

achievement of milestones or performance-related benchmarks. The 

milestone must represent the accomplishment of verifiable, significant 

event(s) and may not be based upon the mere passage of time or the 

performance of a particular level of effort. The Government technical 

officer must verify to and advise the agreement officer that each 

milestone has been achieved prior to authorizing the corresponding 

payment.

    (3) The amount of funds to be disbursed by NASA in recognition of 

the achievement of milestones (``milestone payments'') shall be 

established consistent with the ratio of resource sharing agreed upon 

under the cooperative agreement (see paragraph (e)(2) of this section). 

While the schedule for milestone achievement must reflect the project 

being undertaken, the frequency should not be greater than one payment 

per month. For many projects, scheduling milestones to be accomplished 

about every 60 to 90 days appears to be most workable. Partial or 

interim milestone payments may not be made.

    (4) The final milestone payment should be structured so that the 

associated payment is large enough to provide incentive to the recipient 

to complete its responsibilities under the cooperative agreement. 

Alternatively, funds may be reserved for disbursement after completion 

of the effort.

    (e) Incremental funding. Whenever the period of performance for the 

cooperative agreement crosses fiscal years, the agreement shall be 

incrementally funded using appropriations from different



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fiscal years. In other circumstances, incremental funding may be 

appropriate. The total amount of funds obligated during the course of a 

fiscal year must be sufficient to cover the Government's share of the 

costs anticipated to be incurred by the recipient during that fiscal 

year. NASA may allot funds to an agreement at various times during a 

fiscal year in anticipation of the occurrence of costs. However, there 

must always be sufficient funds obligated to cover all milestone 

payments expected to be made during the current fiscal year.

    (f) Profit applicability. Recipients shall not be paid a profit 

under cooperative agreements. Profit may be paid by the recipient to 

subcontractors, if the subcontractor is not part of the offering team 

and the subcontract is an arms-length relationship. All entities that 

are involved in performing the research and development effort that is 

the purpose of the cooperative agreement shall be part of the 

recipient's consortium and not subcontractors.

    (g) Independent Research and Development (IR&D) costs. When 

determining the applicable dollar amounts or reasonableness of proposed 

IR&D costs to be included as part of the recipient's cost share, 

agreement officers should seek assistance from DCAA or the cognizant 

audit agency.

    (1) In accordance with FAR 31.205-18(e), IR&D costs may include 

costs contributed by contractors in performing cooperative research and 

development agreements or similar arrangements, entered into under 

sections 203(c)(5) and (6) of the National Aeronautics and Space Act of 

1958, as amended (42.U.S.C. 2473(c)(5) and (6)). IR&D costs incurred by 

a contractor pursuant to these types of cooperative agreements should be 

considered as allowable IR&D costs if the work performed would have been 

allowed as contractor IR&D had there been no cooperative arrangement.

    (2) IR&D costs (or an agreed upon portion of IR&D costs) incurred by 

the recipient's organization and deemed by NASA as the same type of 

research being undertaken by the cooperative agreement between NASA and 

the recipient may serve as part of the recipient's contribution of 

shared costs under the cooperative agreement. When considering the use 

of IR&D costs as part of the recipient's cost share, the IR&D costs 

offered by the recipient shall meet the requirements of FAR 31.205-18. 

Any IR&D costs incurred in a prior period, and offered as part of the 

recipient's cost share shall meet the criteria established by FAR 

31.205-18(d), Deferred IR&D Costs.