[Code of Federal Regulations]
[Title 32, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR34.14]

[Page 188-189]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
PART 34_ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH FOR-PROFIT ORGANIZATIONS--Table of Contents
 
                    Subpart B_Post-award Requirements
 
Sec.  34.14  Program income.

    (a) DoD Components shall apply the standards in this section to the 
disposition of program income from projects financed in whole or in part 
with Federal funds.
    (b) Recipients shall have no obligation to the Government, unless 
the terms and conditions of the award provide otherwise, for program 
income earned:
    (1) From license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions produced under 
an award. Note, however, that the Patent and Trademark Amendments (35 
U.S.C. Chapter 18), as implemented in Sec.  34.25, apply to inventions 
made under a research award.
    (2) After the end of the project period. If a grants officer 
anticipates that an award is likely to generate program income after the 
end of the project period, the grants officer should indicate in the 
award document whether the recipient will have any obligation to the 
Federal Government with respect to such income.
    (c) If authorized by the terms and conditions of the award, costs 
incident to the generation of program income may be deducted from gross 
income to determine program income, provided

[[Page 189]]

these costs have not been charged to the award.
    (d) Other than any program income excluded pursuant to paragraphs 
(b) and (c) of this section, program income earned during the project 
period shall be retained by the recipient and used in one or more of the 
following ways, as specified in program regulations or the terms and 
conditions of the award:
    (1) Added to funds committed to the project by the DoD Component and 
recipient and used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (e) If the terms and conditions of an award authorize the 
disposition of program income as described in paragraph (d)(1) or (d)(2) 
of this section, and stipulate a limit on the amounts that may be used 
in those ways, program income in excess of the stipulated limits shall 
be used in accordance with paragraph (d)(3) of this section.
    (f) In the event that the terms and conditions of the award do not 
specify how program income is to be used, paragraph (d)(3) of this 
section shall apply automatically to all projects or programs except 
research. For awards that support research, paragraph (d)(1) of this 
section shall apply automatically unless the terms and conditions 
specify another alternative or the recipient is subject to special award 
conditions, as indicated in Sec.  34.4.
    (g) Proceeds from the sale of property that is acquired, rather than 
fabricated, under an award are not program income and shall be handled 
in accordance with the requirements of the Property Standards (see 
Sec. Sec.  34.20 through 34.25).