Overview
FAR Part 35 provides specialized policies and procedures for Research and Development (R&D) contracting, where the primary objective is to advance scientific and technical knowledge rather than acquire standard supplies or services. Because R&D work is often unpredictable and difficult to define precisely, these regulations emphasize flexibility, technical competence, and the use of cost-reimbursement contracts to manage inherent risks.
Key Rules
- Contract vs. Grant Selection: Contracts must only be used when the R&D is for the direct benefit or use of the Federal Government; otherwise, grants or cooperative agreements are appropriate.
- Contract Types: While the government generally prefers fixed-price contracts, Part 35 identifies cost-reimbursement contracts as the norm for R&D due to the difficulty of estimating costs and defining precise specifications.
- Broad Agency Announcements (BAA): Agencies can use BAAs to solicit proposals for basic and applied research. Unlike standard solicitations, proposals are evaluated via peer or scientific review and do not need to be evaluated against one another.
- Work Statements: SOWs should be "individually tailored" to allow for contractor creativity. They must clearly distinguish between a level-of-effort approach (furnishing effort for a period) and a task-completion approach (achieving a tangible end result).
- Subcontracting: Because R&D awards are based on the specific technical competence of the prime contractor, the contractor is generally prohibited from subcontracting scientific or technical work without the Contracting Officer’s (CO) advance knowledge or approval.
- Publicizing: Agencies are required to look beyond traditional sources and "continually search for" small businesses and scientific talent to expand the R&D source base.
Responsibilities
- Contracting Officers:
- Selecting the appropriate contract type based on technical recommendations.
- Ensuring work statements do not intermingle conflicting language (e.g., mixing completion and level-of-effort terms).
- Evaluating cost/price to ensure the offeror understands the technical risks.
- Managing FFRDC sponsoring agreements and reviews.
- Technical/Program Personnel:
- Recommending qualified sources based on professional stature and past performance.
- Defining the "area of exploration" or "end objectives" for the SOW.
- Conducting the scientific or peer reviews of BAA submissions.
- Monitoring the involvement of "Principal Investigators" in nonprofit/educational contracts.
- Contractors:
- Providing scientific and technical reports as a permanent record of work.
- Disclosing subcontracting plans for technical work during negotiations.
- (For Nonprofits/Universities) Obtaining approval for changes to the Principal Investigator or significant changes in research methodology.
Practical Implications
- Flexibility Over Precision: In the real world, R&D contracting requires a "best efforts" mindset rather than a "delivery of 1,000 widgets" mindset. Contractors have more room to pivot their methodology as long as they stay within the SOW’s broader objectives.
- The "Talent" Factor: For contracts with universities or nonprofits, the government is often "buying" the specific expertise of a single person (the Principal Investigator). If that person leaves the project, the government often has the right to terminate the contract or renegotiate.
- Intellectual Property and Data: Because the goal of Part 35 is knowledge, the delivery of technical data and patent rights is a major negotiation point. Contractors must pay close attention to the data rights clauses specified in the solicitation, as they differ from standard procurement.
- Risk Transition: As an R&D project matures from "Basic Research" to "Development" and eventually "Production," the contract type should transition from cost-reimbursement to fixed-price to reflect the decreasing technical risk.
- FFRDC Nuance: Organizations operating as Federally Funded Research and Development Centers (like MITRE or Sandia National Labs) occupy a unique space; they have "access beyond that which is common" to government data but are strictly prohibited from competing with the private sector using that privileged information.