Overview
FAR Subpart 27.5 establishes the requirement for Federal agencies to develop internal policies regarding intellectual property (IP) within foreign technical assistance and license agreements. Its primary objective is to ensure the government maintains oversight of international IP transactions to prevent the payment of redundant or unnecessary royalty charges.
Key Rules
- Policy Mandate: Agencies are required to provide specific policies and procedures for managing agreements involving foreign technical assistance and IP licenses.
- Cost Control: A central requirement of these policies is the avoidance of "unnecessary royalty charges" when dealing with foreign entities.
- IP Integration: The subpart emphasizes that technical assistance and licensing are integral components of international contracting that require specific IP safeguards.
Responsibilities
- Federal Agencies: Responsible for drafting and implementing the necessary supplemental procedures and policies that govern these foreign agreements.
- Contracting Officers (COs): Responsible for applying agency-specific procedures to individual contracts to ensure that royalty payments to foreign entities are justified and not duplicative.
- Legal/Patent Counsel: Typically tasked by the agency to review the IP clauses within foreign technical assistance agreements to ensure compliance with both the FAR and international treaties.
Practical Implications
- Look to Agency Supplements: Because Subpart 27.5 is very brief, the actual "teeth" of the regulation are usually found in agency-specific supplements (e.g., DFARS for the Department of Defense). Contractors must look beyond the base FAR to understand their specific reporting requirements.
- Royalty Justification: Contractors entering into agreements with foreign partners should be prepared to justify any royalty fees included in their proposals. If the U.S. Government already holds a license to the technology, they will likely challenge and disallow these costs.
- International Compliance: This subpart acts as a bridge between domestic acquisition and international law, reminding contractors that IP rights do not stop at the border and must be clearly defined in technical exchange programs.