DATE: November 21, 2001

SUBJECT: Department of Defense; Transactions Other Than Contracts, Grants, or Cooperative Agreements for Prototype Projects

SOURCE: Federal Register, November 21, 2001, Vol. 66, No. 225, page 58422

AGENCIES: Department of Defense (DOD)

ACTION: Proposed Rule

SYNOPSIS: DOD is proposing to revise the regulations pertaining to transactions other than contracts, grants, or cooperative agreements for prototype projects ("other transactions") to outline the conditions for appropriate use enacted by law, define a "nontraditional defense contractor," and provide audit policy.

EDITOR'S NOTE: The regulations for "other transactions" are in Title 32 of the Code of Federal Regulations (CFR), Chapter 1, Office of the Secretary of Defense, Part 3, Transactions Other Than Contracts, Grants, or Cooperative Agreements for Prototype Projects.

For more on a recent rule change concerning "other transactions," see the November 15, 2001, FEDERAL CONTRACTS DISPATCH "Defense of Defense; Comptroller General Access to Records for Transactions Other Than Contracts, Grants, or Cooperative Agreements for Prototype Projects."

DATES: Comments must be submitted by January 22, 2002.

ADDRESSES: Submit written comments to Office of the Director, Defense Procurement, Attn: Ms. Teresa Brooks, PDUSD(A&T)/DP(CPA), 3060 Defense Pentagon, Washington, DC 20301-3060; fax: 703-614-1254.

FOR FURTHER INFORMATION CONTACT: Teresa Brooks, 703-695-8567.

SUPPLEMENTAL INFORMATION: Section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Public Law 103-160) authorized the secretary of a military department, the director of Defense Advanced Research Projects Agency (DARPA), and any other official designated by the Secretary of Defense, to enter into "transactions other than contracts, grants or cooperative agreements for prototype projects that are directly relevant to weapons or weapon systems proposed to be acquired or developed by the Department of Defense." These are commonly referred to as "other transactions" (OTs) and they are generally exempt from all the statutes and regulations that govern federal contracts and grants. The purpose of OTs is to overcome the reluctance of many firms with significant technological advances and innovations to share their innovations with the government because of the significant statutory and regulatory requirements involved in government contracts and grants. When using OTs, DOD contracting officials are not required to include standard contract provisions that typically address such issues as financial management or intellectual property rights, but may structure the agreements as they consider appropriate.

The Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398), Section 803, Clarification and Extension of Authority to Carry Out Certain Prototype Projects, identified conditions for appropriate use of the authority and defined a "nontraditional defense contractor." In addition, DOD has developed audit policy applicable to transactions for prototype projects. These additional requirements are addressed in this proposed rule, which would revise 32 CFR Part 3 as follows:

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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