DOD Research:

Acquiring Research by Nontraditional Means

NSIAD-96-11: Published: Mar 29, 1996. Publicly Released: Mar 29, 1996.

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GAO evaluated the Department of Defense's (DOD) use of cooperative agreements and other transactions to further its objectives of: (1) helping to reduce the barriers to integrating the defense and civilian sectors of the industrial base; (2) promoting new relationships and practices within the defense industry; and (3) allowing the government to leverage for defense purposes the private sector's financial investment in research and development of commercial products and processes. GAO also discussed two emerging issues concerning the selection and structure of the instruments.

GAO found that: (1) cooperative agreements and other transactions appear to have contributed to reducing some of the barriers between the defense and civilian industrial bases by attracting firms that traditionally did not perform research for DOD; (2) the instruments have enabled the use of more flexible financial management and intellectual property provisions than those typically found in contracts and grants; (3) the instruments appear to be fostering new relationships and practices within the defense industry, especially for projects being undertaken by consortia; (4) DOD has partially offset its own costs by sharing project costs with recipients, but the DOD practice of accepting the value of recipients' prior research efforts in lieu of concurrent financial or in-kind contributions may increase the actual DOD monetary share of the project's costs; (5) differences between DARPA and the military services regarding the selection of instruments and treatment of specific provisions have led to some confusion among firms that were negotiating agreements with different DOD components; and (6) DOD is revising its interim regulations to provide clearer guidance on the instruments' selection, use, and structure.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD issued memoranda, in December 1997 and March 1998, respectively, that provided additional guidance on the use of cooperative agreements and other transactions. The memoranda address the principal areas of concern GAO raised, including selecting the appropriate instrument, evaluating the recipient's proposed cost sharing, and tailoring intellectual property clauses. While these memoranda were to be formally incorporated in DOD's Defense Grant and Agreement Regulatory System, the DOD Inspector General subsequently raised concerns about DOD's financial management and oversight of other transactions. As these issues remain unresolved, DOD has not updated its formal guidance. DOD officials indicated that they anticipate resolving the remaining issues by December 2000.

    Recommendation: Because inconsistent selection of a particular instrument and treatment of specific clauses may unnecessarily increase confusion for government and industry users and may hinder their effective use, the Secretary of Defense should ensure that the revised DOD guidance on the use of cooperative agreements and other transactions promotes increased consistency among DOD components on the selection and structure of these instruments. In particular, the guidance should specifically address the extent that the value of prior research should be accepted as part of a participant's cost-sharing contribution. Further, the guidance should make clear the extent to which these instruments are subject to the provisions of the Bayh-Dole Act and under what conditions.

    Agency Affected: Department of Defense


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