Department of Energy
Implementation and Use of Other Transactions Authority Provided in the Energy Policy Act of 2005 Gao ID: GAO-08-798R June 6, 2008Since the Department of Energy (DOE) was established in 1977, one of its missions has been to promote the nation's energy security through research, development, and demonstration of advanced technologies for meeting future energy demands and diversifying the nation's energy portfolio. As part of this mission, DOE's Office of Energy Efficiency and Renewable Energy conducts research, development, and demonstration activities in partnership with industry to advance a diverse supply of clean power technologies. The fiscal year 2008 budget for these activities was $1.7 billion. The Energy Policy Act of 2005, the first comprehensive energy legislation in more than a decade, includes provisions to address the nation's long-term energy challenges. Key goals of the act include diversifying the nation's energy supply by promoting alternative and renewable sources of energy and by investing in science and technology. Provisions in the act promote the use of solar and wind power, establish a loan-guarantee program to encourage private investment in new energy technologies, and authorize demonstration projects for producing ethanol from cellulosic sources such as forest residues, agricultural residues, and scrap wood. To provide DOE with more flexibility to enter into agreements with private-sector entities, section 1007 of the Energy Policy Act of 2005 gave the Secretary of Energy the ability to use "other transactions authority." This authority, similar to that previously authorized for the Departments of Defense and Homeland Security, allows an agency to enter into agreements "other than" standard contracts, grants, and cooperative agreements. Agreements under this authority would not be subject to the Federal Acquisition Regulation or certain other federal laws governing contracts. Therefore, the other transactions authority could provide for more flexible terms and conditions, thereby enhancing the federal government's ability to acquire cutting-edge science and technology by attracting contractors that had not typically pursued government contracts. DOE may use this authority to help bring new ideas and innovations to fruition, to attract nontraditional government contractors, and to advance the department's energy security mission. The Energy Policy Act of 2005 required DOE to issue proposed guidelines for the use of this authority by November 8, 2005 (no later than 90 days after enactment), and specified that the department could not use the authority until the final guidelines were published. DOE's authority to enter into these transactions terminates on September 30, 2010. The act further required that GAO report on the department's use of other transactions authority, including DOE's ability to attract nontraditional government contractors (defined as those who have not had a contract or other agreement with the federal government for at least 1 year before the proposed contract). This report and our previous discussions and communications with your staff fulfill that directive, addressing (1) the steps DOE has taken to implement other transactions authority, including the safeguards established, and (2) the extent to which using this authority has enabled DOE to attract nontraditional government contractors.
As required by the Energy Policy Act of 2005, DOE developed and issued final regulations to implement other transactions authority before using the authority. Furthermore, DOE issued supplemental guidance and developed and presented training on how to use the other transactions authority to DOE legal, procurement, and program office officials. DOE decided to implement other transactions authority by using a special type of financial assistance instrument, called technology investment agreements. Technology investment agreements can be negotiated to include provisions that would encourage companies with promising new ideas to do business with the federal government. In both its regulations and supplemental guidance, DOE stressed that other transactions authority was to be used only if existing mechanisms, such as contracts or financial assistance, were not feasible or appropriate. Finally, DOE developed a training course on how to use this new type of agreement and presented the course at headquarters and field locations where technology investment agreements were most likely to be used. Overall, we believe that the controls DOE put into place over the use of its other transactions authority appear to be adequate, assuming that DOE continues to effectively implement the safeguards and to incorporate lessons learned as the department negotiates future agreements. DOE's use of other transactions authority to date has been limited: the department has negotiated one technology investment agreement to construct and operate a facility (an integrated biorefinery) that will convert wood wastes to ethanol. This project is part of DOE's efforts to demonstrate the commercial viability of producing ethanol from sources other than corn or similar food crops. The company that will be constructing this facility, Range Fuels, has not previously done work for the federal government and therefore meets the definition of a nontraditional government contractor. DOE's limited use of other transactions authority is consistent with the language in the Energy Policy Act of 2005 specifying that the authority is to be used only if contracts or other financial assistance mechanisms are not feasible or appropriate.
GAO-08-798R, Department of Energy: Implementation and Use of Other Transactions Authority Provided in the Energy Policy Act of 2005
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June 6, 2008:
Congressional Committees:
Subject: Department of Energy: Implementation and Use of Other
Transactions Authority Provided in the Energy Policy Act of 2005:
Since the Department of Energy (DOE) was established in 1977, one of
its missions has been to promote the nation's energy security through
research, development, and demonstration of advanced technologies for
meeting future energy demands and diversifying the nation's energy
portfolio. As part of this mission, DOE's Office of Energy Efficiency
and Renewable Energy conducts research, development, and demonstration
activities in partnership with industry to advance a diverse supply of
clean power technologies. The fiscal year 2008 budget for these
activities was $1.7 billion.
The Energy Policy Act of 2005, the first comprehensive energy
legislation in more than a decade, includes provisions to address the
nation's long-term energy challenges. Key goals of the act include
diversifying the nation's energy supply by promoting alternative and
renewable sources of energy and by investing in science and technology.
Provisions in the act promote the use of solar and wind power,
establish a loan-guarantee program to encourage private investment in
new energy technologies, and authorize demonstration projects for
producing ethanol from cellulosic sources such as forest residues,
agricultural residues, and scrap wood.
To provide DOE with more flexibility to enter into agreements with
private-sector entities, section 1007 of the Energy Policy Act of 2005
gave the Secretary of Energy the ability to use "other transactions
authority." This authority, similar to that previously authorized for
the Departments of Defense and Homeland Security, allows an agency to
enter into agreements "other than" standard contracts, grants, and
cooperative agreements. Agreements under this authority would not be
subject to the Federal Acquisition Regulation or certain other federal
laws governing contracts.[Footnote 1] Therefore, the other transactions
authority could provide for more flexible terms and conditions, thereby
enhancing the federal government's ability to acquire cutting-edge
science and technology by attracting contractors that had not typically
pursued government contracts. DOE may use this authority to help bring
new ideas and innovations to fruition, to attract nontraditional
government contractors, and to advance the department's energy security
mission.
The Energy Policy Act of 2005 required DOE to issue proposed guidelines
for the use of this authority by November 8, 2005 (no later than 90
days after enactment), and specified that the department could not use
the authority until the final guidelines were published.[Footnote 2]
DOE's authority to enter into these transactions terminates on
September 30, 2010.
The act further required that GAO report on the department's use of
other transactions authority, including DOE's ability to attract
nontraditional government contractors (defined as those who have not
had a contract or other agreement with the federal government for at
least 1 year before the proposed contract). This report and our
previous discussions and communications with your staff fulfill that
directive, addressing (1) the steps DOE has taken to implement other
transactions authority, including the safeguards established, and (2)
the extent to which using this authority has enabled DOE to attract
nontraditional government contractors.
To determine the steps DOE has taken to implement other transactions
authority, we reviewed the Energy Policy Act of 2005, the draft and
final regulations issued by the department, and related guidance and
training materials. We also interviewed officials with DOE's Office of
Procurement and Assistance Management and Office of General Counsel. We
obtained documentation of training sessions held in May 2006 at DOE
headquarters and two sites where the other transactions authority could
potentially be used. To determine the extent to which the authority has
enabled DOE to attract nontraditional government contractors, we
reviewed DOE's annual reports on its use of the authority, which were
submitted to Congress for fiscal years 2006 and 2007. In addition, we
reviewed funding announcements and award files at DOE's field office in
Golden, Colorado. DOE's Golden Field Office is the only location where
the department has negotiated an agreement using its other transactions
authority. We also interviewed DOE procurement, legal, and program
officials in DOE headquarters and at the Golden Field Office, as well
as officials with Range Fuels, the recipient of the agreement
negotiated under DOE's other transactions authority. We conducted this
performance audit from January 2008 to June 2008, in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Results in Brief:
As required by the Energy Policy Act of 2005, DOE developed and issued
final regulations to implement other transactions authority before
using the authority. Furthermore, DOE issued supplemental guidance and
developed and presented training on how to use the other transactions
authority to DOE legal, procurement, and program office officials. DOE
decided to implement other transactions authority by using a special
type of financial assistance instrument, called technology investment
agreements. Technology investment agreements can be negotiated to
include provisions that would encourage companies with promising new
ideas to do business with the federal government. In both its
regulations and supplemental guidance, DOE stressed that other
transactions authority was to be used only if existing mechanisms, such
as contracts or financial assistance, were not feasible or appropriate.
Finally, DOE developed a training course on how to use this new type of
agreement and presented the course at headquarters and field locations
where technology investment agreements were most likely to be used.
Overall, we believe that the controls DOE put into place over the use
of its other transactions authority appear to be adequate, assuming
that DOE continues to effectively implement the safeguards and to
incorporate lessons learned as the department negotiates future
agreements.
DOE's use of other transactions authority to date has been limited: the
department has negotiated one technology investment agreement to
construct and operate a facility (an integrated biorefinery) that will
convert wood wastes to ethanol. This project is part of DOE's efforts
to demonstrate the commercial viability of producing ethanol from
sources other than corn or similar food crops. The company that will be
constructing this facility, Range Fuels, has not previously done work
for the federal government and therefore meets the definition of a
nontraditional government contractor. DOE's limited use of other
transactions authority is consistent with the language in the Energy
Policy Act of 2005 specifying that the authority is to be used only if
contracts or other financial assistance mechanisms are not feasible or
appropriate.
Background:
To support its energy security mission, DOE generally conducts basic
energy research at its national laboratories using contracts with
educational institutions, nonprofit organizations, and other private
entities. Research and development of new technologies, on the other
hand, is carried out either by the national laboratories under contract
or by universities, nonprofit organizations, and private companies
using financial assistance mechanisms such as grants or cooperative
agreements.
Consistent with the Federal Grant and Cooperative Agreement Act of
1977,[Footnote 3] DOE guidance states that the decision on whether to
use contracts or financial assistance should be based on the principal
purpose of the award, including its intended primary beneficiary.
* Contracts. The primary beneficiary of contracts is the federal
government. Contracts are used for the purchase of goods and services
for the direct benefit of the government, and establish arrangements
that are clear and certain regarding the relationship and performance
requirements. Contracts are governed by the Federal Acquisition
Regulation, and recipients of contracts generally must have financial
and accounting systems that comply with government cost accounting
standards.
* Financial assistance. The primary beneficiary of financial assistance
is the general public, and the principal purpose of this assistance is
to transfer money or property to accomplish support of a program or
effort authorized by federal law. Financial assistance mechanisms
include grants and cooperative agreements, which differ in the amount
of federal involvement in the project. For grants, the agency's
involvement is essentially administrative, which includes normal
federal stewardship responsibilities, such as reviewing performance to
ensure that the objectives, terms, and conditions of the grant are
accomplished. Under cooperative agreements, the agency expects to be
substantially involved in the project, such as reviewing and approving
one stage of a project before work can begin on a subsequent stage.
Under financial assistance mechanisms, payments may be made in advance
or to reimburse allowed costs. Under DOE regulations, however, these
mechanisms generally do not allow for reimbursement of costs on the
basis of demonstrating progress or completing milestones in a project,
such as construction of a facility.
To address situations where neither contracts nor financial assistance
would be appropriate, Congress established "other transactions
authority" (for transactions other than contracts or financial
assistance). Federal agencies could use other transactions authority to
reduce barriers--such as having to comply with federal cost accounting
standards--that discourage some for-profit firms from doing business
with the federal government and to enhance the federal government's
ability to acquire cutting-edge science and technology. This authority
originated in 1958 when Congress gave the National Aeronautics and
Space Administration the authority to enter into contracts, leases,
cooperative agreements, or "other transactions as may be necessary in
the conduct of its work and on such terms as it may deem
appropriate."[Footnote 4] Congress granted the Department of Defense's
Defense Advanced Research Projects Agency this authority for research
projects in 1989, extended the authority to include prototype
development projects in 1993, and has since extended the ability to use
this authority to the Department of Defense more generally.[Footnote 5]
The Homeland Security Act of 2002 created the Department of Homeland
Security and granted the agency the authority to establish a pilot
program using other transactions authority to carry out both research
and development and prototype projects.[Footnote 6] The Services
Acquisition Reform Act of 2003 authorized all federal agencies to use
other transactions to carry out basic, applied, and advanced research,
and development projects that are otherwise authorized and may
facilitate defense against or recovery from terrorism or nuclear,
biological, chemical, or radiological attack.[Footnote 7]
DOE Developed Regulations as Required, as Well as Guidance and
Training, Before Using Other Transactions Authority:
As required by the Energy Policy Act of 2005, DOE developed proposed
guidelines or regulations for its use of other transactions authority
and issued final regulations before using the authority. The department
also issued supplemental guidance and developed and presented training
on how to use the new mechanism. Overall, these steps appear to
establish adequate safeguards over the use of other transactions
authority.
Regulations Established Technology Investment Agreements:
In its proposed and final regulations, DOE stated that it would
implement other transactions authority through the award and
administration of technology investment agreements. A technology
investment agreement is a special type of financial assistance
instrument meant to increase the involvement of commercial firms in the
department's research, development, and demonstration programs.
According to DOE regulations, the structure of these agreements may
vary, depending on such factors as the intellectual property provisions
required.[Footnote 8] The regulations established minimum requirements
for proper stewardship of federal funds, including audits, reporting
requirements, and systems to control project funds effectively.
Under a technology investment agreement, DOE has greater latitude to
negotiate provisions that vary from traditional government contracts or
financial assistance agreements. For example, federal regulations
generally require that a government contractor have a financial system
in place that complies with federal cost-accounting standards.
Companies that do not traditionally contract with the federal
government generally would not have a financial system that meets
government-unique accounting requirements. Under a technology
investment agreement, DOE can accept a company's financial system as
long as it complies with generally accepted accounting principles,
which reduces the administrative burden on the company.
DOE officials in the Office of Procurement and Assistance Policy and
the Office of General Counsel worked together to develop the proposed
and final regulations. To meet the deadline specified in the act for
issuing proposed regulations by November 8, 2005, DOE used the
Department of Defense's regulations for technology investment
agreements as a starting point for developing its own regulations.
Adapting these existing regulations allowed DOE to develop its proposed
regulations in 3 months.
DOE Issued Supplemental Guidance Concurrent with Final Regulations:
At the same time as it issued its final regulations, the department
also issued supplemental guidance on how to implement the other
transactions authority. For example, DOE issued a new financial
assistance letter covering such topics as documenting the justification
for using a technology investment agreement, satisfying the requirement
for substantial involvement by the department, and outlining the review
and approval process.[Footnote 9]
To demonstrate that a technology investment agreement is warranted, the
DOE contracting officer, along with the program office requesting the
agreement, must prepare a justification memorandum for review and
approval by senior DOE officials. The memorandum must provide
information about (1) the nature of the project; (2) the recipient,
which may be an individual entity or a group but must include at least
one for-profit firm; (3) the recipient's commitment to the project and
the ratio of DOE-to-recipient cost sharing for the project; (4) the
degree of involvement of the government program official; and (5) the
benefits of using a technology investment agreement.
Because using a technology investment agreement provides a contracting
officer considerable latitude in negotiating the provisions of the
agreement, DOE also took steps to ensure that contracting officers have
the necessary level of expertise to make such judgments. Specifically,
to award a technology investment agreement, a contracting officer must
have (1) obtained DOE's highest level (level III) of contracting
certification based on training and experience, (2) obtained separate
financial assistance certification, and (3) completed the DOE training
on using technology investment agreements. Furthermore, a contracting
officer may award a technology investment agreement only if the
officer's warrant (or authority) specifically authorizes the award and
administration of a technology investment agreement.
DOE Developed and Delivered Training to Communicate New Authority:
In addition to regulations and supplemental guidance, DOE developed a
training curriculum for technology investment agreements. This
curriculum covers topics such as the definition of other transactions;
the review and approval process; and the various phases of an award,
from preparing the announcement to negotiating the terms of the
agreement. DOE presented this training course in May 2006 at three
locations: DOE headquarters, the Golden Field Office in Colorado, and
the National Energy Technology Laboratory in Pennsylvania. Program
officials, contracting officers, and Office of General Counsel
officials attended the training. DOE selected these locations as the
ones most likely to use technology investment agreements in the near
term.
Safeguards over Use of Other Transactions Authority Appear Adequate:
Taken as a whole, the safeguards or controls that DOE put into place
over the use of its other transactions authority appear to be adequate,
assuming that DOE continues to effectively implement them. The
regulations, supplemental guidance, and training materials all stress
that technology investment agreements are to be used only when no other
type of contract or financial assistance instrument is feasible or
appropriate. Through training and certification, DOE has taken steps to
ensure that contracting officers who award and administer technology
investment agreements have the requisite skills. In addition, the
authority or contracting officer's warrant to award a technology
investment agreement is not continuous but valid only for negotiating a
specific agreement. Furthermore, both the justification for using a
technology investment agreement and the actual agreement require
approval by senior DOE headquarters officials.
DOE's Use of Other Transactions Authority to Date Has Been Limited:
Since the final regulations on other transactions authority were
issued, the only DOE program office that has used the authority is the
Office of Energy Efficiency and Renewable Energy. To date, DOE has
issued only one technology investment agreement.[Footnote 10] This
limited use of the other transactions authority is consistent with the
language in the Energy Policy Act of 2005, and with DOE regulations and
guidance, specifying that the authority is to be used only if contracts
or other financial assistance mechanisms are not feasible or
appropriate.
Two of DOE's largest component organizations--the National Nuclear
Security Administration and the Office of Science--rely primarily on
their national laboratories for research and development activities.
Officials with these two organizations said that, as a result, existing
contract and financial assistance mechanisms generally provide adequate
flexibility to meet their research and development needs.[Footnote 11]
According to an official in DOE's Office of Procurement and Assistance
Management, two other program offices--the Offices of Nuclear Energy
and Fossil Energy--had considered using other transactions authority
for a specific project but determined that cooperative agreements would
work instead.
Thus, the only DOE program office to use other transactions authority
to date is the Office of Energy Efficiency and Renewable Energy, which
used the authority in support of its biomass program.[Footnote 12] The
first, and so far only, technology investment agreement was finalized
in November 2007 for funding to design, construct, and operate an
integrated biorefinery to produce primarily ethanol from trees and
forest residues (lignocellulosic feedstock). DOE's cost-share funding
of the project was established at $76 million, or about 21 percent of
the total project cost of approximately $356 million.
The biorefinery project originated in response to a funding opportunity
announcement issued in February 2006 by DOE's Golden Field Office to
implement section 932 of the Energy Policy Act of 2005. Section 932,
which deals with bioenergy programs, requires that DOE solicit
proposals for projects to demonstrate the commercial application of
integrated biorefineries. According to the act, the department should
select only proposals that demonstrate that the project will be able to
operate profitably without direct federal subsidy after initial
construction costs are paid and that enable the biorefinery to be
easily replicated.
In February 2007, DOE announced the selection of six projects in
response to the funding opportunity announcement; the planned approach
was to make awards for these projects in two phases. The first phase
would cover preliminary design, testing, and efforts to comply with
environmental regulations for the projects; the second phase would
cover final design and actual construction of the facilities. Of the
six projects selected, the application by Range Fuels to construct a
full-scale biorefinery plant in Georgia to demonstrate its process was
closest to actually starting construction. DOE and Range Fuels, a
nontraditional government contractor, negotiated a technology
investment agreement for the construction of the plant. For the other
selected projects, those that have been awarded have involved
cooperative agreements for the first phase.
To negotiate the terms of the technology investment agreement, DOE used
a team consisting of headquarters and Golden Field Office legal counsel
(including intellectual property attorneys), contracting and financial
assistance officers, and representatives of the biomass program office.
The agreement was structured as a cost-reimbursement rather than a
fixed-cost instrument, with payments to be made to Range Fuels on
completion of specified milestones or performance measures associated
with the construction and operation of its biorefinery. Although DOE
obligated $50 million in funds to this project for fiscal year 2008,
provisions negotiated in the technology investment agreement restricted
Range Fuels from seeking cost reimbursements until it had raised a
specified amount of private financing. In early April 2008, Range Fuels
announced that it had raised the required amount of private financing
to satisfy this provision. As of the end of April 2008, however, Range
Fuels had not requested reimbursement for any expenses under the
agreement, and DOE had not paid out any of the obligated funds.
DOE used a technology investment agreement for several reasons:
* The technology investment agreement allowed DOE to include milestones
or performance measures for progress payments. Under DOE regulations,
progress payments generally cannot be done under cooperative
agreements.
* DOE could include a provision that required Range Fuels to raise a
specified amount of private funding before DOE would reimburse any
costs.
* The agreement allowed DOE to accept Range Fuels' current accounting
system and the use of Range Fuels' independent public accountant for
audits.
* DOE was also able to tailor the intellectual property provisions to
ensure that a successful demonstration project could be replicated,
thereby complying with the requirement in section 932 of the Energy
Policy Act.
DOE is taking steps to incorporate lessons learned from its first
technology investment agreement. Specifically, one of the issues that
arose during the negotiations with Range Fuels was the treatment of
rights to real property and equipment. Under existing regulations for
cost sharing agreements, the recipient obtains title to the property
and equipment acquired under the agreement. DOE, conversely, retains an
interest in that property based on the proportion of the government's
cost share under which it has pro rata rights in the property
disposition matters upon project completion. According to DOE
officials, in many instances, the existence of this government interest
makes the project less attractive to the private financing market,
whose participation is typically needed for project completion.
For the Range Fuels agreement, DOE contracting, legal, and program
officials in the Golden Field Office requested and obtained a
permission to deviate from standard property rights provisions.
According to DOE, providing unconditional title to Range Fuels for the
real property and equipment obtained during the project allowed the
company to be in a better position to obtain additional private-sector
financing. Nevertheless, the department recognized that this issue
could continue to be a concern. Therefore, DOE formed a working group
to study the issue and determine how best to address these concerns, if
necessary.
While DOE has made only limited use of the authority to date, officials
from several DOE offices, including the Office of General Counsel, the
Office of Procurement and Assistance Management Policy, and the Office
of Energy Efficiency and Renewable Energy, expressed concerns over the
September 30, 2010, termination date for the department's use of other
transactions authority. According to these officials, the potential of
having the authority expire in about 2 years may inhibit program
offices from using this valuable addition to the department's tool kit.
Agency Comments We provided a draft of this report to the Secretary of
Energy for review and comment. The Director of the Office of
Procurement and Assistance Management provided written technical
comments, which we have incorporated as appropriate. DOE's comments on
our draft report are included in enclosure I.
We are sending copies of this report to the Secretary of Energy,
appropriate congressional committees, and other interested parties. We
are also making copies available to others upon request. This report
will be available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at 202-512-3841 or aloisee@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Key contributors to this report include
Janet E. Frisch, Assistant Director; Carole J. Blackwell; Ellen W. Chu;
Karen Keegan; Tim DiNapoli; and Omari Norman.
Signed by:
Gene Aloise:
Director, Natural Resources and Environment Enclosure:
List of Committees:
The Honorable Jeff Bingaman:
Chairman:
The Honorable Pete V. Domenici:
Ranking Member:
Committee on Energy and Natural Resources:
United States Senate:
The Honorable John D. Dingell:
Chairman:
The Honorable Joe L. Barton:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Thomas M. Davis:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
Enclosure I: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
May 30, 2008:
Gene Aloise:
Director:
Natural Resources and Environment:
Government Accountability Office:
441 G Street, N.W.:
Washington, D.C. 20548:
Dear Mr. Aloise:
Thank you for the opportunity to comment on the Draft Report entitled
Implementation and Use of Other Transactions Authority Provided in the
Energy Policy Act of 2005 (GAO-08-798R).
In addition to the comments previously provided by the Offices of
Procurement and Assistance Management, Energy Efficiency and Renewable
Energy and General Counsel, the Department of Energy (DOE) has two
comments on the Draft Report.
In two places (the carry over sentence at the top of page 4 and the
last sentence on page 9), the draft states that DOE guidance and
supplemental guidance indicates that DOE will use Other Transactions
Authority (OTA) "only if" existing mechanisms (contracts and financial
assistance) will not work. In fact, the statute states, "...instead
this is the case only if the other vehicles are not "feasible or
appropriate." As part of justifying why other vehicles are not feasible
or appropriate, the regulations (10 CFR 600.110, and 603.225) and
Financial Assistance Letter 2006-03 require the documentation to
describe the goals and benefits (reducing barriers, promote new
relationships among performers in the technology base, benefit RD&D
results) of using OTA.
In addition, on page 7, in the third paragraph, third sentence, the
word "that" should be inserted between "financial system" and "meets."
Questions on the Department's comments should be directed to Miss
Jacqueline Kniskern at 202-287-1342 or Jacqueline.kniskern@hq.doe.gov.
Sincerely,
Signed by:
Edward R. Simpson:
Director:
Office of Procurement and Assistance Management:
[End of section]
Footnotes:
[1] For a discussion of the laws that do not generally apply to
agreements under other transactions authority, see GAO, Homeland
Security: Further Action Needed to Promote Successful Use of Special
DHS Acquisition Authority, GAO-05-136 (Washington, D.C.: Dec. 15,
2004), 4-6.
[2] DOE issued its proposed regulations in the Federal Register on
November 15, 2005, and the final regulations on May 9, 2006, with an
effective date of July 10, 2006.
[3] The Federal Grant and Cooperative Agreement Act of 1977 established
criteria for determining whether a transaction is financial assistance.
DOE's Financial Assistance Rules (10 C.F.R. pt. 600) establish uniform
policies and procedures for the award and administration of financial
assistance.
[4] 42 U.S.C. 2473(c)(5).
[5] GAO has reported on the Department of Defense's use of this
authority. For example, see DOD Research: Acquiring Research by
Nontraditional Means, GAO/NSIAD-96-11 (Washington, D.C.: Mar. 29,
1996); Acquisition Reform: DOD's Guidance on Using Section 845
Agreements Could Be Improved, GAO/NSIAD-00-33 (Washington, D.C.: Apr.
7, 2000); and Defense Acquisitions: DOD Has Implemented Section 845
Recommendations but Reporting Can Be Enhanced, GAO-03-150 (Washington,
D.C.: Oct. 9, 2002).
[6] GAO has reported on the Department of Homeland Security's use of
this special acquisition authority. See GAO-05-136 and Department of
Homeland Security: Status and Accountability Challenges Associated with
the Use of Special DHS Acquisition Authority, GAO-08-471T (Washington,
D.C.: Feb. 7, 2008.)
[7] P.L. 108-136, sec. 1441.
[8] Intellectual property includes, among other things, patents,
copyrights, and technical data. For example, intellectual property
provisions will apply to the development of a new process or
technology.
[9] Department of Energy, Implementation Guidance for Awarding
Technology Investment Agreements, Financial Assistance Letter No. 2006-
03 (Washington, D.C., May 10, 2006).
[10] The Energy Policy Act of 2005 required DOE to submit an annual
report to Congress on the department's use of other transactions
authority, including the technical objectives for each agreement, the
extent to which the other transaction has contributed to a broadening
of the technology and industrial base available for meeting DOE's
mission needs, and the extent to which the other transaction has
fostered new relationships and practices. In its first two reports
submitted to Congress, covering activity in fiscal years 2006 and 2007,
DOE reported that it had the framework in place for using other
transactions authority, but there had been no agreements to date.
[11] During 2007, the Office of Science established three DOE Bioenergy
Research Centers to accelerate basic research in the development of
cellulosic ethanol and other biofuels. According to an Office of
Science official, DOE had at one point considered using technology
investment agreements. Two of the research centers were established at
existing DOE national laboratories, however, and the third was
established under a cooperative agreement.
[12] The biomass program focuses on developing biofuel, bioproduct, and
biopower technologies in partnership with other government agencies,
industry, and academia. This program supports four key priorities of
the Office of Energy Efficiency and Renewable Energy's strategic plan:
(1) dramatically reducing dependence on foreign oil; (2) promoting the
use of diverse, domestic, and sustainable energy resources; (3)
reducing carbon emissions from energy production and consumption; and
(4) establishing a domestic bioindustry.
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