According to the Office of Naval Research (ONR), the majority of "basic research" is conducted by educational institutions. However, some "basic research" is also awarded to for-profit companies.
If a contract is subject to the 35% limitiation, it will include a provision similar to the following:
This contract is funded with Fiscal Year 2008 basic research appropriations and is subject tothe reimbursement limit on F&A costs set forth in Section 8115 of the Department of Defense Appropriations Act, 2008 (P.L 110-116). Payment of F&A costs for research with funds obligated by this action may not exceed 35% of the total costs provided under this contract action.