Monday, April 6, 2015

Federally Funded Research and Development Centers (FFRDCs)

Federally Funded Research and Development Centers ((FFRDCs) are organizations established to meet special long-term research and developments needs for the Federal Government that cannot be effectively met by existing federal or contractor resources.

At present, there are 40 such FFRDCs in existence. Each FFRDC has a sponsoring agency and an operating organization. Sponsoring agencies include Defense, Energy, National Science Foundation, FAA (Federal Aviation Administration), the IRS, the National Institute of Health, and NASA.Operating organizations include commercial organizations, nonprofit organizations and educational institutions. Sponsoring agencies generally contract with operating organizations under long term contracts. Within DoD, these contracts are generally for five years. As a practical matter however, once a operating organization has the contract, it has it forever. We don't know of any recent cases where a sponsor agency switched operators. FFRDCs are exempt from the Competition in Contracting Act which allows FFRDCs to receive sole-source contracts.

Some of the more well-known FFRDCs include:

  • The Aerospace Corporation
  • Center for Naval Analyses
  • RAND Corporation 
  • JPL (Jet Propulsion Laboratory)
  • Lawrence Livermore
  • Los Alamos
  • Oak Ridge
  • Sandia

The Government wide policies for establishing, using, auditing, and terminating FFRDCs are contained in FAR 31.017. Sponsors are required to conduct comprehensive audits of the use and need for FFRDCs before renewing a contract or agreement for the FFRDC. The detailed examination must include an assessment of the FFRDC's management controls.

Costs incurred by FFRDCs are generally subject to the cost principles applicable to the type of entity operating the FFRDC. Thus, an FFRDC operated by an educational institution would be subject to the cost principles in OMB Circular A-122 while those operated by non-profits would be subject to the cost principles in OMB Circular A-21. All FFRDCs (including those operated by non-profits and educational institutions, are subject to Cost Accounting Standards (CAS). OMB Circular A-133 (Audits of Non Federal entities that expend Federal awards) is applicable to non-profit and educational operators of FFRDCs. (Note, all of these "circulars" are being superseded by the so-called "Super Circular" for awards made in 2015.

 to the FAR 31.2 cost principles (see Appendix A-300). f. All FFRDCs, including those operated by a nonprofit organization or educational institution, are subject to the CASB rules, regulations, and standards for commercial companies. g. OMB Circular A-133, “Audits of States, Local Governments, and Nonprofit Organizations,” is applicable to an FFRDC operated by an educational institution or nonprofit organization (see 13-205). 13

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