Last week, the Federal Register published President Biden's Executive Order on Federal Research and Development in Support of Domestic Manufacturing and United States Jobs 1 (Executive Order), which requires federal agencies 2 to emphasize domestic manufacturing in research and development agreements, contracts, and plans.
The Executive Order specifically directs certain federal agencies to, among other things:
- consider domestic manufacturing in federal Research & Development (R&D) funding agreement solicitations, including how R&D funding supports the overall U.S. manufacturing base;
- use both Other Transaction Authority and the Small Business Innovation Research and Small Business Technology Transfer programs to support the production of leading-edge and new technologies in the United States, by streamlining program requirements and simultaneously encouraging domestic manufacture of the new technologies;
- require recipients of federal R&D funding agreements to track and update the awarding agency on the location where "subject inventions" are manufactured and to report annually on licensees and manufacturing locations of such inventions; 3
- consider whether "exceptional circumstances" exist warranting restrictions on the right to retain title to subject inventions, including whether to extend the requirement to manufacture substantially in the United States to recipients of federal R&D funding agreements, to non-exclusive licensees of subject inventions, and for use or sale of subject inventions outside the United States.
The Executive Order also encourages the impacted agencies to develop a process by which the agency may waive the domestic manufacturing requirements for agency-funded technology or technology developed under an agency funding opportunity without first having to receive a waiver request from a federal R&D funding agreement recipient. This process should set forth specific factors that may support a waiver, and seek concurrence from the Made in America Director prior to waiving domestic manufacturing requirements. Additionally, the Executive Order directs the Secretary of Commerce, through the Director of the National Institute of Standards and Technology, to provide guidance to agencies on the factors and considerations they should weigh when determining whether domestic manufacturing is not commercially feasible.
Key Takeaways
The government's emphasis on protecting U.S. intellectual property and rebuilding domestic critical manufacturing continues to increase. Entities seeking federal R&D funding may be able to further distinguish themselves in competitions by emphasizing their domestic manufacturing capabilities, efforts, or goals. Conversely, entities that lack options for United States manufacturing may struggle to be deemed eligible for federal R&D projects, though the Executive Order's emphasis on transparency and consistency within the process for obtaining waivers for "subject invention" domestic manufacturing requirements could help ensure such waivers are granted when warranted.
Footnotes
1. Executive Order 14104, July 28, 2023.
2. The Executive Order applies to the agencies under the Department of Defense, Department of Agriculture, Department of Commerce, Department of Health and Human Services, Department of Transportation, Department of Energy, Department of Homeland Security, National Science Foundation, and National Aeronautics and Space Administration. Certain requirements also apply to all agencies participating in the Small Business Innovation Research and Small Business Technology Transfer programs or that have statutory Other Transaction Authority or authority from Congress to use other business arrangements for acquisitions.
3. The Department of Commerce has been instructed to develop the award terms and conditions for these reporting requirements within 60 days of the Executive Order (late September 2023).
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