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Veterans Administration
Office of General Counsel
Washington DC, 20420
O.G.C. Advisory Opinion 27-90
April 24, 1990
VA District Counsel (343/02)
211 Main Street
San Francisco, CA 94105
QUESTION PRESENTED: When a VA laboratory receives funds pursuant
to a Federal Technology Transfer Act agreement, may it transfer them
to its nonprofit research corporation for administration?
COMMENTS:
1. The Federal Technology Transfer Act (FTTA) authorizes a Federal
agency to permit the directors of its Government-operated
laboratories to enter into cooperative research and development
agreements with other Government agencies, private organizations, and
persons. 15 U.S.C. 3710a(a)(1). The Secretary has implemented
pertinent provisions of the Act by delegating authority to VAMC
directors to enter into such agreements. 54 Fed. Reg. 26,027 (1989)
(to be codified at 38 C.F.R. 2.83). Under these agreements,
laboratories may receive funds from collaborating parties to be used
for "the conduct of specific research or development efforts." Id.
3710a(d)(1). In addition, the law permits these laboratories to
receive royalties and other income from the licensing or agreements.
Id. 3710a(b)(1). Nowhere, however, does the Act specify where Federal
laboratories shall retain the funds obtained under a cooperative
agreement. Thus, VA must look beyond the Act to answer the question.
2. VA has authority to establish nonprofit research corporations
as "flexible funding mechanisms" for conducting approved research at
VA medical centers. 38 U.S.C. 4161(a). "Any funds received by the
[Secretary] for the conduct of research at the medical center other
than funds appropriated to the [Department of Veterans Affairs] may
be transferred to and administered by the corporation for that
purpose." Id. 4162. A VA facility's laboratory could thus transfer
funds received for the conduct of research at the facility to that
facility's nonprofit research corporation. In light of the broad
language of section 4162, the funds transferred could, in our view,
include funds received under a cooperative agreement for the conduct
of research at the laboratory. Royalties and other income from
licensing or assignment of inventions are not received for the
conduct of VA research, however. This income thus could not be
transferred to and administered by a VA nonprofit research
corporation.
3. We note, however, that VA fiscal instructions prohibit VA
laboratories from funding cooperative agreements through nonprofit
research corporations. A VA teletype to all VA facilities dated July
10, 1989, directs that cooperative agreements be funded through the
Medical and Prosthetic Research appropriation account. This directive
appears to have been issued without considering the use of VA
nonprofit research corporations to administer these research funds.
In formulating the guidance, consideration was apparently given only
to the question whether or not the General Post Fund is an
appropriate depository for monies intended to finance research under
the Act. In addition, the VA Circular implementing the FTTA requires
that funds received to support research under a cooperative agreement
be deposited in the medical and prosthetic research account at the
laboratory level. VHS&RA Circular 10-89-131, attachment A,
paragraph 8 (Dec. 12, 1989). Before transferring FTTA funds to a VA
nonprofit research corporation's account, these policy provisions
would need to be revised or waived by the appropriate VA officials.
HELD:
A VA laboratory may transfer funds received under a cooperative
agreement for the conduct of research to its nonprofit research
corporation for administration if VA policy instructions are waived
or revised. Royalties and other income from licensing or assignment
of inventions may not be transferred to and administered by a VA
nonprofit research corporation.
Raoul L. Carroll
General Counsel
NONPROFIT RESEARCH CORPORATIONS
AND
THE FEDERAL TECHNOLOGY TRANSFER ACT
VA has authority to establish nonprofit research corporations as
"flexible funding mechanisms" for conducting approved research at VA
medical centers. 38 U.S.C. 7361(a). VA also has authority to permit
the directors of Government-operated laboratories to enter into
cooperative research and development agreements (CRADAs) with other
Government agencies, private organizations, and persons. 15 U.S.C.
3710a(a)(1). The question presented is whether a nonprofit research
corporation has authority to enter into a CRADA on behalf of the
Government. As explained below, a nonprofit research corporation is
not a Government-operated laboratory and therefore does not fall
within the statutory language permitting such agreements.
The purpose of the statute authorizing nonprofit research
corporations is to allow private entities to contribute research
monies to Government projects without augmenting appropriations, and
without passing monies through universities. The relationship which
the statute creates between these corporations and the Federal
Government is that the corporations, although formed under and
subject to state corporate laws, are subject to oversight by the
inspector General and the Comptroller General. The statute does not
create a relationship in which a nonprofit research corporation is an
arm of the Government.
In the House Report on the Veterans' Omnibus Health Care
Amendments of 1987, Congress addressed the proposed amendment
authorizing nonprofit research corporations, stating that "these
corporations would not be considered for any purposes as corporations
owned or controlled by the United States, except for the limitations
made applicable to these corporations by this Act." H.R. Rep. No.
373, 100th Cong., 1st Sess., at 5 (1987).
Given this legislative history, attorneys at the Department of
Veterans Affairs and the Department of Justice have concluded that
the Federal Tort Claims Act does not cover employees of nonprofit
research corporations, that nonprofit research corporations cannot
use the GSA supply schedule, and that VA medical centers may not
transfer funds received pursuant to a CRADA to nonprofit research
corporations for administration.
Consistent with the conclusion that nonprofit research
corporations are not Government-operated laboratories, and consistent
with prior determinations finding that nonprofit research
corporations have no governmental authority, we find that they also
have no authority to enter into CRADAs on behalf of the Federal
Government.
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