27.202-1
Reporting of royalties
Contractors must provide royalty information when required, and contracting officers must ensure royalties are reasonable and coordinate with patent offices before contract award or subcontract consent.
Overview
FAR 27.202-1 outlines the procedures for reporting royalties in government contracts to ensure that royalty payments are not excessive, improper, or inconsistent with government patent rights. Contractors must provide royalty information as required by solicitation provision 52.227-6. Contracting officers are responsible for reviewing this information, forwarding it to the appropriate patent office, and taking action to address any issues. The regulation also covers the handling of royalty information in subcontracts and requires timely communication between contracting officers and patent offices, but does not require contract award or subcontract consent to be delayed while awaiting advice.
Key Rules
- Royalty Information Requirement
- Prospective contractors must furnish royalty information if required by the solicitation provision 52.227-6.
- Review and Action on Royalties
- Contracting officers must review royalty information and take steps to reduce or eliminate excessive or improper royalties.
- Forwarding Royalty Information
- If a proposal includes royalty charges, the contracting officer must forward the information to the cognizant patent office before contract award.
- Subcontract Royalty Reporting
- For subcontracts, royalty information must be obtained and forwarded if required under the prime contract, but consent to subcontract need not be delayed.
- Ongoing Reporting
- All royalty reports must be sent to the appropriate patent office for review.
Responsibilities
- Contracting Officers: Collect, review, and forward royalty information; take action on excessive or improper royalties; coordinate with patent offices.
- Contractors: Submit required royalty information as specified in the solicitation.
- Agencies: Patent offices must review royalty information and advise contracting officers on appropriate actions.
Practical Implications
- Ensures government does not pay excessive or improper royalties.
- Requires clear communication and documentation of royalty information.
- Delays in contract award or subcontract consent are minimized by allowing action to proceed while awaiting patent office advice.
- Common pitfalls include failure to submit required information or delays in forwarding reports, which can lead to compliance issues.