FAR 35.017-1—Sponsoring agreements.
Plain-English Summary
FAR 35.017-1 explains how a sponsoring agreement for a Federally Funded Research and Development Center (FFRDC) must be created, what it must contain, and how long it may last. It covers the requirement to prepare a written sponsorship agreement when the FFRDC is established, the acceptable forms that agreement may take, and the need to clearly identify it as a sponsoring agreement. It also sets minimum content requirements, including the FFRDC’s purpose and mission, termination or nonrenewal procedures, asset disposition and liability settlement, capitalization and ownership of assets, retained earnings and reserve plans, limits on competition with non-FFRDC firms, and rules on whether the FFRDC may accept nonsponsor work. In addition, it allows sponsoring agencies to add policy-based requirements such as advance agreements on certain cost elements and considerations affecting fee negotiations. Finally, it limits the agreement term to five years, with renewal allowed only after periodic review and only in increments of up to five years. In practice, this section is meant to preserve the special status of an FFRDC, keep its mission aligned with Government needs, and ensure periodic oversight so the arrangement remains justified and properly controlled.
Key Rules
Written sponsorship required
A written sponsoring agreement must be prepared when the FFRDC is established. The agreement may be part of a contract, another legal instrument, or a separate document, but it must be clearly designated as the sponsoring agreement by the sponsor.
Minimum content is mandatory
The agreement must, at a minimum, address the items listed in paragraph (c), either in the agreement itself or in the sponsoring agency’s policies and procedures. Agencies may add more requirements, but they cannot omit the required baseline topics.
Mission and purpose statement
The agreement must state the FFRDC’s purpose and mission. This anchors the center’s work to the Government need it was created to serve and helps distinguish it from ordinary contractor support.
Termination and asset disposition
The agreement must provide for orderly termination or nonrenewal, disposal of assets, and settlement of liabilities. It must also define capitalization responsibility so ownership of assets can be determined fairly if the sponsor relationship ends.
Retained earnings must be addressed
The agreement must identify retained earnings or reserves and include a plan for their use and disposition. This prevents uncertainty over accumulated funds and how they may be applied.
Competition restrictions apply
The FFRDC may not compete with non-FFRDC concerns in response to a Federal agency RFP for work other than operating an FFRDC. This restriction does not automatically extend to the parent organization or its other subsidiaries in their non-FFRDC operations, and sponsors may restrict responses to information, qualifications, or capability requests.
Nonsponsor work must be defined
The agreement must say whether the FFRDC may accept work from entities other than the sponsor(s). If nonsponsor work is allowed, the agreement must describe the procedures and any limits on which nonsponsors may be served.
Optional agency-specific provisions
The sponsoring agreement or agency policies may also identify cost elements that require advance agreement under cost-type contracts and factors that will affect fee negotiations when fees are used. These provisions are discretionary but often important for administration and pricing control.
Five-year term limit
The sponsoring agreement may not exceed five years. It may be renewed only after periodic review, and each renewal period may not exceed five years.
Responsibilities
Sponsor / Sponsoring Agency
Prepare the written sponsoring agreement at FFRDC establishment, clearly designate it as the sponsoring agreement, ensure all minimum content requirements are included, set any additional policy requirements, control whether the FFRDC may answer information or capability requests, decide whether nonsponsor work is allowed, and conduct periodic review before any renewal.
FFRDC
Operate within the mission and purpose stated in the agreement, comply with termination, asset, reserve, competition, and nonsponsor-work restrictions, and follow any sponsor-imposed procedures or limitations.
Contracting Officer / Acquisition Officials
Ensure the agreement or related policies address required FAR topics, incorporate any needed advance agreements or fee considerations in contract administration, and verify that the term and renewal structure comply with the five-year limit and periodic review requirement.
Agency Policy Owners
Establish or supplement sponsoring-agency policies and procedures that specify required agreement content, advance-agreement cost elements, fee-negotiation considerations, and any restrictions or procedures for nonsponsor work or responses to requests for information.
Practical Implications
This section is a governance tool, not just a paperwork requirement: it defines why the FFRDC exists and how the Government will oversee it over time.
A common pitfall is treating the sponsoring agreement like a standard contract clause set; it must specifically address mission, termination, assets, reserves, competition limits, and nonsponsor work.
Asset ownership and capitalization language matters at the end of the relationship; if it is vague, disputes can arise over who owns equipment, facilities, or other funded assets.
Sponsors should be deliberate about nonsponsor work and responses to RFIs/RFQs/capability requests, because the agreement can either permit or restrict those activities.
The five-year cap means agencies must plan periodic reviews and renewals well in advance; letting the term lapse can create administrative and mission continuity problems.
Official Regulatory Text
(a) In order to facilitate a long-term relationship between the Government and an FFRDC, establish the FFRDC’s mission, and ensure a periodic reevaluation of the FFRDC, a written agreement of sponsorship between the Government and the FFRDC shall be prepared when the FFRDC is established. The sponsoring agreement may take various forms; it may be included in a contract between the Government and the FFRDC, or in another legal instrument under which an FFRDC accomplishes effort, or it may be in a separate written agreement. Notwithstanding its form, the sponsoring agreement shall be clearly designated as such by the sponsor. (b) While the specific content of any sponsoring agreement will vary depending on the situation, the agreement shall contain, as a minimum, the requirements of paragraph (c) of this subsection. The requirements for, and the contents of, sponsoring agreements may be as further specified in sponsoring agencies’ policies and procedures. (c) As a minimum, the following requirements must be addressed in either a sponsoring agreement or sponsoring agencies’ policies and procedures: (1) A statement of the purpose and mission of the FFRDC. (2) Provisions for the orderly termination or nonrenewal of the agreement, disposal of assets, and settlement of liabilities. The responsibility for capitalization of an FFRDC must be defined in such a manner that ownership of assets may be readily and equitably determined upon termination of the FFRDC’s relationship with its sponsor(s). (3) A provision for the identification of retained earnings (reserves) and the development of a plan for their use and disposition. (4) A prohibition against the FFRDC competing with any non-FFRDC concern in response to a Federal agency request for proposal for other than the operation of an FFRDC. This prohibition is not required to be applied to any parent organization or other subsidiary of the parent organization in its non-FFRDC operations. Requests for information, qualifications or capabilities can be answered unless otherwise restricted by the sponsor. (5) A delineation of whether or not the FFRDC may accept work from other than the sponsor(s). If nonsponsor work can be accepted, a delineation of the procedures to be followed, along with any limitations as to the nonsponsors from which work can be accepted (other Federal agencies, State or local governments, nonprofit or profit organizations, etc.). (d) The sponsoring agreement or sponsoring agencies’ policies and procedures may also contain, as appropriate, other provisions, such as identification of- (1) Any cost elements which will require advance agreement if cost-type contracts are used; and (2) Considerations which will affect negotiation of fees where payment of fees is determined by the sponsor(s) to be appropriate. (e) The term of the agreement will not exceed 5 years, but can be renewed, as a result of periodic review, in increments not to exceed 5 years.