FAR 35.017-5—Terminating an FFRDC.
Plain-English Summary
FAR 35.017-5 addresses what happens when a sponsoring agency no longer needs a federally funded research and development center (FFRDC). It covers two core topics: possible transfer of sponsorship to one or more other Government agencies, and, if transfer is not justified or does not occur, the required phaseout of the FFRDC. The section exists to ensure the Government does not continue an FFRDC relationship after the original mission need has ended, while still allowing a useful center to be preserved if another agency can justify taking it over. In practice, this provision is a governance and lifecycle rule: it forces agencies to reassess whether the FFRDC still serves a valid federal purpose, document the justification for any transfer, and plan an orderly wind-down when continued sponsorship is no longer warranted. For contracting officers and program officials, it means termination of an FFRDC is not simply a contract closeout decision; it is a policy decision tied to mission need, interagency justification, and transition planning.
Key Rules
End of Need Triggers Review
When the sponsoring agency no longer needs the FFRDC, the agency must address the center’s future. The rule is triggered by the loss of sponsor need, not by contract expiration alone.
Transfer Is Permitted
The sponsorship may be transferred to one or more Government agencies, but only if the transfer is appropriately justified. This means the receiving agency or agencies must have a valid need for the FFRDC and a defensible basis for taking over sponsorship.
Phaseout If Not Transferred
If the FFRDC is not transferred to another Government agency, it must be phased out. The rule does not allow indefinite continuation without a sponsor once the original need has ended.
Government Agency Sponsorship Only
Any transfer is limited to Government agencies. The section contemplates continued federal sponsorship, not transfer to a non-Government entity or private-sector owner.
Orderly Termination Required
The phaseout requirement implies an orderly wind-down of the FFRDC’s activities, obligations, and support arrangements. Agencies should plan for transition, staffing, and contract administration impacts rather than allowing abrupt termination.
Responsibilities
Sponsoring Agency
Determine when its need for the FFRDC no longer exists, decide whether transfer is justified, and either arrange a transfer to one or more Government agencies or ensure the FFRDC is phased out.
Receiving Government Agency or Agencies
If asked to assume sponsorship, evaluate whether the FFRDC supports a legitimate agency need and whether taking over sponsorship is appropriately justified and supportable.
Contracting Officer
Support the administrative and contractual actions needed to implement the sponsorship decision, including coordinating termination or transition actions and ensuring the contract is handled consistently with the phaseout or transfer decision.
Program/Technical Officials
Assess mission need, document the rationale for continued use or transfer, and help define the scope and timing of any phaseout so the transition is orderly and defensible.
Practical Implications
This section prevents FFRDCs from continuing by inertia after the original sponsor no longer needs them; someone must affirmatively justify continued sponsorship or begin phaseout.
A common pitfall is treating the issue as a routine contract expiration matter. The real question is whether a federal mission need still exists and, if so, which agency can justify sponsorship.
If transfer is considered, agencies should document the justification carefully. Weak or incomplete justification can create audit, oversight, or policy compliance problems.
Phaseout planning matters because FFRDCs often have specialized staff, facilities, and ongoing research commitments. Without a transition plan, the Government can face disruption, cost growth, or loss of critical knowledge.
Contracting officers should watch for mismatches between policy decisions and contract actions, such as continuing work after sponsorship has ended or failing to align funding, scope, and termination timing with the phaseout decision.
Official Regulatory Text
When a sponsor’s need for the FFRDC no longer exists, the sponsorship may be transferred to one or more Government agencies, if appropriately justified. If the FFRDC is not transferred to another Government agency, it shall be phased out.