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I'm acquiring "bio-technology licenses" that involves the use of a company's licensed technology with some incidental services (most of the cost is the license rather than the service), and I can't figure out how to classify it.

 

1) I presume this is overall a supply/personal property (not real property) and not a service because most of the cost is for the technology, which is a product?

2) Our Program classified this as "GENERAL SCIENCE AND TECHNOLOGY R&D SERVICES; GENERAL SCIENCE AND TECHNOLOGY; BASIC RESEARCH" under Product Service Code (PSC) #AJ11. That means it is not considered a Manufactured End Product. But Program's classification is often inaccurate.

Should this be reclassified as a manufactured end product somehow, and how can I find the right PScode?

 

 

 

 

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1. Can you offer some actual license language that might give a better sense of what it is i.e., does it include a research and development component, provide for use and transfer of technology such as know-how and materials, include language that governs rights to existing and future developed IP?? 

2. I question your basis for believing it is real property. Can you explain that?

3. Can the DAU Product and Service Code Selection Tool be useful to you? See, https://www.dau.edu/tools/t/Product-and-Service-Code-Selection-Tool

4. Have you asked the program to explain its classification selection?

 

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6 hours ago, NewbieFed said:

I'm acquiring "bio-technology licenses" that involves the use of a company's licensed technology with some incidental services (most of the cost is the license rather than the service), and I can't figure out how to classify it.

Can you be more specific?

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On 9/10/2021 at 4:58 PM, Neil Roberts said:

1. Can you offer some actual license language that might give a better sense of what it is i.e., does it include a research and development component, provide for use and transfer of technology such as know-how and materials, include language that governs rights to existing and future developed IP?? 

2. I question your basis for believing it is real property. Can you explain that?

3. Can the DAU Product and Service Code Selection Tool be useful to you? See, https://www.dau.edu/tools/t/Product-and-Service-Code-Selection-Tool

4. Have you asked the program to explain its classification selection?

 

Sorry, I meant personal property - not real property.

It is a 1 year license to use a company's patented technology/process. I thought it was classified as property since intellectual property is typically classified as personal property. 

I was just informed that because we are not owning the intellectual property in perpetuity, then it is technically more like a service than an item./supply.

So I am sticking with the service PSC I believe.

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13 hours ago, NewbieFed said:

So I am sticking with the service PSC I believe.

I think that's reasonable. If you look at the software PSCs the manual is clear that the difference between a D "service" PSC and a 7 "supply" PSC is whether the license is perpetual or not, and the same logic could apply in your case. I don't think the use of an alpha-character PSC as prescribed in the PSC manual makes it a service in the FAR 37 sense, but you may still run into issues with CAR coding (e.g. if it's not a service at all do you call it a is it a performance based service or not a performance based service?), and people who expect anything with an alpha PSC to be treated entirely like a FAR 37 service (payment in arrears, certification of non-personal services, QASP, etc.). But to paraphrase Vern Edwards quoting GAO paraphrasing Galileo: it doesn't matter what you call something, it matters what it is...

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@NewbieFedYou are not being clear!

On 9/10/2021 at 7:54 AM, NewbieFed said:

I'm acquiring "bio-technology licenses" that involves the use of a company's licensed technology with some incidental services (most of the cost is the license rather than the service), and I can't figure out how to classify it.

What do you mean by "technology"?  Hardware? Software? Both? Something just on paper. None of those? Do you know?

15 hours ago, NewbieFed said:

It is a 1 year license to use a company's patented technology/process. I thought it was classified as property since intellectual property is typically classified as personal property. 

WHAT are you buying permission to use? What do you mean by "technology/process"? Hardware? Software? Both? A facility? Something just on paper? None of those? Do you know? A "technology/process" might be a mathematical equation, a chemical formula, or a process specification. 

Specifically what will be delivered or rendered under contract? Do you know?

Don't be embarrassed if you don't know. A lot of us have bought stuff we didn't understand, especially in our early days on the job.

If you don't know, please say so. Then go away, find out, and come back if you still have a question.

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On 9/10/2021 at 10:54 AM, NewbieFed said:

I can't figure out how to classify it.

Irrespective of what you are buying, three methods to finding an appropriate PSC.

1) Ask the seller.  If they are experienced with the federal government, they'll know.

2) Reference previous contracts for the same thing, and see what PSC was used then.  In house contracts or FPDS.

3) Punt.  Ask Program Office.  If particularly important and difficult, ask for help from Legal.  

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On 9/13/2021 at 9:19 AM, Vern Edwards said:

@NewbieFedYou are not being clear!

What do you mean by "technology"?  Hardware? Software? Both? Something just on paper. None of those? Do you know?

WHAT are you buying permission to use? What do you mean by "technology/process"? Hardware? Software? Both? A facility? Something just on paper? None of those? Do you know? A "technology/process" might be a mathematical equation, a chemical formula, or a process specification. 

Specifically what will be delivered or rendered under contract? Do you know?

Don't be embarrassed if you don't know. A lot of us have bought stuff we didn't understand, especially in our early days on the job.

If you don't know, please say so. Then go away, find out, and come back if you still have a question.

We are buying a 1 year license to the 'knowledge, know-how, and rights' to produce certain biological components (adjuvants) that was patented by this company.

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On 9/13/2021 at 10:28 AM, General.Zhukov said:

Irrespective of what you are buying, three methods to finding an appropriate PSC.

1) Ask the seller.  If they are experienced with the federal government, they'll know.

2) Reference previous contracts for the same thing, and see what PSC was used then.  In house contracts or FPDS.

3) Punt.  Ask Program Office.  If particularly important and difficult, ask for help from Legal.  

Thanks. I ended up going with the service codes since that is what previous contracts/other programs used too.

So this is now more of a theoretical quesiton of what falls under supplies vs services.

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On 9/16/2021 at 12:44 PM, NewbieFed said:

I ended up going with the service codes since that is what previous contracts/other programs used too.

Good - The CO should make the best decision, given all information available, at the time and move on. 

On 9/16/2021 at 12:44 PM, NewbieFed said:

So this is now more of a theoretical quesiton of what falls under supplies vs services.

If the below doesn't give you some insight then we can continue: 

This is one of those conversations that will never be agreed on 100%. It's easy to debate for/against either side. 

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I don't think it's helpful to try to categorize every requirement as either a service or a supply. I think the must useful categorization of a license or subscription, or an equipment rental or short-term facility rental (all of which have alpha character "service" PSCs but don't really fall within the definition of a service) is "not a FAR Part 37 Service."

I'm not saying it is a supply, I'm just saying it isn't a service in the FAR Part 37 sense of the word where an identifiable task is performed by a contractor employee (or the T. Peter Hill, "On Goods and Services", 23 REV. INCOME & WEALTH 315, Dec. 1977 sense of the word as a "change in the condition of a person, or of a good belonging to some economic unit, which is brought about as the result of the activity of some other economic unit, with the prior agreement of the former person or economic unit”; or Vern Edwards, "Performance Work Statements", The Nash & Cibinic Report Vol 35 Issue 2, Feb. 2021 sense of the word as "work done in order to change an existing state of affairs" either).

Why is it useful to separate from FAR part 37? Because there are a bunch of extra things you have to do for a FAR part 37 service that don't make sense for a non-FAR part 37 service, like a determination of non-personal services, inherently-governmental determination, acquisition strategy for the acquisition of services, performance-based service acquisition, maybe pay in arrears, etc. and yet it still doesn't make sense to call an intangible license a "supply." The Section 809 Panel Recommendation 43 notes that it is "[unrealistic to categorize] all purchases as either supplies or services [...] often leading to contracts that are neither optimized nor appropriate for the solution being acquired." 

So, call it a non-FAR 37 service, use the alpha-character PSC, and create a contract optimized for the actual requirement, not any particular category.

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