Open Innovation FAQs

An agency’s ability to use appropriated funds for conducting a prize competition is not limited to appropriations that have a particular period of availability. Thus, an agency can use one-year funds, multi-year funds, or no-year funds to conduct a prize competition (so long as the appropriation is available for that purpose). However, as Section 24(m)(2) makes clear, an agency must comply with the Antideficiency Act when obligating and expending funds: “No provision in this section permits obligation or payment of funds in violation of section 1341 of title 31, United States Code.” Moreover, depending on the length of the time period during which a prize may be awarded, after the prize competition has been announced, an agency may need to rely on a multi-year or no-year appropriation in order to ensure that the amounts that the agency has obligated for the prize (at the time the prize competition is announced) will continue to be available for expenditure during the period in which the prize can be awarded. See 31 U.S.C. § 1552 (providing for the cancellation of obligated balances on September 30 of the fifth fiscal year after the period of availability has ended).

Section 24(m)(2) provides that: “Notwithstanding any other provision of law, funds appropriated for prize awards under this section shall remain available until expended.” Since Congress in a later-enacted appropriation could specify a different period of availability for such appropriated funds, agencies should consult with their general counsels, and where necessary with OMB, about this issue, which would depend on the language of the applicable appropriations statute.

No. Section 24(m) grants agencies authority to accept and use private-sector funds for the design, administration, or prize purse of a competition conducted under section 24, regardless of whether the agency has pre-existing statutory authority to accept donations or gifts. In considering private sector support for a prize competition, agencies must review all applicable ethics and conflict-of-interest rules, and agencies must comply with the prohibition in section 24 against “giv[ing] any special consideration to any private sector entity in return for a donation.” Note that although section 24(m)(3) permits an agency to announce a prize competition when “all the funds needed to pay out the announced amount of the prize have been appropriated or committed in writing by a private source,” section 24 provides no exception to the general rule that an agency may not incur an obligation until such time as the agency has actually received the funds (i.e., the written commitment does not provide “budget authority” against which an agency may incur a legal obligation and record a budgetary obligation). Moreover, section 24(m)(2) makes clear that the section does not waive the application of the Antideficiency Act (“No provision in this section permits obligation or payment of funds in violation of section 1341 of title 31, United States Code.”). Thus, in those cases where an agency is announcing a prize competition, but the agency has not yet received the private funds for which a written commitment has been provided, the agency must make clear in announcing the prize competition that the agency’s (and the Federal Government’s) legal obligation extends only to the payment of any Federal share of the prize, and that the private source is therefore liable for the payment of its share of the prize.

No. Section 24(l) grants agencies authority to enter into an agreement with a private nonprofit entity to administer a prize competition under section 24, regardless of whether the agency has pre-existing statutory authority to enter into such agreements.

In considering potential agreements with private nonprofit entities for the purpose of a prize competition, agencies should review all applicable ethics and conflict-of-interest rules.

The America COMPETES Act prohibits agencies from gaining an interest in intellectual property developed by a participant in a competition without the written consent of the participant. The Act also permits agencies to “negotiate a license for the use of intellectual property developed by a participant for a competition.” 15 U.S.C. § 3719(j)(2)

Agencies may handle intellectual property considerations a number of ways. For example, agencies could indicate in the rules that for an entry to be considered, the participant must grant in writing a license to the solution (a copyrightable work or patentable invention) at the time of submission, or even a written assignment to all rights in the solution (which might be coupled to a retained license by the participant in the solution). Furthermore, the agency could indicate in contest rules that it may choose to negotiate a license with the prize contest winner at some later point. In choosing how to handle intellectual property rights in prize competitions, agencies should consider the aim of the competition, the extent to which obtaining a Government license may impact implementation of the solution outside the Government, the agency’s need and intended application for the solution, as well as how treatment of intellectual property rights may influence the interest of solutions providers to participate in the contest.

Treatment of intellectual property rights will vary between competitions, and will depend upon a number of factors. Agencies are encouraged to consult with their respective points of contact in the Office of the General Counsel for assistance in developing terms such as this in their prize contests.

No. From a policy perspective, agencies should select an intellectual property regime based on a careful analysis of the goals of the prize competition, an analysis of the full set of incentives for potential participants in light of any agreement about sharing intellectual property rights, and a theory of how the solutions will be implemented post-prize award.

Agencies should note that the America COMPETES Act prohibits agencies from gaining an interest in intellectual property developed by a participant in a competition without the written consent of the participant (15 U.S.C. § 3719 (j)(1). Agencies should clearly articulate the intellectual property treatment for winning solutions in the prize competition’s rules, and they should ask all participants to provide written consent to the rules upon or before submitting an entry. Agencies choosing to use an electronic signature to fulfill 15 U.S.C. § 3719(j)(1) should comply with all applicable statutes, including the Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) and the Government Paperwork Elimination Act (44 U.S.C. § 3504(a)(1)).

In addition, the Act specifically permits agencies to “negotiate a license for the use of intellectual property developed by a participant for a competition” 15 U.S.C. § 3719(j)(2), which can be done at any time during or after the competition.

In general, the America COMPETES Act does not require that treatment of intellectual property rights be included in the Federal Register Notice; however, the agency would need to include the treatment of IP rights in the Federal Register Notice if either or both of the following two conditions is/are met:

1. The treatment of the intellectual property rights is a requirement for solutions providers to meet as a condition of eligibility to participate in the competition under 15 U.S.C. § 3719(f)(2). If the treatment of intellectual property amounts to a condition of eligibility to participate in the contest, then it must be included in the Federal register notice under 15 U.S.C. § 3719(f)(2) . One example of this would be where the agency indicates in the rules for the competition that for an entry to be considered, the participant must grant in writing a license to the solution (for example for a copyrightable work or a patentable invention) at the time of submission.
2. The treatment of the intellectual property rights amounts to a “basis on which a winner would be selected” (such as an evaluation factor considered in the selection of the winner) under 15 U.S.C. § 3719(f)(5). If the treatment of intellectual property rights is, in essence, an evaluation factor that the agency would consider in the selection of the prize winner, then the program manager must include that information in the Federal Register Notice as part of the “basis on which a winner would be selected” under 15 U.S.C. § 3719(f)(5). For example, a challenge may identify that the agency wishes to evaluate the intellectual property treatments that would provide options for licensing to the government and may consider this in the evaluation of the solutions. Under this scenario, the challenge manager should include a description of the intellectual property treatment in the Federal Register Notice.

No. The lack of a statement in the Federal Register Notice addressing intellectual property rights considerations under this scenario does not preclude the program manager from seeking licensing rights to the solution after the challenge is concluded. Please note that as described in the question and answer above, the treatment of intellectual property rights must be published in the Federal Register Notice under certain circumstances.

There is generally no conflict between the COMPETES Act and the Bayh Dole Act with respect to intellectual property; the two Acts work independently. If, for a example, a university with a government grant were to enter a COMPETES Act competition that called for a typical disposition of intellectual property rights such as a license, the University could generally grant that license under a COMPETES Act prize competition without creating a conflict with any of its Bayh-Dole Act rights or responsibilities.

15 U.S.C. 3719(i)(1)(B) (“Liability”) provides that”[r]egistered participants shall be required to agree to assume any and all risks and waive claims against the Federal Government and its related entities, except in the case of willful misconduct, for any injury, death, damage, or loss of property, revenue, or profits, whether direct, indirect, or consequential, arising from their participation in a competition, whether the injury, death, damage, or loss arises through negligence or otherwise.”

In essence, this provision means that registered prize contest participants shall be required to release the Government from any liability that may arise from participation in a contest. In other words, contest participants should sign a liability release as part of the contest registration process.

HHS would suggest something along the lines of the following:

“By participating in this competition, I agree to assume any and all risks and waive claims against the Federal Government and its related entities, except in the case of willful misconduct, for any injury, death, damage, or loss of property, revenue, or profits, whether direct, indirect, or consequential, arising from my participation in this prize contest, whether the injury, death, damage, or loss arises through negligence or otherwise.”

II. Discretionary Decision: Whether to Obtain Liability Insurance from Contest Participants for Potential Third Party Claims

15 U.S.C. § 3719(i)(2)(“Insurance”), provides as follows:

‪(2) Insurance. Participants shall be required to obtain liability insurance or demonstrate financial responsibility, in amounts determined by the head of an agency, for claims by–

(A) a third party for death, bodily injury, or property damage, or loss resulting from an activity carried out in connection with participation in a competition, with the Federal Government named as an additional insured under the registered participant’s insurance policy and registered participants agreeing to indemnify the Federal Government against third party claims for damages arising from or related to competition activities; and

(B) the Federal Government for damage or loss to Government property resulting from such an activity.

(3) Exception. The head of an agency may not require a participant to waive claims against the administering entity arising out of the unauthorized use or disclosure by the agency of the intellectual property, trade secrets, or confidential business information of the participant.

This provision to gives the head of the Agency or designee authorized by the Attached April 22, 2011, Delegation of Authority of the Competes Act (hereinafter, “designee) the discretion to either require contest participants to obtain liability insurance, or demonstrate that they have adequate financial resources, to address third party claims that may result as a result of the competition. In any event, the provision gives the head of the agency or designee the discretion to determine the amount of any such insurance or required financial responsibility.

HHS recommends that the head of the agency or designee make a written determination (even where the determined amount is”$0″ in this regard) based on the subject matter of the contest, the type of work that it will possibly require, as well as an analysis of the likelihood of any claims for “death, bodily injury, or property damage, or loss” potentially resulting from contest participation. Obviously, a contest to develop a vehicle or mode of transportation would pose far greater claims potential than a contest for a proposal, schematic, blue print, or software application. HHS understands that many HHS contests will likely involve development of software technology, and notes that the Agency is precluded from requiring a contest participant from waiving claims against an agency for the unauthorized use or disclosure by the agency of the intellectual property, trade secrets, or confidential business information of the participant. See 15 U.S.C. 3719(i)(3).

With respect to indemnification, 15 U.S.C. § 3719(i)(2)(A) requires that registered participants agree “to indemnify the Federal Government against third party claims for damages arising from or related to competition activities.”

This provision means that registered prize contest participants shall be required to indemnify or protect the Federal Government against claims by third parties for damages arising from or related to competition activities.

Similar to the approach recommended in Section I above, contest participants should sign an indemnification agreement as part of the contest registration process. HHS would suggest something along the lines of the following:

“By participating in this competition, I agree to indemnify the Federal Government against third party claims for damages arising from or related to competition activities.”

HHS program managers should contact their cognizant Division of the HHS Office of the General Counsel if they have any questions about the liability of insurance provisions of the Act.

As designed by the General Services Administration (GSA), agency use of Challenge.gov tools to conduct challenges—including the platform’s registration, public voting, and blog/discussion functionalities—are not subject to the PRA.

OMB’s April 7, 2010 memorandum, Social Media, Web-Based Interactive Technologies, and the Paperwork Reduction Act, explained that contests in which an agency asks the general public for ideas, such agency requests would not constitute collections of information that require OMB PRA approval. Such requests could take the form of an agency’s solicitation of ideas for how the agency could improve current practices under a statute that the agency administers; for potential solutions to a scientific, technological, social, or other problem; or for innovations (e.g., video and software applications) that might advance an agency’s mission. In such cases, the agency’s request for ideas would be the kind of general solicitation that is not subject to the requirements of the PRA. (See 5 C.F.R. § 1320.3(h)(4)). For example, essay or video contests that permit respondents to create their own submissions are not covered by the PRA if no additional information is collected for the contest beyond what is necessary to contact the entrants.

However, the PRA may be triggered if the agency – in conducting a prize, challenge, contest, or competition – requests the submission of information beyond what would be considered as a request to the general public for ideas – such as a series of questions that entrants must answer in order to qualify for the contest. If an agency plans to regularly use this type of contest, it may consider requesting a generic clearance.[/vc_toggle][vc_toggle title=”If an agency uses a platform other than Challenge.gov for conducting a contest, must it submit an ICR to OMB for approval under the PRA before conducting the challenge? ” open=”false”]The need to submit an information collection to OMB for approval under the PRA depends not on the platform used, but on the nature of the information collected. Therefore, the same principles apply to both challenges hosted on Challenge.gov as well as those hosted elsewhere.

As explained above in the answer to Question 1, agency solicitations to the general public for ideas – such as ideas for improving current practices under a statute that an agency administers; for potential solutions to a scientific, technological, social, or other problem; or for innovations (e.g., video and software applications) that might advance an agency’s mission—fall within the category of information that is not subject to the PRA. [See OMB’s April 7, 2010 memo, Social Media, Web-Based Interactive Technologies, and the Paperwork Reduction Act ].

Thus, as noted above, a challenge that permits respondents to create their own submissions will not be covered by the PRA if no additional information is collected for the contest beyond what is necessary to contact the entrants. If, however, an agency requests more information with a challenge submission (e.g. a series of questions that entrants must answer to take part in the contest or demographic information about the entrants), the information collected as part of the challenge may be covered by the PRA.

No. OMB considers the title of the entry to be part of the submission created by the entrant. Therefore, if a challenge or entry is otherwise not subject to the PRA, the request for the title would not trigger the need for PRA approval.

No. OMB considers scripts to be part of the creation of the submitted video. Therefore, if a challenge or entry is otherwise not subject to the PRA, the request for the script would not trigger the need for PRA approval.

No. Similar to the title of the entry (See Question 3), OMB considers this type of information to be intrinsic to the submission. Therefore, if a challenge or entry is otherwise not subject to the PRA, such a request would not trigger the need for PRA approval.

No. Similar to a title of the entry (See Question 3), OMB considers this type of information to be intrinsic to the submission. Therefore, if a challenge or entry is otherwise not subject to the PRA, the request for this information would not trigger the need for PRA approval.

No. If the content of the hash tag is supplied by the agency, it is not subject to the PRA. (See 5 CFR 1320.3(c)(2))

If an agency is not conducting or sponsoring the challenge, it is not subject to the PRA. For example, if a private organization is conducting a contest, the PRA is inapplicable even if an agency is informed and provides suggestions, advice, and technical assistance (so long as the agency is not making a specific request or in a position to approve a challenge or its design). Items collected by third party websites or platforms that are not collecting information on behalf of the Federal Government are not subject to the PRA.

If an agency does not conduct the challenge (i.e., collects the information itself, using its own staff and resources), but sponsors the collection by, for example, designing the contest or providing the award, the PRA could apply if the information collected is beyond what is necessary to contact the entrants.

Under the PRA, an agency “sponsors” a collection if the agency (1) causes another agency to collect the information, (2) contracts or enters into a cooperative agreement with a person to collect the information, (3) requires a person to provide information to another person, or (4) in similar ways causes another agency, contractor, partner in a cooperative agreement, or person to obtain, solicit, or require the disclosure to third parties or the public of information by or for an agency. In the context of collections that are not Federally funded, a Federal agency does not “sponsor” an information collection if it merely provides suggestions, advice, or technical assistance to a non-Federal entity (governmental or private) that will conduct the collection on its own initiative. [See OMB’s December 9, 2010 memorandum, Facilitating Scientific Research by Streamlining the Paperwork Reduction Act Process].

In the context of challenges and contests, it would be acceptable to request a generic clearance that covered challenges and contests on a variety of themes and several challenges and contests that covered the same topic.

A generic ICR is a request for OMB approval of a plan for conducting more than one information collection using very similar methods when (1) the need for and the overall practical utility of the data collection can be evaluated in advance, as part of the review of the proposed plan, but (2) the agency cannot determine the details of the specific individual collections until a later time. Clearances of generic ICRs provide a significantly streamlined process by which agencies may obtain OMB’s approval for particular information collections – usually voluntary, low-burden, and uncontroversial collections.

It is important that the agency be able to provide enough detail about the types of activities covered under the generic to allow OMB to determine whether “the collection of information by the agency is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility,” and thus to approve the generic ICR.

In this case, challenge managers must require that solution-providers submit a statement acknowledging that they understand that, as a pre-requisite to any subsequent obtainment by FAR contract or other method, they may be subsequently required to make their proposed solution compliant with Section 508 accessibility and usability requirements at their own expense, and also provide a short description of how this would be accomplished.

The HHS Section 508 Evaluation Product Assessment Template may provide a useful roadmap for developers to review and follow in developing such a statement. This tool is a simple, web-based checklist utilized by HHS officials to allow vendors to document how their products do or do not meet the various Section 508 requirements.

These could include, but are not limited to challenges that seek the following kinds of technological solutions:

• Web-based internet applications
• Videos and multimedia products
• Dashboards, mash-ups or tools that synthesize and present disparate data in novels ways
• Algorithms
• Mobile phone applications
• Information technology-enabled devices or robots

The America COMPETES Act (15 U.S.C. 3719) does not address the issue of compliance with Section 508 of the Rehabilitation Act, which is a federal law that requires Federal agencies to ensure that persons with disabilities have comparable access to and use of the information and data that they develop, procure, maintain, or use. The Department is committed to ensuring equal access to and use of electronic and information technology (EIT) for persons with disabilities for all EIT procured, used, developed, or maintained by HHS.

This FAQ provides guidance to Challenge Managers on addressing 508 compliance issues in two areas likely to arise in challenge competitions: a) where the Department anticipates that after a challenge competition, it may acquire a solution with EIT for the Government’s use, maintenance, or development; and, b) challenge competitions involving product ideas, theoretical models, or early-stage prototypes.

1. Acquisition of a Solution with EIT Subsequent to a Challenge Competition

Challenge managers should address Section 508 compliance issues for those challenges where it is known at the time a challenge is launched that the Department anticipates that after the challenge competition, it may obtain by contract under the Federal Acquisition Regulation (FAR) or by any other method, a solution that includes EIT for the Government’s use, maintenance, or development. Before such a solution with EIT can be subsequently obtained by contract or other vehicle, it must comply with Section 508’s accessibility and usability requirements, unless an exemption is provided for. Therefore, challenge managers should ensure that their challenge solicitations inform solution-providers that, as a pre-requisite to any subsequent of solutions with EIT by contract or other method, they may be required to make their solutions 508 compliant at their own expense. For anticipated contracts under the FAR, challenge managers are advised to engage with their cognizant acquisition personnel to assess the potential contract requirements related to compliance with Section 508. In addition, for anticipated acquisitions of EIT by methods other than under the FAR, you may wish to refer challenge managers to their 508 coordinators.

2. Challenge Competitions Involving Product Ideas, Theoretical Models, or Early-Stage Prototypes

In cases where the Department is seeking product ideas, theoretical models, or early-stage prototypes, it may be premature to require solution-providers to comply with Section 508 requirements in their submissions to an HHS-initiated challenge. In such cases, challenge managers should require solution-providers to submit a statement acknowledging that they understand that, as a pre-requisite to any subsequent acquisition by FAR contract or other method, they may be required to make their proposed solution compliant with Section 508 accessibility and usability requirements at their own expense. Challenge managers should also require solution-providers to submit a short description of how this would be accomplished.

There is a strong business case for challenge managers to build awareness of Section 508 accessibility and usability requirements into their challenge solicitations. Any EIT that is ultimately obtained by HHS for its use, development, or maintenance must meet Section 508 accessibility and usability standards. Past experience has demonstrated that it can be costly for solution-providers to “retrofit” solutions if remediation is later needed.

Under Section 508, HHS has a legal responsibility to ensure that the electronic and information technology that it procures will be accessible to and usable by persons with disabilities. Therefore, if, after a challenge prize has been awarded, HHS determines that a solution that it is interested in obtaining does not meet Section 508’s accessibility and usability requirements, such solution must ultimately conform to the described accessibility and usability in the HHS Section 508 Evaluation Product Assessment Template before it is deployed or utilized by the Government.

Resources for understanding and implementing Section 508 accessibility and usability requirements can be found at on the Section 508 requirements page (this site provides a broad overview for understanding and implementing Section 508) and the HHS Section 508 requirements page (this site, developed and managed by HHS, provides additional information on the testing of documents and procedures for making them 508-compliant). In addition, online training on this topic is available online for HHS employees.

HHS challenge managers may wish to contact their designated 508 coordinators, which are listed online the 508 coordinator website. Challenge managers in need of additional technical assistance may wish to contact the Access Board. Contact information for the Access Board may be found on their website.

Federal grantees may not use Federal funds to develop COMPETES Act challenge applications unless consistent with the purpose of their grant award and specifically requested to do so due to competition design, and as announced in the Federal Register. If a grantee using Federal funds wins the competition, the award needs to be treated as program income for purposes of the original grant in accordance with applicable OMB Circulars.

Federal contractors may not use Federal funds from a contract to develop COMPETES Act challenge applications or to fund efforts in support of a COMPETES Act challenge submission. Costs associated with such activities are unallowable and are not allocable to Government contracts.

No. The Competes Act establishes that a federal entity is not eligible to receive a prize under a Competes Act Competition. 15 U.S.C. 3719 (g)(4).

The Competes Act establishes that to be eligible for a prize an individual “may not be a Federal employee acting within the scope of their employment.” 15 U.S.C. 3719 (g)(4). Also, HHS Staff Division (STAFFDIV) employees are only allowed to compete for challenges and competitions that are offered by HHS Operating Divisions (OPDIVs) or a STAFFDIV other than their own. HHS OPDIV employees may compete for challenges and competitions that are offered by: (1) an HHS STAFFDIV or an OPDIV other than their own; and (2) their own OPDIV if they are not in the reporting chain of the OPDIV award approving official, which may only be the OPDIV head or one of their direct reports. In addition, HHS employees may not work on their applications or submissions during assigned duty hours, and may not use Federal facilities or consult with a Federal employee except as permitted under Section 24(h) of the Act.

For HHS Prize Competition designers, consultation with the designer’s cognizant Office of General Counsel point of contact is recommended on prize competitions where entries are anticipated or sought for one or more of the above referenced entities. As a general matter, the COMPETES Act does not prohibit federal agencies from considering COMPETES Act prize competition entries from states, local Governments or Medicaid health plans. However, legal requirements unique to such entities could preclude them, either as matter of law or due to practical considerations, from competing in COMPETES ACT authorized prize competitions. In addition, depending on the design or objective of any particular prize competition, it may be inadvisable for agencies sponsoring prize competitions to deem these entities as eligible for participation, due to potential conflicts of interest or other considerations.