Sponsoring Agreement

H.30 SPONSORING AGREEMENT

Section 35.017-1 of the Federal Acquisition Regulations requires a written agreement of sponsorship between the Government and an FFRDC at the time the FFRDC is established, and requires that this sponsoring agreement be renewed periodically as long as the FFRDC continues. This section of the contract is designated as the sponsoring agreement for the IRS FFRDC, as provided by FAR 35.017-1 (a).

H.30.1 IDENTIFICATION OF THE PARTIES

The parties to this sponsoring agreement are the Chief Information Officer of the Internal Revenue Service, hereby designated as the Sponsor of the IRS FFRDC (the Sponsor); the IRS FFRDC (the FFRDC), a separate operating unit of The MITRE Corporation, and The MITRE Corporation (MITRE), a not-for-profit Delaware corporation.

H.30.2 PURPOSE AND RECIPROCAL COMMITMENTS

This sponsoring agreement establishes the IRS FFRDC to provide expert and objective strategic, technical, and program management advice, guidance, and support services to the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury).

The IRS and the FFRDC both commit to forging a long-term relationship dedicated to providing an effective response to special needs of the IRS and the Treasury. The FFRDC undertakes to obtain and sustain both breadth and depth of knowledge of matters relevant to tax system modernization, including the available technologies and the IRS environment, and to couple this knowledge with MITRE's core competencies in information technology modernization and resource management. The FFRDC will conduct its activities in a responsible manner befitting its special relationship with the IRS, will operate in the public interest free of organizational conflicts of interest, and will disclose its affairs (as an FFRDC) to the IRS. The IRS undertakes to facilitate where possible the growth of the FFRDC's knowledge base, and to provide reasonable continuity.

H.30.3 MISSION OF THE IRS FFRDC

The mission of the FFRDC is to provide support to the operation and modernization of tax systems. This support will consist primarily of expert advice to help IRS officials determine, monitor, and evaluate the technical direction of the modernization effort in an environment free from both internal constraints and external market and profit related influences. The FFRDC will provide a critical infusion of expertise, in a context of a special relationship, confidentiality, and freedom from organizational conflict of interest.

The basic IRS expectations of the FFRDC are:
• The FFRDC shall help identify, define, and resolve problems as an integral part of the IRS management team.
• The FFRDC shall function so effectively as to act as an agent for the IRS in the design and pursuit of mission goals.
• The FFRDC shall provide rapid responsiveness to changing requirements for expertise in all aspects of strategic, technical, and program management.
• The FFRDC shall recognize government objectives as its own objectives, partnering with the IRS in pursuit of excellence in public service.
• The FFRDC shall simultaneously direct its efforts to the support of individual programs and projects for tax modernization, and to assuring that these individual programs and projects operate effectively with each other and efficiently support the business objectives of the government.
• The FFRDC shall direct its attention to ways in which current and newly emerging commercial technologies can be infused into the tax modernization program in a manner which holds cost and technical risk within manageable levels.
• The FFRDC shall maintain a commitment to technical excellence and responsiveness to government objectives in everything it does.

H.30.4 ANNUAL REVIEW OF OBJECTIVES

The parties will conduct an annual review of the IRS objectives to which the FFRDC is expected to make a significant contribution during the coming year. The parties will use this review to establish or revise the work program of the FFRDC.

H.30.5 ANNUAL ASSESSMENT

The parties agree to cooperate in an annual assessment of the IRS FFRDC's performance in the areas of accomplishment of Government business goals; quality of products and services; cost control; timeliness of performance; and business relations. The Sponsor will provide feedback on the matters addressed in the annual assessment to the Executive Director and the Director of the FFRDC.

H.30.6 RELATIONSHIP WITH OTHER MITRE FFRDCs

The parties acknowledge that MITRE also operates FFRDCs sponsored by the Department of Defense (DoD), the "C3I FFRDC." and for the Federal Aviation Administration (FAA), the "Center for Advanced Aviation System Development" (CAASD). The DoD, FAA, and IRS FFRDCs are managed under contracts that are awarded and administered in accordance with the FAR, and they are operated in such a way as to enhance the technical quality and objectivity of each. The goals, functions, and operations of these FFRDCs differ, reflecting the particular needs of their respective sponsors. MITRE's sponsoring agreements with the DoD, the FAA, and the IRS ensure that the three FFRDC work programs can be accomplished in a complementary manner that draws on the entire range of corporate competencies, yet minimizes the risk that the activities of one FFRDC might detract from the ability of another FFRDC to accomplish its mission. The President of MITRE agrees to bring any issues arising in this connection to the attention of the affected government agencies.

H.30.7 PROHIBITION AGAINST COMPETITION AND WORK FOR PRIVATE CONCERNS

The FFRDC is expressly prohibited from competing with any non-FFRDC concern in response to a Federal agency solicitation other than for the operation of an FFRDC. However, the FFRDC's parent organization shall be prohibited from competing against or with any concern in response to any other IRS solicitation. The FFRDC is prohibited from doing work for private concerns except as may be specifically authorized in writing by the IRS. All FFRDC personnel are subject to the provisions of section 27 of the Office of Federal Procurement Policy Act (41 USC 423).

H.30.8 WORK PERFORMED FOR NONSPONSORING AGENCIES

The FFRDC is established in the public interest to assist the IRS in solving problems arising from the modernization of the tax system. The FFRDC will support other elements of the Treasury and may perform work for other agencies in public interest situations on a non-interference basis when this work is not inconsistent with the goals of the IRS. Non-Treasury work may only be performed by the FFRDC when its performance does not degrade the FFRDC's ability to support the IRS, when it is in the public interest, and when its performance will not increase the cost to the IRS. Other users of the FFRDC may conduct a direct procurement action or - with the approval of the IRS contracting officer - may transfer the funds to the IRS under the Economy Act of 1932 (31 USC 1535) or other statutory authority. The contractor will report annually on the performance of non-Treasury tasks.

H.30.9 RESEARCH PROGRAM

The parties agree that an effective independent research and development (IR&D) program tailored to the needs of the Sponsor sharpens the technical skills of the FFRDC and is therefore in the parties' mutual interest. MITRE will focus its IRS FFRDC IR&D program on technologies which can reasonably be expected to be commercially available within a few years, and which show promise of enhancing the capability and/or lowering the cost of the tax system. MITRE agrees to make available to the IRS the results of this research, as well as any applicable MITRE IR&D funded by the DoD and the FAA.

H.30.10 IDENTIFICATION OF RETAINED EARNINGS

MITRE is a not-for-profit corporation, organized to ensure that none of its assets will inure directly or indirectly to the benefit of any private individual or entity. The accumulations since inception of residual management allowances (discretionary fees less expenditures for non-reimbursable costs) and other income over total costs and expenses represent MITRE's capital (retained earnings). MITRE's capital is utilized to fulfill working capital and fixed capital (depreciated value of real and personal property) requirements. MITRE agrees to provide to the IRS on an annual basis MITRE's consolidated financial statement (certified by an independent public accounting firm), a financial statement of the IRS FFRDC, and the corporate capital plan. In accordance with FAR 35.017-1(c) 3, the FFRDC's plan for the identification of retained earnings; (reserves) and their use and disposition shall be submitted annually.

H.30.11 ADVANCE AGREEMENTS ON COST ELEMENTS

Since the FFRDC will be funded under a cost-type contract, this contract may include advance agreements regarding certain cost elements if the IRS contracting officer determines that they are appropriate.

H.30.12 FEE

The parties recognize that the operation of the FFRDC will generate working capital and other miscellaneous expense requirements which cannot be covered through the reimbursement of direct or indirect costs. These expenses, which are otherwise unallowable in accordance with FAR Part 31, will be addressed by a fixed fee which is negotiated and made part of the contract. The negotiation of a fee for the FFRDC contract is consistent with the FAR guidance on the establishment and use of fees. MITRE will report annually to the IRS on the uses of fee provided by the IRS.

H.30.13 PROPERTY

All assets and other property that have been acquired by the IRS and provided to the FFRDC for its use under the contract shall remain the property of the IRS. The IRS shall own all assets and other property that are acquired by the FFRDC on behalf of the IRS for FFRDC use under the contract, and whose cost is directly charged to the contract. All other real and personal property is owned by MITRE. Ownership rights

in intellectual property shall be governed by the applicable data rights provisions contained in this contract. The Government will reimburse the FFRDC for all reasonable, allowable and allocable expenses subject to the limitations of the FAR and other regulatory and statutory limitations.

H.30.14 RENEWAL AND TERMINATION

This Sponsoring Agreement shall be effective upon the effective date of the contract of which it forms a part and will be in force for a 5-year period of time, unless otherwise superseded by mutual agreement or unilaterally terminated by the Government. It may be renewed only upon completion of a comprehensive review that meets the requirements of FAR section 35.017-4. The IRS will notify MITRE one year in advance of the expiration of this Sponsoring Agreement of its intent to either renew or terminate the Sponsoring Agreement.

Any liabilities incurred as a direct result of work by the IRS FFRDC within the scope of this contract will be the responsibility of the IRS.

In the event of the total dissolution of The MITRE Corporation, its Trustees will, in accordance with MITRE's Certificate of Incorporation, transfer "remaining property and assets...to the United States of America..."

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