32 CFR § 3.5 - Appropriate use.

---
identifier: "/us/cfr/t32/s3.5"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "32 CFR § 3.5 - Appropriate use."
title_number: 32
title_name: "National Defense"
section_number: "3.5"
section_name: "Appropriate use."
chapter_name: "OFFICE OF THE SECRETARY OF DEFENSE"
subchapter_number: "A"
subchapter_name: "ACQUISITION"
part_number: "3"
part_name: "TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE AGREEMENTS FOR PROTOTYPE PROJECTS"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "Sec. 845, Pub. L. 103-160, 107 Stat. 1547, as amended."
regulatory_source: "66 FR 57383, Nov. 15, 2001, unless otherwise noted."
cfr_part: "3"
---


# 3.5 Appropriate use.

In accordance with statute, this authority may be used only when:

(a) At least one nontraditional Defense contractor is participating to a significant extent in the prototype project; or

(b) No nontraditional Defense contractor is participating to a significant extent in the prototype project, but at least one of the following circumstances exists:

(1) At least one third of the total cost of the prototype project is to be paid out of funds provided by non-Federal parties to the transaction.

(2) The Senior Procurement Executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a procurement contract.

[67 FR 54956, Aug. 27, 2002]