CLS – Legal and Policy Guidelines

Part of the ongoing HHS Competes Crowdsourcing Learning Series



In December of 2010, Congress passed the America COMPETES Reauthorization Act of 2010. Section 105 of the Act provides Federal departments and agencies with a clear legal pathway to plan and execute challenges and competitions, and specifically authorizes the use of appropriated funds for these purposes. In his updated Strategy for Innovation, President Obama called on all federal agencies to increase their use of prizes and challenges to mobilize America’s ingenuity to solve some of our nation’s most pressing challenges. While providing an opportunity for government to get the best idea or solution to a problem, using a challenge or competition is not how government has traditionally operated when purchasing a product or issuing a grant.

What you need to know



All prize competitions must be widely advertised to encourage broad participation. At a minimum, a notice must be published in the federal register. In practice, you should also consider other channels to market to your target audience. Be sure to create a listing on, the official federal listing site for all prize competitions.

Fairness and Transparency

There are several ways to help ensure the competition is fair and transparent. Judges should be fairly balanced and not have any conflict of interest or personal financial interest with participants.


The Act itself does not provide any “budget authority” or Federal appropriations for the funding of a prize. Instead, it allows agencies to use appropriated funds to as prize money, just as you would with a contract or grant. At HHS, you can offer prize purses up to $500,000 per competition without Secretarial approval.

Prize competitions can be run through contract vehicles or partnerships with non-profit organizations. Many online competition platforms possess the resources and have access to an existing community of solvers. Funding can also be shared with non-profit organizations that you can partner with to run your competition.

Intellectual Property

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.” Treatment of intellectual property rights will vary between competitions, and will depend upon a number of factors.

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.


Eligibility to receive prize money is restricted to those who have agreed to the rules of the competition. Further, winning organizations must be incorporated in and maintain a primary place of business in the United States, and individuals must be a citizen or permanent resident of the United States. Winners cannot be a Federal entity or Federal employee acting within the scope of employment. Winners must also agree to all the rules of the competition, including assuming risk, obtaining liability insurance if required.

Report to OSTP

Congress requires that the White House submit an annual report on the agencies’ use of the prize authority. HHS coordinates the submission from HHS. In order to get the most important information needed to compile that report, we ask that you complete our Pre-challenge questionnaire before running the challenge and the Post-challenge questionnaire following the end. This will ensure that the details of the competition are fresh in your minds and that you will not be required to submit any reports at the end of the year. These questionnaires are also found in the Links section of the Competes Page.


The intent behind the Competes Act is to allow the use of prize competitions to achieve agency goals and collaborate with the public. You have the legal authority to implement crowdsourcing activities. In fact, it is a priority for the White House and HHS leadership. Use this to your advantage when you are trying to garner internal support for your challenge by referring the policy.

Many of the policy issues have been dealt with by your colleagues. Ask around to see if your questions can be answered by those that are experts in the field.