Part 13: General Schedule 2: Exempted contracts Part 2: Subject Matter Exempted Contracts Research and development services
Paragraph 22 exempts contracts for "research and development services" that are intended for general public benefit, provided the contract does not include goods or works that might otherwise flow from the research and development activity. This would include fundamental research, applied research and experimental development up to but not including preparation for manufacturing a new product or carrying out works in a commercial market).
	Sub-paragraph (2) sets out what is meant by "research and development services". The essence here is the process of testing the validity of a theory through the controlled process of interaction and observation. This may involve the use of live experimentation which provides new knowledge about specific factors relevant to a particular activity.
	Sub-paragraph (3) sets out things that are not research and development services, e.g. where there are elements that would allow commercialisation of the research (e.g. the production of tools or development of industrial processes to enable the manufacture of goods for a commercial market). The list at sub-paragraph (3) is not exhaustive.
	There is a degree of overlap between this exemption and the direct award justification for prototypes and development (Schedule 5, paragraph 2). Direct award would need to be used where, for example, the research and development programme also involved goods or the production of a prototype to test the viability of industrial processes to manufacture novel goods (as defined in Schedule 5, paragraph 3) at scale.