DoD Seeks Public Comments Before Issuing A Proposed Rule On IR&D Costs

The Department of Defense intends to issue a proposed rule to ensure that substantial future independent research and development ("IR&D" or "IRAD") expenses, which can be used as a means to reduce bid prices in competitive source selections, are evaluated in a uniform way during the competitive process.   81 Fed. Reg. 6488 (February 8, 2016).  However, interested parties and industry leaders can help formulate this regulation before the DoD issues the proposed rule.

In his April 2015 memorandum, entitled "Implementing Directive for Better Buying Power 3.0 – Achieving Dominant Capabilities through Technical Excellence and Innovation," Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall, explained that IR&D conducted by defense companies as an allowable overhead expense is an important source of innovation for both defense corporations and the DoD.  Memo at 11.  However, the Under Secretary explained that a problem has developed in how