ARTICLE · 10 NOVEMBER 2016

DoD Takes First Step In Removing The "I" From IR&D

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The US DoD will publish a final rule that amends the DFARS to effectively render IR&D costs unallowable on DoD contracts unless contractors comply with certain reporting and oversight requirements.

United StatesGovernment, Public Sector

Steven Masiello

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On November 4, 2016, the US Department of Defense (DoD) will publish a final rule that amends the Federal Acquisition Regulation Supplement (DFARS) to effectively render independent research and development (IR&D) costs unallowable on DoD contracts unless contractors comply with certain reporting and oversight requirements. While intended to "improve the effectiveness of IR&D investments by the defense industrial base, the final rule, by requiring contractors to engage in technical interchanges with DoD before costs are generated," appears to send the DoD down a slippery slope of curtailing the "independent" nature of contractor IR&D. Contractors should be aware of this change when establishing and/or assessing the financial viability of an IR&D project.

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