Proposed IR&D DFARS Rule Would Competitively Punish Technology Innovators

Understanding that it will punish innovative contractors for engaging in independent research and development (IR&D) and taking on risks that would otherwise be borne by the government, on November 4, 2016, the US Department of Defense (DoD) proposed a rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to "ensure that substantial future independent research and development expenses, as a means to reduce evaluated bid prices in competitive sources selections, are evaluated in a uniform way during competitive source selections." In essence, DoD wants to ensure that the government's possible reimbursement of allowable IR&D overhead costs is reflected in a contractor's total evaluated offer price for competitively awarded contracts to create a level playing field where none, for good reason, has previously existed. This proposed rule was issued after DoD had requested input on concepts for how to evaluate contracts that relied upon IR&D and the