48 CFR 31.205-18 - Independent research and development and bid and proposal costs.

31.205-18 Independent research and development and bid and proposal costs.

(a)Definitions. As used in this subsection -

Applied research means that effort which (1) normally follows basic research, but may not be severable from the related basic research, (2) attempts to determine and exploit the potential of scientific discoveries or improvements in technology, materials, processes, methods, devices, or techniques, and (3) attempts to advance the state of the art. Applied research does not include efforts whose principal aim is design, development, or test of specific items or services to be considered for sale; these efforts are within the definition of the term development, defined in this subsection.

Basic research, (See 2.101).

Bid and proposal (B&P) costs means the costs incurred in preparing, submitting, and supporting bids and proposals (whether or not solicited) on potential Government or non-Government contracts. The term does not include the costs of effort sponsored by a grant or cooperative agreement, or required in the performance of a contract.

Company means all divisions, subsidiaries, and affiliates of the contractor under common control.

Development means the systematic use, under whatever name, of scientific and technical knowledge in the design, development, test, or evaluation of a potential new product or service (or of an improvement in an existing product or service) for the purpose of meeting specific performance requirements or objectives. Development includes the functions of design engineering, prototyping, and engineering testing. Development excludes: (1) Subcontracted technical effort which is for the sole purpose of developing an additional source for an existing product, or (2) development effort for manufacturing or production materials, systems, processes, methods, equipment, tools, and techniques not intended for sale.

Independent research and development (IR&D) means a contractor's IR&D cost that consists of projects falling within the four following areas: (1) Basis research, (2) applied research, (3) development, and (4) systems and other concept formulation studies. The term does not include the costs of effort sponsored by a grant or required in the performance of a contract. IR&D effort shall not include technical effort expended in developing and preparing technical data specifically to support submitting a bid or proposal.

Systems and other concept formulation studies means analyses and study efforts either related to specific IR&D efforts or directed toward identifying desirable new systems, equipment or components, or modifications and improvements to existing systems, equipment, or components.

(b)Composition and allocation of costs. The requirements of 48 CFR 9904.420, Accounting for independent research and development costs and bid and proposal costs, are incorporated in their entirety and shall apply as follows -

(1)Fully-CAS-covered contracts. Contracts that are fully-CAS-covered shall be subject to all requirements of 48 CFR 9904.420.

(2)Modified CAS-covered and non-CAS-covered contracts. Contracts that are not CAS-covered or that contain terms or conditions requiring modified CAS coverage shall be subject to all requirements of 48 CFR 9904.420except 48 CFR 9904.420-50(e)(2) and 48 CFR 9904.420-50(f)(2), which are not then applicable. However, non-CAS-covered or modified CAS-covered contracts awarded at a time the contractor has CAS-covered contracts requiring compliance with 48 CFR 9904.420, shall be subject to all the requirements of 48 CFR 9904.420. When the requirements of 48 CFR 9904.420-50(e)(2) and 48 CFR 9904.420-50(f)(2) are not applicable, the following apply:

(i) IR&D and B&P costs shall be allocated to final cost objectives on the same basis of allocation used for the G&A expense grouping of the profit center (see 31.001) in which the costs are incurred. However, when IR&D and B&P costs clearly benefit other profit centers or benefit the entire company, those costs shall be allocated through the G&A of the other profit centers or through the corporate G&A, as appropriate.

(ii) If allocations of IR&D or B&P through the G&A base do not provide equitable cost allocation, the contracting officer may approve use of a different base.

(c)Allowability. Except as provided in paragraphs (d) and (e) of this subsection, or as provided in agency regulations, costs for IR&D and B&P are allowable as indirect expenses on contracts to the extent that those costs are allocable and reasonable.

(d)Deferred IR&D costs.

(1) IR&D costs that were incurred in previous accounting periods are unallowable, except when a contractor has developed a specific product at its own risk in anticipation of recovering the development costs in the sale price of the product provided that -

(i) The total amount of IR&D costs applicable to the product can be identified;

(ii) The proration of such costs to sales of the product is reasonable;

(iii) The contractor had no Government business during the time that the costs were incurred or did not allocate IR&D costs to Government contracts except to prorate the cost of developing a specific product to the sales of that product; and

(iv) No costs of current IR&D programs are allocated to Government work except to prorate the costs of developing a specific product to the sales of that product.

(2) When deferred costs are recognized, the contract (except firm-fixed-price and fixed-price with economic price adjustment) will include a specific provision setting forth the amount of deferred IR&D costs that are allocable to the contract. The negotiation memorandum will state the circumstances pertaining to the case and the reason for accepting the deferred costs.

(e)Cooperative arrangements.

(1) IR&D costs may be incurred by contractors working jointly with one or more non-Federal entities pursuant to a cooperative arrangement (for example, joint ventures, limited partnerships, teaming arrangements, and collaboration and consortium arrangements). IR&D costs also may include costs contributed by contractors in performing cooperative research and development agreements, or similar arrangements, entered into under -

(i) Section 12 of the Stevenson-Wydler Technology Transfer Act of 1980 ( 15 U.S.C. 3710(a));

(ii) Sections 203(c) (5) and (6) of the National Aeronautics and Space Act of 1958, as amended ( 42 U.S.C. 2473(c) (5) and (6));

(iii) 10 U.S.C. 2371 for the Defense Advanced Research Projects Agency; or

(iv) Other equivalent authority.

(2) IR&D costs incurred by a contractor pursuant to these types of cooperative arrangements should be considered as allowable IR&D costs if the work performed would have been allowed as contractor IR&D had there been no cooperative arrangement.

(3) Costs incurred in preparing, submitting, and supporting offers on potential cooperative arrangements are allowable to the extent they are allocable, reasonable, and not otherwise unallowable.

[ 57 FR 44265, Sept. 24, 1992, as amended at 59 FR 11379, Mar. 10, 1994; 62 FR 12705, Mar. 17, 1997; 62 FR 51271, Sept. 30, 1997; 62 FR 64932, Dec. 9, 1997; 66 FR 2131, Jan. 10, 2001]

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.

United States Code
U.S. Code: Title 10 - ARMED FORCES

§ 2301 - Repealed. Pub. L. 103–355, title I, § 1501(a), Oct. 13, 1994, 108 Stat. 3296]

§ 2302 - Definitions

§ 2302a - Simplified acquisition threshold

§ 2302b - Implementation of simplified acquisition procedures

§ 2302c - Repealed. Pub. L. 114–328, div. A, title VIII, § 833(b)(5)(A)(i), Dec. 23, 2016, 130 Stat. 2285]

§ 2302d - Major system: definitional threshold amounts

§ 2303 - Applicability of chapter

§ 2303a - Repealed. Pub. L. 98–577, title III, § 302(c)(1), Oct. 30, 1984, 98 Stat. 3077]

§ 2304 - Contracts: competition requirements

§ 2304a - Task and delivery order contracts: general authority

§ 2304b - Task order contracts: advisory and assistance services

§ 2304c - Task and delivery order contracts: orders

§ 2304d - Task and delivery order contracts: definitions

§ 2304e - Contracts: prohibition on competition between Department of Defense and small businesses and certain other entities

§ 2305 - Contracts: planning, solicitation, evaluation, and award procedures

§ 2305a - Design-build selection procedures

§ 2306 - Kinds of contracts

§ 2306a - Cost or pricing data: truth in negotiations

§ 2306b - Multiyear contracts: acquisition of property

§ 2306c - Multiyear contracts: acquisition of services

§ 2307 - Contract financing

§ 2308 - Buy-to-budget acquisition: end items

§ 2309 - Allocation of appropriations

§ 2310 - Determinations and decisions

§ 2311 - Assignment and delegation of procurement functions and responsibilities

§ 2312 - Remission of liquidated damages

§ 2313 - Examination of records of contractor

§ 2313a - Defense Contract Audit Agency: annual report

§ 2314 - Laws inapplicable to agencies named in section 2303 of this title

§ 2315 - Law inapplicable to the procurement of automatic data processing equipment and services for certain defense purposes

§ 2316 - Disclosure of identity of contractor

§ 2317 - Repealed. Pub. L. 103–160, div. A, title VIII, § 821(a)(2), Nov. 30, 1993, 107 Stat. 1704]

§ 2318 - Advocates for competition

§ 2319 - Encouragement of new competitors

§ 2320 - Rights in technical data

§ 2321 - Validation of proprietary data restrictions

§ 2322 - Repealed. Pub. L. 102–484, div. A, title X, § 1052(25)(A), Oct. 23, 1992, 106 Stat. 2500]

§ 2323 - Contract goal for small disadvantaged businesses and certain institutions of higher education

§ 2323a - Credit for Indian contracting in meeting certain subcontracting goals for small disadvantaged businesses and certain institutions of higher education

§ 2324 - Allowable costs under defense contracts

§ 2325 - Restructuring costs

§ 2326 - Undefinitized contractual actions: restrictions

§ 2327 - Contracts: consideration of national security objectives

§ 2328 - Release of technical data under Freedom of Information Act: recovery of costs

§ 2329 - Repealed. Pub. L. 103–355, title I, § 1506(a), Oct. 13, 1994, 108 Stat. 3298]

§ 2330 - Procurement of contract services: management structure

§ 2330a - Procurement of services: tracking of purchases

§ 2331 - Procurement of services: contracts for professional and technical services

§ 2332 - Share-in-savings contracts

§ 2333 - Joint policies on requirements definition, contingency program management, and contingency contracting

§ 2334 - Independent cost estimation and cost analysis

§ 2335 - Prohibition on collection of political information

§ 2336 - Renumbered § 2679]

§ 2337 - Life-cycle management and product support