DFARS; new change to IR&D

[Guest Infoseeker]

January 30, 2012 DFARS 231.205-18 (IR&D/B&P) changed signficantly. I was hoping to see a post on this.

I am getting bombed by industry with questions on this. It requires reporting information on IR&D information or the costs are questioned, etc..

I am unsure of the process on what it takes to get something into the DFARS, but for this change.., the process failed on many many levels. I am hoping clarification comes out real soon.

(1) Read through it. It changes every few paragraphs from referencing "IR&D/B&P" and then just "IR&D." This change is only related to IR&D, but somehow B&P gets dragged into the verbiage every few paragraphs or so.

(2) Look at 231.205-18(a)(ii). They are using a new phrase "product division." This needs to be defined. You can guess at it, but this is the FAR and it needs to be clarified.

(3) 231.205-18©(iv). It says the ACO should determine if the IR&D/B&P costs are of potential interest to DoD. Is this something new? Because this is not humanly possible. How can a ACO or any KO tell what is of potential interest to DoD at a major company. I thought the reason for this DFARS change was for companies to report this information to DTIC (oversight), why do they also add in that KOs have to know everything about this nebulous area?

I am looking forward to others comments and experience in this area.

[here_2_help]

Infoseeker,

The requirement for a DOD CO to determine that a contractor's IR&D projects are of interest to DOD is not new. I agree with you that this requirement has been inconsistently applied and that COs lack policy guidance as to how to make a proper decision. Yet, the requirement has been around for quite some time.

The only new aspect here is the requirement to report into DTIC, and the threat that a failure to report will render IR&D costs unallowable.

Hope this helps.

[Guest Vern Edwards]

in the mid-1980s I had a job as a Tri-services Contracting Officer negotiating contractor IR&D and B&P ceilings for DOD and NASA. We relied on people in a technical office to determine whether IR&D was of interest to the government. It wes a routine process and no big deal. In those days the major contractors had to submit IR&D plans to us every two years. They were massive documents.

[Ophelia]

I agree with here_2_help--the requirement is not new, but the reporting into DTIC is.

[Guest Infoseeker]

Actually, my point was that not that the IR&D requirement was new. I meant to say that what is so huge about it is that if you do not report it, it is QUESTIONED.

That is what is so huge and that is why industry is flaming at this. No judgement required now.., you either report or you are questioned.

[here_2_help]

Infoseeker,

Yes, I think you could make a decent case that the regulation as promulgated goes beyond what the enabling statute intended. In fact, one or more industry associations pretty much said exactly that in the public comments to the proposed rule. As it does with many comments that offer an unpalatable point of view, the DAR Council ignored the substance of the comment and published the rule that it wanted to publish--thus setting the stage for potential downstream litigation.

Contractors have to report into DTIC. That's the rule. Smart contractors will figure out procedures to ensure that the reporting is done. Less smart contractors will ignore the requirement and risk getting costs questioned. If I thought DCAA had the resources to review the matter in depth, I might be more concerned. Or if I thought that DCMA would sit patiently on its collective keister while indirect rates were held up just that much longer while DCAA reviewed the reporting, I might be more concerned. Quite honestly, I'm not all that concerned. At worst, I think it will be a YES/NO determination. At best, auditors will ignore the requirement because they have more important issues to worry about.