The Armed Services Procurement Regulations Committee promulgated the current definition for Independent Research and Development (IR&D costs in 1971. That definition excludes from IR&D the cost of effort “required in the performance of a contract.” This language has long perplexed contractors and the government resulting in difficulty in determining when to charge the cost of certain development effort as an IR&D cost. Moreover, this IR&D regulatory definition is inconsistent with other more current regulations defining direct and indirect costs, and fails to reflect the current government policy encouraging contractors to engage in IR&D effort. Finally, the Federal Circuit Court of Appeals recent decision in ATK Thiokol, Inc. v. United States found this regulatory language to be ambiguous. Unfortunately, the Federal Circuit's interpretation of the language creates additional problems by letting the individual contracting parties determine what is an IR&D cost. For the reasons discussed below, this paper proposes changing the definition of IR&D costs from excluding the cost of effort “required in the performance of a contract” to exclude those costs “specifically identified with a contract.”
|Advisor:||Schooner, Steven L.|
|School:||The George Washington University|
|School Location:||United States -- District of Columbia|
|Source:||MAI 49/03M, Masters Abstracts International|
|Keywords:||Cost Accounting Standard 420, Federal Acquisition Regulation 31.205-18, Government contracts, Independent research and development|
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