231.205-18 Independent research and

development and bid and proposal costs.

(a) Definitions. As used in this section—

“Covered contract” means a DoD prime contract for an amount exceeding the simplified acquisition

threshold, except for a fixed-price contract without cost incentives. The term also includes a

subcontract for an amount exceeding the simplified acquisition threshold, except for a fixed-price

subcontract without cost incentives under such a prime contract.

“Covered segment” means a product division of the contractor that allocated more than $1,100,000

in independent research and development (IR&D) costs and bid and proposal (B&P) costs to covered

contracts during the preceding fiscal year. In the case of a contractor that has no product divisions,

the term means that contractor as a whole. A product division of the contractor that allocated less

than $1,100,000 in IR&D costs and B&P costs to covered contracts during the preceding fiscal year

is not subject to the limitations in paragraph (c) of this section.

“Major contractor” means any contractor whose covered segments allocated a total of more than

$11 million in IR&D costs and B&P costs to covered contracts during the preceding fiscal year. For

purposes of calculating the dollar threshold amounts to determine whether a contractor meets the

definition of “major contractor,” do not include contractor segments allocating less than $1,100,000

of IR&D and B&P costs to covered contracts during the preceding fiscal year.

(c) Allowability.

(i) Departments/agencies shall not supplement this regulation in any way that limits IR&D cost

allowability and B&P cost allowability.

(ii) See 225.7303-2 (c) for allowability provisions affecting foreign military sale contracts.

(iii)(A) For IR&D costs major contractors incurred on covered contracts to be allowable—

(1) The contractor is required to report IR&D projects generating the IR&D costs to the Defense

Technical Information Center (DTIC) using the DTIC’s online input form and instructions at

https://defenseinnovationmarketplace.dtic.mil/industry-portal/ ;and

(2) The contractor is required to update its DTIC inputs at least annually, no later than 3 months

after the end of the contractor’s fiscal year, and when the project is completed.

(B) The amount of IR&D costs allowable under DoD contracts shall not exceed the lesser of—

(1) Such contracts’ allocable share of total incurred IR&D costs; or

(2) The total amount of incurred IR&D costs that the chief executive officer of the contractor has

determined will advance the needs of DoD for future technology and advanced capability as DoD

describes such needs in communications referenced at 242.771-3(c)(1)(i).

(C) Contractors that are not major contractors are encouraged to use the DTIC online input form and

instructions at https://defenseinnovationmarketplace.dtic.mil/industry-portal/ to report IR&D

projects in order to provide DoD with visibility into the technical content of the contractors’ IR&D
projects.

(iv) Contractors are required to report incurred IR&D costs separately from indirect costs.

(v) Contractors are required to report incurred B&P costs separately from other indirect costs.

Parent topic: 231.205 Selected costs.