4632 Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Rules and Regulations 

approved under OMB clearance 0704– 

0229 from the point of contact identified 

in this notice. Please cite OMB Control 

Number 0704–0229, in all 

correspondence. 

List of Subjects in 48 CFR Part 252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR part 252 is 

amended as follows: 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 1. The authority citation for 48 CFR 

part 252 is revised to read as follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

chapter 1. 

252.212–7001 [Amended]. 

■ 2. In section 252.212–7001, remove 

the clause date ‘‘(DEC 2011)’’ and add 

‘‘(JANUARY 2012)’’ in its place and in 

paragraph (b)(13)(i) remove the clause 

date ‘‘(OCT 2011)’’ and add ‘‘(JANUARY 

2012)’’ in its place. 

■ 3. In section 252.225–7021, remove 

the clause date ‘‘(OCT 2011)’’ and add 

‘‘(JAN 2012)’’ in its place and in 

paragraph (a), in the definition for 

‘‘Designated country’’, revise paragraph 

(i) to read as follows: 

252.225–7021 Trade agreements. 

* * * * * 

(a) * * * 

Designated country * * * 

(i) A World Trade Organization 

Government Procurement Agreement 

(WTO GPA) country (Armenia, Aruba, 

Austria, Belgium, Bulgaria, Canada, 

Cyprus, Czech Republic, Denmark, 

Estonia, Finland, France, Germany, 

Greece, Hong Kong, Hungary, Iceland, 

Ireland, Israel, Italy, Japan, Korea 

(Republic of), Latvia, Liechtenstein, 

Lithuania, Luxembourg, Malta, 

Netherlands, Norway, Poland, Portugal, 

Romania, Singapore, Slovak Republic, 

Slovenia, Spain, Sweden, Switzerland, 

Taiwan (known in the World Trade 

Organization as ‘‘the Separate Customs 

Territory of Taiwan, Penghu, Kinmen, 

and Matsu’’ (Chinese Taipei)), or the 

United Kingdom); 

* * * * * 

■ 4. In section 252.225–7045, remove 

the clause date ‘‘(JUN 2011)’’ and add 

‘‘(JAN 2012)’’ in its place and in 

paragraph (a), in the definition for 

‘‘Designated country’’, revise paragraph 

(1) to read as follows: 

252.225–7045 Balance of Payments 

Program—Construction Material Under 

Trade Agreements. 

* * * * * 

(a) * * * 

Designated country * * * 

(1) A World Trade Organization 

Government Procurement Agreement 

(WTO GPA) country (Armenia, Aruba, 

Austria, Belgium, Bulgaria, Canada, 

Cyprus, Czech Republic, Denmark, 

Estonia, Finland, France, Germany, 

Greece, Hong Kong, Hungary, Iceland, 

Ireland, Israel, Italy, Japan, Korea 

(Republic of), Latvia, Liechtenstein, 

Lithuania, Luxembourg, Malta, 

Netherlands, Norway, Poland, Portugal, 

Romania, Singapore, Slovak Republic, 

Slovenia, Spain, Sweden, Switzerland, 

Taiwan (known in the World Trade 

Organization as ‘‘the Separate Customs 

Territory of Taiwan, Penghu, Kinmen, 

and Matsu’’ (Chinese Taipei)), or the 

United Kingdom); 

* * * * * 

[FR Doc. 2012–1488 Filed 1–27–12; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 231 

RIN 0750–AG96 

Defense Federal Acquisition 

Regulation Supplement; Independent 

Research and Development Technical 

Descriptions (DFARS Case 2010–D011) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to require major contractors to 

report independent research and 

development (IR&D) projects. 

DATES: Effective date: January 30, 2012. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Mark Gomersall, (703) 602–0302. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD published a proposed rule at 76 

FR 11414 on March 2, 2011, to revise 

requirements for reporting IR&D projects 

to the Defense Technical Information 

Center (DTIC). Beginning in the 1990s, 

DoD reduced its technical exchanges 

with industry, in part to ensure 

independence of IR&D. The result has 

been a loss of linkage between funding 

and technological purpose. The 

reporting requirements of this rule, 

issued in accordance with 10 U.S.C. 

2372, will provide in-process 

information from IR&D projects, for 

which reimbursement, as an allowable 

indirect cost, is sought from DoD, to 

increase effectiveness by providing 

visibility into the technical content of 

industry IR&D activities to meet DoD 

needs and promote the technical 

prowess of our industry. Without the 

collection of this information, DoD will 

be unable to maximize the value of the 

IR&D funds it disburses without 

infringing on the independence of 

contractors to choose which 

technologies to pursue in IR&D 

programs. The public comment period 

closed May 2, 2011. Four respondents 

submitted comments on the proposed 

rule. A discussion of the comments is 

provided in Section II. 

II. Discussion and Analysis 

DoD reviewed the public comments in 

the development of the final rule. A 

discussion of the comments and the 

changes made to the rule as a result of 

those comments are provided as 

follows: 

A. Threshold 

Comment: The proposed rule should 

clarify whether the reporting 

requirement is triggered by a major 

contractor’s aggregate IR&D costs or the 

costs of an individual IR&D project. The 

threshold for triggering the reporting 

requirement is low and should be 

increased. The low threshold of $50,000 

magnifies the burden to contractors, 

ACOs, and DCAA auditors, as this 

threshold would require the reporting of 

almost any IR&D project. Respondents 

recommended a number of alternative 

thresholds. 

Response: The $50,000 contractor 

annual IR&D threshold has been 

removed from the final rule. DFARS 

231.205–18(c)(iii) applies only to major 

contractors, which are defined as those 

contractors whose covered segments 

allocated a total of more than 

$11,000,000 in IR&D/Bid and Proposal 

(B&P) costs to covered contracts during 

the preceding fiscal year. However, 

contractors who do not meet the 

threshold as a major contractor are 

encouraged to use the DTIC on-line 

input form to report IR&D projects to 

provide DoD with visibility into the 

technical content of the contractors’ 

IR&D activities. 

B. Proprietary Information 

Comment: The proposed rule should 

ensure that contractor trade secret and 

proprietary information is protected. It 

is apparent that DoD is seeking to 


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collect more than high-level, basic 

information regarding each IR&D 

project. Moreover, the proposed rule 

seeks to incentivize and encourage the 

voluntary disclosure by contractors of 

competition-sensitive, proprietary 

information. The respondent 

understands that DoD has had concerns 

with the security of proprietary 

information contained in the DTIC 

database, as discussed in a September 

2008 presentation by the Deputy 

Undersecretary of Defense, International 

Technology Security. Therefore the 

respondent made the following 

suggestions: 

(1) DoD should first assure that the 

DTIC database is capable of protecting 

contractor trade secret and proprietary 

information. How can DoD assure 

contractors that the data will not be 

compromised? The sensitive nature of 

the data should require encryption at 

the very least. 

(2) DoD should ensure that provisions 

are in place that provide assurance that 

only DoD personnel will have access to 

this data. If any third party contractors 

have access, ensure that assurances/ 

restrictions are in place to ensure that 

none of a contractor’s proprietary IR&D 

data is disclosed outside of DoD. 

(3) The respondent suggested that the 

on-line input information be high level 

only and if the area has interest to DoD, 

contact the contractor to obtain more 

detail. This will limit the sensitive 

information in the database and still 

allow DoD to obtain the information it 

seeks. 

(4) DoD should reconsider the 

requirement that the submission of 

IR&D data be exclusively by means of 

the DTIC’s on-line input form, and 

alternative means for submission should 

be permitted. 

(5) The rule should be revised so as 

to avoid imposing on contractors the 

burden and expense of resisting public 

release under the Freedom of 

Information Act (‘‘FOIA’’) of 

information entered into the DTIC 

database. 

(6) The rule should be revised to make 

clear that the submission of IR&D 

information is voluntary, and that there 

is a presumption that information 

entered into and maintained in the DTIC 

database pursuant to the rule is 

confidential, and that its release is likely 

to cause the provider of the information 

substantial competitive harm if such 

information were to be released to the 

public. This would make it clear that 

the information entered into the DTIC 

database is within the scope of FOIA 

exemption (b)(4) and, therefore, not 

subject to public disclosure. The Trade 

Secrets Act, 18 U.S.C. § 1905, prohibits 

the Government from releasing private 

information within its possession, 

unless law otherwise authorizes the 

release. 

(7) DoD should ensure that processes 

are in place to verify data for accuracy 

and verify input for timeliness. 

(8) The proposed rule should make 

clear that the Government cannot 

release or disclose proprietary IR&D 

submissions outside the Government 

without the data owner’s written 

authorization. Further, contractors 

should be able to restrict the internal 

Government use of such IR&D data to 

DoD only. If DoD needs to share such 

proprietary IR&D data with support 

contractors, such as ‘‘covered 

Government support contractors’’ 

furnishing independent and impartial 

advice or technical assistance directly to 

DoD, then DoD should be required to 

obtain the data owner’s written 

permission to do so. 

Response: (1) Information protection. 

DTIC advises that adequate controls are 

in place to protect information from 

compromise. Only unclassified IR&D 

project summary information should be 

provided. Both database screens and 

printouts will be marked ‘‘Proprietary.’’ 

Any markings on attachments provided 

by a contractor would not be altered. 

(2) Access control. DTIC advises that 

sufficient measures are being employed 

to limit access to authorized DoD users. 

(3) Inputs. Firms have discretion 

regarding presentation of information 

they regard as sensitive when they 

submit project summaries. 

(4) Submission format. The DTIC online input form has been established to 

provide contractors with a template for 

reporting on their IR&D projects. This 

format allows for submission of 

additional information as attachments. 

(5) FOIA exemption. Information 

submitted is within the scope of FOIA 

exemption (b)(4). 

(6) FOIA exemption and trade secrets. 

Information submitted is within the 

scope of FOIA exemption (b)(4). 

(7) Timeliness and accuracy. 

Providing updates on an annual basis 

will ensure timeliness of the 

information submitted. Firms will be 

responsible for the accuracy of their 

submissions. 

(8) Proprietary information controls. 

The rule makes no changes to existing 

laws and regulations dealing with 

Government use of proprietary 

information. 

C. DTIC On-Line Form 

Comment: The rule should include a 

copy of the proposed DTIC on-line input 

form. The proposed rule does not 

address the nature of the information 

that must be provided through the 

proposed DTIC on-line input form and 

the means of transmission of the form. 

The respondent recommended that DoD 

include in any final rule a copy of the 

DTIC form and instructions for 

completing the form. By doing so, 

relevant DoD personnel, including 

Administrative Contracting Officers 

(‘‘ACOs’’) and Defense Contract Audit 

Agency (‘‘DCAA’’) auditors, and 

contractors would be provided some 

certainty regarding the information that 

would be required to be entered into the 

DTIC database by contractors and the 

nature of the form as it may be revised. 

Unless the rule includes the form, 

contractors must monitor the form each 

year and may be subjected to increased 

reporting from the DTIC without proper 

notice or opportunity to comment. 

Response: DFARS 231.205–18(v) sets 

forth that the cognizant contract 

administration office shall furnish 

contractors with guidance on financial 

information needed to support IR&D/ 

B&P costs and on technical information 

needed from major contractors to 

support the potential interest to DoD 

determination. To that extent, the DTIC 

on-line input form has been established 

to provide contractors with a template 

for reporting on their IR&D projects, and 

a process to provide such reporting that 

is designed to minimize the 

administrative burden on contractors. 

The DTIC on-line form includes 

reporting elements such as project title, 

project number, anticipated 

expenditures, project description, 

keywords, and technology readiness 

level. The DTIC on-line form can be 

found at http://www.dtic.mil/ird/dticdb/ 

index.html. 

D. Classified information 

Comment: The proposed rule fails to 

address issues relating to the reporting 

of classified information. The proposed 

rule does not address how contractors 

should handle the reporting of classified 

information should a contractor’s 

classified IR&D project trigger the 

reporting requirement. The respondent 

recommended that DoD address this 

issue, including whether contractors 

would be required to report classified 

IR&D projects and, if such a requirement 

exists, how contractors would report 

this information. For example, it is 

unclear to the respondent whether 

classified information may properly be 

transmitted through the DTIC’s on-line 

input form or whether the DTIC 

database is cleared to maintain 

classified IR&D project information. 

Response: Only unclassified IR&D 

project summary information should be 


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provided. Both database screens and 

printouts will be marked ‘‘Proprietary.’’ 

E. Technical expertise 

Comment: The proposed rule includes 

DCAA in the process to identify IR&D 

projects having potential interest to 

DoD, but fails to consider needed 

technical expertise. ACOs have 

responsibility for determining whether 

IR&D projects are of potential interest to 

DoD and thus satisfy that test for 

allowability. The proposed rule, 

however, suggests that DCAA may play 

some role in the determination process, 

but it is not clear to the respondent what 

role DCAA is expected to play. Further, 

to the extent that the purpose of making 

the DTIC input and updates available to 

DCAA is to facilitate assistance to ACOs 

in making potential interest 

determinations, this raises the question 

whether DCAA auditors, or even ACOs, 

have the necessary technical expertise 

to properly evaluate IR&D project 

descriptions to make these 

determinations. The respondent 

recommended that DoD clarify what 

role, if any, DCAA is to play in 

determining whether IR&D projects are 

of potential interest to DoD. Further, 

given the increasing technical 

complexity of many IR&D projects, 

should the proposed rule be finalized, 

the respondent recommended that DoD 

consider mandating the use of a Defense 

Contract Management Agency (DCMA) 

or other technical representative to 

assist ACOs and, as applicable, DCAA 

auditors, in evaluating contractor IR&D 

project descriptions and making 

potential interest determinations. 

Response: This rule does not place 

additional oversight responsibilities 

onto DCAA and DCMA. Further, 

contracting personnel will make 

appropriate determinations whether 

IR&D projects are of potential interest to 

DoD and thus satisfy that test for 

allowability, in accordance with this 

rule. However, when specialized 

expertise is required, contracting 

officers are expected to consult with 

auditors and other individuals with 

specialized experience, as necessary, to 

ensure a full understanding of issues. 

F. Administrative Burden 

Comment: The proposed rule would 

impose administrative burdens on 

contractors, ACOs, and DCAA auditors. 

Contractors would need to coordinate 

the review and approval of the data 

reported, often across multiple business 

units for larger IR&D projects, to ensure 

the information is accurate and relevant 

and meets the reporting objectives. This 

would involve contractor management 

personnel, as well as personnel from 

functions such as engineering, 

manufacturing, quality assurance, and 

many others. In addition to the impact 

on contractors, the rule would impose 

administrative burdens on ACOs and 

DCAA auditors. 

Response: The reporting requirements 

in this rule will provide in-process 

information to allow DoD to maximize 

the value of the IR&D funds it disburses 

without infringing on the independence 

of contractors to choose which 

technologies to pursue in IR&D 

programs. DoD will employ procedures 

that minimize the administrative burden 

on contractors. 

G. Intent of IR&D Reporting 

Comment: A respondent questioned 

what DoD really intends to do with the 

information and how much detail will 

be required to evaluate the ‘‘technical 

content’’ of IR&D projects. 

Response: The objective is to support 

DoD science and technology and 

acquisition program planning personnel 

by providing visibility into the technical 

content of industry IR&D activities to 

ensure that they meet DoD needs and 

promote the technical prowess of our 

industry. For this purpose, only a 

concise one-and-a-half to two-page 

overview is needed. 

H. DoD-sponsored IR&D 

Comment: The phrase ‘‘DoDsponsored IR&D’’ is inconsistent with 

the concept that IR&D is developed at 

private expense. The respondent 

suggested eliminating the phrase DoDsponsored IR&D. 

Response: The phrase ‘‘DoDsponsored IR&D’’ is not used in the 

DFARS. For clarity, this notice 

references IR&D projects for which 

reimbursement, as an allowable indirect 

cost, is sought from DoD. 

I. Patent Issues 

Comment: The proposed rule may 

force contractors to file patent 

applications on early-stage technologies 

prematurely. Depending on the 

specificity of the information required, 

the proposed rule may also require 

contractors to seek patent protection for 

disclosed technologies at an earlier date 

than would otherwise be the case in 

order to avoid the bar to patentability 

provided for in 35 U.S.C. 102. This 

would entail additional and possibly 

unnecessary expense, as further 

development of early-stage technologies 

often leads to the conclusion that the 

technology isn’t viable and hence does 

not justify the expense of a patent 

application. Expressly providing that 

the submitted information will be 

accorded confidential treatment may 

avoid this result, but that isn’t clear to 

the respondent in the proposed rule in 

its present form. 

Response: Firms control the 

specificity of information submitted. 

Therefore, this rule will not force 

contractors to file patent applications on 

early-stage technologies prematurely. 

Information submitted will be 

safeguarded as addressed in responses 

to comment B. 

J. Not a Mandated Statutory 

Requirement 

Comment: 10 U.S.C. 2372 does not 

mandate IR&D reporting. Contrary to the 

statement in the background section of 

the proposed rule, 10 U.S.C 2372 does 

not mandate any particular form of 

IR&D reporting. On the contrary, IR&D 

reporting is permissive. In addition, this 

information is already required under 

DFARS 231.205–18 for purposes of 

determining allowability of IR&D costs. 

Additional reporting information is not 

and should not be required. 

Specifically, the Government already is 

provided the data and is responsible for 

reviews of IR&D projects that are of 

potential interest to DoD under the 

DFARS clause. 

Response: 10 U.S.C 2372 subsection 

(a), Regulations, states that the Secretary 

of Defense shall prescribe regulations 

governing the payment, by the 

Department of Defense, of expenses 

incurred by contractors for independent 

research and development and bid and 

proposal costs. To that extent, 

subsection (c), Additional controls, 

states that the regulations prescribed 

pursuant to subsection (a) may include 

implementation of regular methods for 

transmission from contractors to the 

Department of Defense, in a reasonable 

manner, of information regarding 

progress by the contractor on the 

contractor’s independent research and 

development programs. The 

requirement to determine the 

allowability of IR&D costs is a preestablished requirement in 231.205– 

18(c)(iii)(B), which sets forth that 

allowable IR&D/B&P costs are limited to 

those for projects that are of potential 

interest to DoD. The reporting 

requirements of this rule will provide 

necessary information to DoD cognizant 

administrative contracting officers to 

make the required allowability 

determinations. 

K. Allowability of IR&D Costs 

Comment: DoD should not make IR&D 

cost allowability contingent on 

reporting. Under the proposed rule, 

IR&D costs would be unallowable for 

projects exceeding $50,000 unless the 

project(s) are reported in the DTIC. 


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Using the disallowance of costs to 

enforce the proposed reporting 

requirement is unnecessary and 

unreasonable and would result in 

sanctions that are disproportional to the 

potential harm to DoD. Normally, if a 

contract fails to comply with such a 

contractual reporting requirement, the 

noncompliance would be treated as a 

breach of contract judged on the basis of 

its materiality. Moreover, claimed 

contractor IR&D costs are currently 

auditable by the Defense Contract Audit 

Agency to support G&A rate audits. DoD 

already is protected from improper 

charging including the remedy of 

double damages and interest on 

expressly unallowable costs. 

Response: The requirement to 

determine the allowability of IR&D costs 

is a pre-established requirement in the 

DFARS. Specifically, 231.205– 

18(c)(iii)(B) sets forth that allowable 

IR&D/B&P costs are limited to those 

costs for projects that are of potential 

interest to DoD. Further, 231.205– 

18(c)(iv) states that for major 

contractors, the cognizant ACO or 

corporate ACO shall determine whether 

IR&D/B&P projects are of potential 

interest to DoD. This rule establishes 

reporting requirements to provide 

necessary information to DoD cognizant 

ACOs to make the required allowability 

determinations. 

L. Impacts to Small Businesses 

Comment: The proposed rule’s 

Regulatory Flexibility Act section states 

that the reporting requirements will not 

apply to a significant number of small 

businesses. If the reporting requirement 

is not limited to major contractors and 

is not on a per project basis, the low 

threshold likely will capture many 

small businesses. Given the current state 

of DoD contracting and the complex 

systems required to support DoD, there 

are very few IR&D projects that can be 

performed for less than $50,000 and 

thus the requirements, in effect, will 

apply to most IR&D, including those 

performed by small businesses. The 

respondent, therefore, respectfully 

disagreed with DoD’s suggestion that the 

requirements will not apply to a 

significant number of small businesses. 

Response: DoD does not expect this 

proposed rule to have a significant 

economic impact on a substantial 

number of small entities within the 

meaning of the Regulatory Flexibility 

Act, 5 U.S.C. 601, et seq., because 

231.205–18(c)(iii) applies only to major 

contractors, which are defined as those 

whose covered segments allocated a 

total of more than $11,000,000 in IR&D/ 

B&P costs to covered contracts during 

the preceding fiscal year. The $50,000 

contractor annual IR&D threshold has 

been removed from the final rule. 

However, DoD has included a new 

sentence in the rule to encourage small 

businesses to submit their project 

description since there may be an 

advantage to any size business to have 

its projects included. 

M. Increased Costs 

Comment: The scope and sweep of 

this proposed rule is not well defined 

and is left open to conflicting 

interpretations. As such, it is difficult 

for companies to assess the costs of 

compliance or judge the accuracy of the 

burden of the proposed information 

collected without further specificity. For 

example, the term ‘‘project’’ is 

undefined. It is not uncommon for 

contractors to account for their IR&D 

costs not on a project basis but only as 

charge numbers or cost centers. 

Response: The IR&D cost principle at 

FAR 31.205–18(b) states ‘‘The 

requirements of 48 CFR 9904.420, 

Accounting for independent research 

and development costs and bid and 

proposal costs, are incorporated in their 

entirety * * *.’’ The cost accounting 

standard at 48 CFR 9904.420–40, 

Fundamental requirement, paragraph (a) 

states, ‘‘The basic unit for identification 

and accumulation of Independent 

Research and Development (IR&D) and 

Bid and Proposal (B&P) costs shall be 

the individual IR&D or B&P project.’’ 

The proposed rule used terms in long 

use with understood meanings. Further, 

for contractors to account for their IR&D 

costs on other than a project basis 

would result in noncompliant reporting 

of IR&D costs if the amount of IR&D 

costs were determined to be material in 

amount. 

N. Public Hearing 

Comment: The proposed rule raises 

many issues and leaves many questions 

unanswered. In light of this, one 

respondent requested that DoD hold a 

public hearing to further discuss the 

proposed rule and obtain additional 

comments. 

Response: DoD acknowledges the 

respondent’s recommendation. 

However, DoD has determined that a 

public meeting is not necessary at this 

time. Through the public comments 

received in response to the proposed 

rule, DoD has determined that it has a 

clear understanding of public issues and 

concerns. 

III. Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This is a significant 

regulatory action and, therefore, was 

subject to review under section 6(b) of 

E.O. 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

IV. Regulatory Flexibility Act 

DoD has prepared a final regulatory 

flexibility analysis consistent with 5 

U.S.C. 604. A copy of the analysis may 

be obtained from the point of contact 

specified herein. The analysis is 

summarized as follows: 

DoD does not expect this final rule to 

have a significant economic impact on 

a substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because reporting the IR&D projects 

utilizing the DTIC on-line input form 

does not require contractors to expend 

significant effort or cost. Furthermore, 

since 231.205–18(c)(iii) applies only to 

major contractors, which are defined as 

those whose covered segments allocated 

a total of more than $11,000,000 in 

IR&D/B&P costs to covered contracts 

during the preceding fiscal year, the 

IR&D project reporting requirements 

will not apply to a significant number 

of small entities. Reporting the IR&D 

projects will utilize the DTIC on-line 

input form, which does not require 

contractors to expend significant effort 

or cost. No alternatives to the rule that 

would meet the stated objectives were 

identified by the agency. 

V. Paperwork Reduction Act 

The rule contains information 

collection requirements that require the 

approval of the Office of Management 

and Budget under the Paperwork 

Reduction Act (44 U.S.C. chapter 35). 

OMB has cleared this information 

collection requirement through January 

31, 2015 under OMB Control Number 

0704–0483, titled: Defense Federal 

Acquisition Regulation Supplement 

(DFARS) Part 231, Contract Cost 

Principles and Procedures. 


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4636 Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Rules and Regulations 

List of Subjects in 48 CFR Part 231 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR part 231 is 

amended as follows: 

PART 231— CONTRACT COST 

PRINCIPLES AND PROCEDURES 

■ 1. The authority citation for 48 CFR 

part 231 is revised to read as follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

chapter 1. 

■ 2. In section 231.205–18, add 

paragraph (c)(iii)(C) and revise 

paragraph (c)(iv) introductory text to 

read as follows: 

231.205–18 Independent research and 

development and bid and proposal costs. 

* * * * * 

(c) * * * 

(iii) * * * 

(C) For a contractor’s annual IR&D 

costs to be allowable, the IR&D projects 

generating the costs must be reported to 

the Defense Technical Information 

Center (DTIC) using the DTIC’s on-line 

input form and instructions at http:// 

www.dtic.mil/ird/dticdb/index.html. 

The inputs must be updated at least 

annually and when the project is 

completed. Copies of the input and 

updates must be made available for 

review by the cognizant administrative 

contracting officer (ACO) and the 

cognizant Defense Contract Audit 

Agency auditor to support the 

allowability of the costs. Contractors 

that do not meet the threshold as a 

major contractor are encouraged to use 

the DTIC on-line input form to report 

IR&D projects to provide DoD with 

visibility into the technical content of 

the contractors’ IR&D activities. 

(iv) For major contractors, the ACO or 

corporate ACO shall— 

* * * * * 

[FR Doc. 2012–1490 Filed 1–27–12; 8:45 am] 

BILLING CODE 5001–06–P 


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