Last February, DoD published a proposed regulation for its FAR Supplement (DFARS) that would require “major contractors” to engage in technical interchanges with DoD before IR&D costs (Independent Research and Development Costs) are generated. Major contractors in this context are defined as those that allocate more than $11 million in IR&D and B&P (Bid and Proposal) costs per year to DoD prime contracts (see Enhancing the Effectiveness of Independent Research and Development). The effective date of this new requirement is today, November 4, 2016.

Source: PNWC’s Government Contracting Update: Contractors Must Now Engage in Technical Exchanges with DoD Prior to Incurring IR&D Costs

When determining the allowability of costs under Government contracts, one needs to have a very good grasp of the FAR (Federal Acquisition Regulations) cost principles (Part 31), a copy of the tome close by and good reference material to consult when costs don’t fit nicely into FAR classifications. Often it is necessary to consult several cost principles to determine whether a cost is allowable or unallowable. Sometimes, after exhausting all available resources, you just don’t know and you would like some guidance from the Government before including the costs in a proposal or an incurred cost submission. Good luck on that. Contracting officers are not inclined to give “private letter rulings” like the IRS and contract auditors will certainly not go out on a limb and offer their opinions. And even if they did, it wouldn’t be binding on the Government anyway. Only the contracting officer has that authority. When the cost is immaterial, especially when the inclusion or exclusion has no impact on an indirect expense rate, many contractors simply forgo the costs.

Source: PNWC’s Government Contracting Update: Know the Purpose for Which Costs were Expended – Then Make Your Allowability Determination