Sec. 814. Elimination of bid and proposal costs and other expenses as allowable independent research and development costs on certain contracts
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Section 2372 of title 10, United States Code, is amended to read as follows: 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 costs. The regulations prescribed pursuant to subsection
(a)shall provide that independent research and development costs shall be considered a fair and reasonable and allowable expense on Department of Defense contracts. Subject to subsection (f), the regulations prescribed pursuant to subsection
(a)may include the following provisions: A limitation on the fair and reasonableness determination with respect to costs of independent research and development which the Secretary of Defense determines is of potential interest to the Department of Defense. A limitation that the total amount of the independent research and development costs of the contractor that are determined as fair and reasonable may not exceed the contractor’s adjusted maximum reimbursement amount. Implementation of regular methods for transmission— from the Department of Defense to contractors, in a reasonable manner, of timely and comprehensive information regarding planned or expected Department of Defense future technology and advanced capability needs; and 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. For purposes of subsection (c)(2), the adjusted maximum reimbursement amount for a contractor for a fiscal year is 5 percent of the total amount of the work performed by the contractor during the preceding fiscal year on Department of Defense contracts funded through procurement or research development, test, and evaluation accounts using authorized appropriations. The Secretary of Defense may waive the applicability of any limitation prescribed under subsection (c)(2) to any contractor for a fiscal year to the extent that the Secretary determines that allowing the contractor to exceed the contractor’s adjusted maximum reimbursement amount for such year is otherwise in the best interest of the Government. Regulations prescribed pursuant to subsection
(c)may not include provisions that would infringe on the independence of a contractor to choose which technologies to pursue in its independent research and development program so long as the chief executive officer certifies that the expenditures will advance Department of Defense future technology and advanced capability needs as transmitted pursuant to subsection (c)(3)(A). . The table of sections at the beginning of chapter 139 of such title is amended by striking the item relating to section 2372 and inserting the following new item: 2372. Independent research and development costs: payments to contractors. .