§ 3762. Independent research and development costs: allowable costs

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1990

   National Defense Authorization Act for Fiscal Year 1991

   Pub. L. 101–510 div. A title VIII § 824(a)(1) · 104 Stat. 1485

   Enacted · 10 U.S.C. § 3762

   Added Pub. L. 101–510, div. A, title VIII, § 824(a)(1), Nov. 5, 1990, 104 Stat. 1603, § 2372

   Source evidence

   Code source credit
   Added Pub. L. 101–510, div. A, title VIII, § 824(a)(1), Nov. 5, 1990, 104 Stat. 1603, § 2372

   Enacted provision · exact public law section
   (1) Chapter 139 of title 10, United States Code, is amended by adding at the end the following new section: “§ 2372. Independent research and development “(a) The Secretary of Defense shall prescribe regulations governing Regulations. the payment, by the Department of Defense, of independent research and development costs or bid and proposal costs. “(b) Payment may be made for independent research and development costs or bid and proposal costs when work for which payment is made is of potential interest to the Department of Defense. “(c) The regulations shall encourage contractors to engage in research and development activities that— “(1) strengthen the defense industrial and technology base of the United States; “(2) enhance the industrial competitiveness of the United States; “(3) promote the development of technologies identified as critical under section 2508 of this title; “(4) increase the development of technologies useful for both the private commercial sector and the public sector; and “(5) develop efficient and effective technologies for achieving such environmental benefits as improved environmental data gathering, environmental cleanup and restoration, pollution reduction in manufacturing, environmental conservation, and environmentally safe management of facilities. “(d) (1) Subject to paragraph (3), for each fiscal year following a Government contracts. fiscal year in which independent research and development costs or bid and proposal costs incurred by a person were paid by the Department of Defense in a total amount exceeding $7,000,000, the Secretary of Defense shall enter into an advance agreement with such person regarding the manner and extent to which the Department of Defense may pay independent research and development costs or bid and proposal costs incurred by such person. If such person is a business entity that has a product division that received payments for such costs from the Department of Defense in a total amount exceeding $700,000 during such preceding fiscal year, the Secretary may enter into an advance agreement, regarding payment of the independent research and development costs and bid and proposal costs incurred by such product division. “(2) The agreement shall include the following provisions: “(A) The maximum amount of the costs incurred by such person in that fiscal year that the Department may pay. “(B) The costs that are payable under the agreement, which may be only those costs that are incurred in connection with work referred to in subsection (b) or the attainment of benefits described in subsection (c). “(3) If a person referred to in paragraph (1) does not enter into an advance agreement with the Secretary under paragraph (1) for a fiscal year, the payment of the independent research and development costs and bid and proposal costs incurred by such person during such fiscal year shall be subject to such limitations as the Secretary of Defense may prescribe in the regulations under subsection (a). “(4) On October 1, 1994, and October 1 of each third year thereafter, the Secretary may adjust the amounts in paragraph (1) to reflect changes in one or more economic indices that the Secretary considers appropriate for use in making adjustments under this paragraph. “(5) The provisions of this section shall apply only to contracts for which the submission and certification of cost or pricing data are required in accordance with section 2306a of this title.”.

2. 1991

   Persian Gulf Conflict Supplemental Authorization and Personnel Benefits Act of 1991

   Pub. L. 102–25 title VII § 701(c) · 105 Stat. 75

   Substituted · 10 U.S.C. § 3762(d)(2)(B)

   Pub. L. 102–25 substituted “subsection (b), including” for “subsection (b) or”

   Source evidence

   Code amendment note
   Subsec. (d)(2)(B). Pub. L. 102–25 substituted “subsection (b), including” for “subsection (b) or”.

   Enacted provision · exact public law section
   (c) Clarification of IR&D Amendments.— Section 2372(d)(2)(B) of title 10, United States Code, as added by section 824(a)(1) of Public Law 101–510 (104 Stat. 1603), is amended by striking out “or” after “subsection (b)” and inserting in lieu thereof “, including”.

3. 1991

   National Defense Authorization Act for Fiscal Years 1992 and 1993

   Pub. L. 102–190 div. A title VIII § 802(a)(1) · 105 Stat. 1290

   1. Substituted · 10 U.S.C. § 3762

      Pub. L. 102–190 substituted section catchline for one which read “Independent research and development”

   2. Amended · 10 U.S.C. § 3762

      Pub. L. 102–190 amended text generally

   3. Substituted · 10 U.S.C. § 3762

      Pub. L. 102–190 substituting present provisions for provisions authorizing payment of independent research and development or bid and proposal costs, encouraging contractors to engage in research and development activities, and authorizing advance agreements regarding the manner and extent in which the Department of Defense may pay independent research and development costs or bid and proposal costs

   Source evidence

   Code amendment note
   Pub. L. 102–190 substituted section catchline for one which read “Independent research and development” and amended text generally, substituting present provisions for provisions authorizing payment of independent research and development or bid and proposal costs, encouraging contractors to engage in research and development activities, and authorizing advance agreements regarding the manner and extent in which the Department of Defense may pay independent research and development costs or bid and proposal costs.

   Enacted provision · exact public law section
   (1) Section 2372 of title 10, United States Code, is amended to read as follows: “§ 2372. Independent research and development and bid and proposal costs: payments to contractors “(a) Regulations.— 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. “(b) Costs Allowable as Indirect Expenses.— The regulations prescribed pursuant to subsection (a) shall provide that independent research and development and bid and proposal costs shall be allowable as indirect expenses on covered contracts to the extent that those costs are allocable, reasonable, and not otherwise unallowable by law or under the Federal Acquisition Regulation. “(c) Additional Controls.— Subject to subsection (f), the regulations prescribed pursuant to subsection (a) may include the following provisions: “(1) A limitation on the allowability of independent research and development and bid and proposal costs to work which the Secretary of Defense determines is of potential interest to the Department of Defense. “(2) For each of fiscal years 1993 through 1995, a limitation in the case of major contractors that the total amount of the independent research and development and bid and proposal costs that are allowable as expenses of the contractor’s covered segments may not exceed the contractor’s adjusted maximum reimbursement amount. “(3) Implementation of regular methods for transmission— “(A) from the Department of Defense to contractors, in a reasonable manner, of timely and comprehensive information regarding planned or expected Department of Defense future needs; and “(B) 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. “(d) Adjusted Maximum Reimbursement Amount.— For purposes of subsection (c)(2), the adjusted maximum reimbursement amount for a major contractor for a fiscal year is the sum of— “(1) the total amount of the allowable independent research and development and bid and proposal costs incurred by the contractor during the preceding fiscal year; “(2) 5 percent of the amount referred to in paragraph (1); and “(3) if the projected total amount of the independent research and development and bid and proposal costs incurred by the contractor for such fiscal year is greater than the total amount of the independent research and development and bid and proposal costs incurred by the contractor for the preceding fiscal year, the amount that is determined by multiplying the amount referred to in paragraph (1) by the lesser of— “(A) the percentage by which the projected total amount of such incurred costs for such fiscal year exceeds the total amount of the incurred costs of the contractor for the preceding fiscal year; or “(B) the estimated percentage rate of inflation from the end of the preceding fiscal year to the end of the fiscal year for which the amount of the limitation is being computed. “(e) Waiver of Adjusted Maximum Reimbursement Amount.— 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— “(1) is necessary to reimburse such contractor at least to the extent that would have been allowed under regulations as in effect on the day before the date of the enactment of the National Defense Authorization Act for Fiscal Years 1992 and 1993; or “(2) is otherwise in the best interest of the Government. “(f) Limitations on Regulations.— 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. “(g) Encouragement of Certain Contractor Activities.— The regulations under subsection (a) shall encourage contractors to engage in research and development activities of potential interest to the Department of Defense, including activities intended to accomplish any of the following: “(1) Enabling superior performance of future United States weapon systems and components. “(2) Reducing acquisition costs and life-cycle costs of military systems. “(3) Strengthening the defense industrial base and the technology base of the United States. “(4) Enhancing the industrial competitiveness of the United States. “(5) Promoting the development of technologies identified as critical under section 2522 of this title. “(6) Increasing the development and promotion of efficient and effective applications of dual-use technologies. “(7) Providing efficient and effective technologies for achieving such environmental benefits as improved environmental data gathering, environmental cleanup and restoration, pollution reduction in manufacturing, environmental conservation, and environmentally safe management of facilities. “(h) Major Contractors.— A contractor shall be considered to be a major contractor for the purposes of subsection (c) for any fiscal year if for the preceding fiscal year the contractor’s covered segments allocated to Department of Defense contracts a total of more than $10,000,000 in independent research and development and bid and proposal costs. “(i) Definitions.— In this section: “(1) Covered contract.— The term ‘covered contract’ has the meaning given that term in section 2324(m) of this title. “(2) Covered segment.— The term ‘covered segment’, with respect to a contractor, means a product division of the contractor that allocated more than $1,000,000 in independent research and development and bid and proposal costs to Department of Defense contracts during the preceding fiscal year. In the case of a contractor that has no product divisions, such term means the contractor as a whole.”.

4. 1992

   Wagner-O’Day Act

   Pub. L. 102–484 div. A title X § 1052(27) · 106 Stat. 2315

   Substituted · 10 U.S.C. § 3762(e)(1)

   Pub. L. 102–484 substituted “on December 4, 1991” for “on the day before the date of the enactment of the National Defense Authorization Act for Fiscal Years 1992 and 1993”

   Source evidence

   Code amendment note
   Subsec. (e)(1). Pub. L. 102–484 substituted “on December 4, 1991” for “on the day before the date of the enactment of the National Defense Authorization Act for Fiscal Years 1992 and 1993”.

   Enacted provision · exact public law section
   (27) Section 2372(e)(1) is amended by striking out “on the day before” and all that follows through the semicolon and inserting in lieu thereof “on December 4, 1991;”.

5. 1993

   Pub. L. 103–35 title II § 201(c)(5) · 107 Stat. 97

   Substituted · 10 U.S.C. § 3762(g)(5)

   Pub. L. 103–35 substituted “section 2506” for “section 2522”

   Source evidence

   Code amendment note
   Subsec. (g)(5). Pub. L. 103–35 substituted “section 2506” for “section 2522”.

   Enacted provision · exact public law section
   (5) Section 2372(g)(5) is amended by striking out “section 2522” and inserting in lieu thereof “section 2506”.

6. 1996

   National Defense Authorization Act for Fiscal Year 1996

   Pub. L. 104–106 div. D title XLIII § 4321(b)(11) · 110 Stat. 186

   Substituted · 10 U.S.C. § 3762(i)(1)

   Pub. L. 104–106 substituted “2324(l)” for “2324(m)”

   Source evidence

   Code amendment note
   Subsec. (i)(1). Pub. L. 104–106 substituted “2324(l)” for “2324(m)”.

   Enacted provision · exact public law section
   (11) Section 2372(i)(1) is amended by striking out “section 2324(m)” and inserting in lieu thereof “section 2324(1)”.

7. 2016

   National Defense Authorization Act for Fiscal Year 2017

   Pub. L. 114–328 div. A title VIII § 824(a)(1) · 130 Stat. 2000

   Amended · 10 U.S.C. § 3762

   Pub. L. 114–328 amended section generally. Prior to amendment, section related to payments to contractors for independent research and development and bid and proposal costs

   Source evidence

   Code amendment note
   Pub. L. 114–328 amended section generally. Prior to amendment, section related to payments to contractors for independent research and development and bid and proposal costs.

   Enacted provision · exact public law section
   (1) In general.— Section 2372 of title 10, United States Code, is amended to read as follows: “§ 2372. Independent research and development costs: allowable costs “(a) Regulations.— 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. Such regulations shall provide that expenses incurred for independent research and development shall be reported independently from other allowable indirect costs. “(b) Costs Treated as Fair and Reasonable, and Allowable, Expenses.— The regulations prescribed under subsection (a) shall provide that independent research and development costs shall be considered a fair and reasonable, and allowable, indirect expense on Department of Defense contracts. “(c) Additional Controls.— Subject to subsection (d), the regulations prescribed under subsection (a) may include the following provisions: “(1) Controls on the reimbursement of costs to the contractor for expenses incurred for independent research and development to ensure that such costs were incurred for independent research and development. “(2) Implementation of regular methods for transmission— “(A) from the Department of Defense to contractors, in a reasonable manner, of timely and comprehensive information regarding planned or expected needs of the Department of Defense for future technology and advanced capability; and “(B) from contractors to the Department of Defense, in a reasonable manner, of information regarding progress by the contractor on the independent research and development programs of the contractor. “(d) Limitations on Regulations.— Regulations prescribed under subsection (a) 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 if the chief executive officer of the contractor determines that expenditures will advance the needs of the Department of Defense for future technology and advanced capability as transmitted pursuant to subsection (c)(3)(A). “(e) Effective Date.— The regulations prescribed under subsection (a) shall apply to indirect costs incurred on or after October 1, 2017.” .

8. 2017

   National Defense Authorization Act for Fiscal Year 2018

   Pub. L. 115–91 div. A title X § 1081(a)(35) · 131 Stat. 1283

   Substituted · 10 U.S.C. § 3762(d)

   Pub. L. 115–91 substituted “subsection (c)(2)(A)” for “subsection (c)(3)(A)”

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 115–91 substituted “subsection (c)(2)(A)” for “subsection (c)(3)(A)”.

   Enacted provision · exact public law section
   (35) Section 2372 is amended by striking “subsection (c)(3)(A)” and inserting “subsection (c)(2)(A)”.

9. 2021

   William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021

   Pub. L. 116–283 div. A title XVIII § 1832(j)(2) · 134 Stat. 3388

   Changed · 10 U.S.C. § 3762

   Pub. L. 116–283 renumbered section 2372 of this title as this section

   Source evidence

   Code amendment note
   Pub. L. 116–283 renumbered section 2372 of this title as this section.

   Enacted provision · exact public law section
   (2) Transfer of sections on restructuring costs, allowability of independent research and development costs, and allowability of bid and proposal costs.— Sections 2325, 2372, and 2372a of title 10, United States Code, are transferred to subchapter II of chapter 273 of such title, as added by paragraph (1), inserted (in that order) after the table of sections, and redesignated as sections 3761, 3762, and 3763, respectively.

   Effective date note
   Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.

11 of 11 references resolved to an enrolled provision