For official guidance or specific questions on allowability, please contact Defense Procurement Acquisition Policy (DPAP) at firstname.lastname@example.org. DPAP is responsible for all Contracting and Procurement policy matters including e-Business in the Department of Defense (DoD). DPAP executes that policy through the timely update of the DFARS, PGI, and 5000.1&2. Source: https://www.acq.osd.mil/dpap/.
Following are answers to Frequently Asked Questions, arranged by category:
Q: When does industry need to submit their IR&D projects into the Marketplace?
A: In February 2014, the Director, Defense Procurement and Acquisition Policy, put out a memo clarifying part of the DFARS rule and the submission timeframe for IR&D projects. For contractor FY 2012 and 2013 IR&D projects, the reporting period is extended to the end of contractor Fiscal Year 2014. In future years, contractors must report projects no later than three months after the end of the contractor's fiscal year.
Q: When does industry need to submit their annual IR&D project updates into the Marketplace?
A: Projects must be updated at least annually, and project summaries with updated project data must be submitted no later than 3 months after the end of the contractor fiscal year. For FY 2014 and going forward, “Follow On” project summary must use the same project title/internal tracking number as the “New Start,” and all fields (ie, expenditure and TRL) must be updated to show the progress of the project.
Q: How do we enter a “Follow-on Project” when none of the project details have changed from the prior year?
A: If none of the data has changed since the prior year, resubmit all of the project data and add the words “No Change from Prior Year’s Entry” at the end of the Project Summary field on the updated entry.
Q: What does industry need to submit into the Marketplace when the project is considered complete?
A: A final project summary with final project data must be submitted when the project is considered complete, and no later than three months after the end of the contractor fiscal year. For FY 2014 and going forward, these final project summaries must use the same project title/internal tracking number as the “New Start” and “Follow On” summaries, and be labeled “Complete.”
Q: If an organization needs to make a correction or change its IR&D project data after submission and during the same contractor fiscal year, how do we do it?
A: To change a record in the secure marketplace, you will need to contact email@example.com with the record number you were assigned when you entered the project. The administrator will work with you to manually update or replace the record; to ensure the security of your information please do not email any proprietary information.
Q: If I have a project that is a new start and is completed in the same contractor fiscal year, can I just add the project once as completed or do I need enter the project twice as a “New Start” and “Complete”?
A: If you enter a “New Start” project summary and then complete the project before the end of the same contractor fiscal year, you would need to submit a second project summary labeled “Complete,” updating all the fields to show the final status of the project. If you complete the project before entering a project summary for the year, you should only enter your completed project.
Q: In some cases, projects were started, but cancelled after a relatively small amount of money was spent, and little or no significant progress was made. Do we need to report these?
A: For costs to be allowable, a project summary needs to be submitted into the Defense Innovation Marketplace, as either a “New Start”, “Follow On” or “Completed” project. DoD understands that not all IR&D efforts will result in success. We are interested in the types of research underway and any updates that you have as it helps inform our R&D/S&T investment and policy decisions. To minimize any administrative burden, a brief two or three sentence descriptor for the IR&D projects where "a relatively small amount of money was spent/little or no significant progress" is all that is needed in the project summary section in the input field.
Q: Company A plans to spend approximately $3 Million dollars to do research on Project B. This year they plan to spend $2 Million on the Project and next year they plan to spend the remaining $1 million. What does the company put in “Approximate Expenditures?” Is this expenditure for the current year, the upcoming year or all approximate expenditures?
A: The company would put current fiscal year expenditure amounts in "Approximate Expenditures." In this example, $2 Million would be entered for this year and the remaining about ($1 Million) would be reported in the Follow On report in the next fiscal year.
In addition, when the project status is “Complete,” the contractor must submit a final updated project summary, including any project advances of interest, with updates to the narratives, Technology Readiness Level and expenditures.
Q: How do I receive a PIN so I can begin to input my Independent Research & Development (IR&D) data?
A: Go to https://www.defenseinnovationmarketplace.mil/input/irad/requestpin.htm and request your unique PIN.
Q: Can any firm enter IR&D project data into the Defense Innovation Marketplace (Marketplace)?
A: Yes. All current Department of Defense (DoD) contractors can request a unique PIN and enter their IR&D projects into the secure database.
Q: What methods are available to upload our IR&D project data?
A: Organizations can enter their IR&D data in one of two ways:
1) Individual Project via online submission: follow the prompts on the Marketplace to enter individual project data;
2) Multiple Projects via XML upload: follow the information provided on the Marketplace to enter many projects via XML/Batch;
An overview of the input fields and the two IR&D project delivery options is provided at http://defenseinnovationmarketplace.mil/industry.html.
Q: What are the security safeguards that have been put in place to protect organizations’ data?
A: The department has periodic security reviews of the Defense Innovation Marketplace that includes ensuring the security of the flow of data, firewalls and database accesses.
In addition, access restrictions are in place for:
- Upon request and verification, companies are issued a unique and secure PIN, which is required to enter data.
- Data entry is the only current functionality available; firms have no access to their information submitted into the site or to other firms’ information.
- Access to view IR&D project data is restricted to restricted to Department of Defense (DoD) federal employees or military service members with a direct interest in technology development or S&T planning and that have a Common Access Card (CAC).
- Employees of the U.S. Government are subject to the Trade Secrets Act, 18 U.S.C 1905. The Trade Secrets Act prevents government employees from revealing any confidential business information to which the employee has access through his or her employment. Violations of this Act are crimes, punishable by fine, imprisonment or both, and the employee will be removed from office.
Q: Who has access to the IR&D database and who is using it?
A: Access to search the database is restricted to Department of Defense (DoD) federal employees or military service members with a direct interest in technology development or S&T planning and that have a Common Access Card (CAC).
Q: How is this industry IR&D data being used?
A: The goal of sharing industry IR&D information is to better inform current and future acquisition and S&T program planning. Examples of current uses of the data include:
- DASD(RF): understand innovative technologies that may support immediate needs of warfighters.
- EW Priority Steering Council: improve understanding of performers and technologies.
- S&T Execs: support investment/disinvestment decisions based on technical maturity.
- Virtual IR&D Exchange: foster discussion between PMs & industry on current technology development.
Q: Are those Government users of the Search database sensitive to the Proprietary nature of the data?
A: Yes, access to use the database is restricted and information is marked on every screen and printout with appropriate markings. Employees of the U.S. Government are subject to the Trade Secrets Act, 18 U.S.C 1905. The Trade Secrets Act prevents government employees from revealing any confidential business information to which the employee has access through his or her employment. Violations of this Act are crimes, punishable by fine, imprisonment or both, and the employee will be removed from office.
Q: What are the benefits to the Contractor of sharing their IR&D project data?
A: There are two primary reasons that industry participates in IR&D:
- Reimbursement: Organizations are reimbursed a percentage of their IR&D expenditures through their contracted overhead costs.
- Sharing their R&D efforts with potential customers: With the new database, companies have an opportunity to share their IR&D projects with a broader group of DoD customers than ever before. Evidence of this is that more than half of the projects in the database are from companies that are not required to submit their IR&D projects.
Q: What additional demands on industry do you see this creating, i.e., additional inquiries
from government agencies, etc.?
A: The beta Search functionality of the IR&D search opened in May 2013 and we have heard that this sharing of IR&D data has helped streamline efforts with sharing proprietary data in a secure way particularly with Service Technology Interchanges.
Q: Who owns the technical data rights for industry's IR&D projects?
A: Generally speaking, the rights in technical data produced by an entity using its own independent research and development (IR&D) funds are "owned" by that entity, even if all or a portion of those costs are included in the IR&D and Bid and Proposal (B&P) cost pool of that entity and are reimbursed by the government as an indirect cost on a government contract.
Q: What guidance is given to Government users about protecting industry's proprietary IR&D data?
A: Employees of the United States government are subject to the Trade Secrets Act, 18 U.S.C 1905. The Trade Secrets Act prevents government employees from revealing any confidential business information to which the employee has access through his or her employment. Violations of this Act are crimes, punishable by fine, imprisonment, or both, and the employee will be removed from office.
As a reminder of the sensitivity of the information to be submitted to the secure IR&D database, we have put on the logon page to the database a reminder to all authorized users that the content of the database is subject to the restrictions of the Trade Secrets Act. Only government employees will have access to the IR&D database.
Q: Should projects generating IR&D costs under cooperative research and development agreements (CRADAs) be reported into the IR&D database? **Updated 6/19/14**
A: Projects generating IR&D costs incurred pursuant to FAR 31.205-18(e) (IR&D costs contributed by contractors in performing cooperative research and development agreements) should be reported. Contractor contributions will be considered as allowable IR&D costs if the work performed would have been allowed as contractor IR&D had there been no cooperative agreement. Only that portion of the IR&D costs "contributed by the contractor" (not that portion paid or to be paid by the government under the cooperative research and development agreement) should be reported into the IR&D database when entering the project summary.
Q: Which companies are required to submit their IR&D data into the Defense Innovation Marketplace?
A: The Defense Federal Acquisition Regulation Supplement (DFARS) rule applies to major contractors (defined in DFARS 231.205-18(a)(iii)), or firms that receive reimbursements totaling more than $11 million in IR&D/Bid and Proposal costs to covered contracts. The rule also encourages firms that fall below the $11 million threshold to voluntarily submit IR&D project data so that department acquisition and R&D/S&T program managers can gain visibility and leverage their projects.
Q: Are aggregate IR&D totals considered since the threshold for companies that are required to submit is $11M?
A: Only major contractors are required to submit IR&D project summaries. The definition of a major contractor is a firm that expends $11M or more in combined IR&D and B&P in a given fiscal year.
Q: For projects to be considered "allowable”, does a project summary need to be completed for each one?
A: Yes, for the claimed project costs (however small; if cancelled soon after starting) to be considered allowable, the project summaries must be posted.
Q: In some cases, projects were started, but cancelled after a relatively small amount of money was spent, and little or no significant progress was made. Do we need to report these?
A: For costs to be allowable, a project summary needs to be completed. DoD understands that not all IR&D efforts will result in success. We are interested in the types of research underway as it informs our R&D/S&T investment and policy decisions. To minimize any administrative burden, a brief two or three sentence descriptor for the IR&D projects where "a relatively small amount of money was spent/little or no significant progress " is all that is needed in the project summary section in the input field.
Q: Is there a spending threshold that we can use as a general rule of thumb, or a percent complete number, to determine if each projects should be reported through the Marketplace?
A: There is no spending threshold; project summaries must be submitted for all IR&D expenses where the firm is seeking reimbursement from DoD.
Q: Should all projects be reported regardless of the progress made or amount of money spent?
A: Yes. Project summaries must be submitted for all IR&D expenses where the firm is seeking reimbursement from DoD.
Q: Since IR&D is a period cost, there may be carry-over costs from the prior year to finish outstanding operations builds, administrative costs, project management, etc. Are these types of costs considered allowable?
A: Once the project is posted and reviewed/updated at least annually, the costs incurred until completion of billing, etc. can be claimed and properly considered for allowability. The project should be closed when all the charge numbers etc. are closed.
Q: Are all of the allowability decisions left up to the ACO, or are more thorough guidelines published somewhere?
A: Allowability decisions are left to the ACO by following criteria from 10 USC 2372.
- Enabling superior performance of future United States weapon systems and components.
- Reducing acquisition costs and life-cycle costs of military systems.
- Strengthening the defense industrial base and the technology base of the United States.
- Enhancing the industrial competitiveness of the United States.
- Promoting the development of technologies identified as critical under section 2506 of this title.
- Increasing the development and promotion of efficient and effective applications of dual-use technologies.
- 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.
Q: Is the allowable dollar value of each IR&D effort reconciled with our submissions in some fashion?
A: No, the dollar value provided in the project summaries is used solely to get an understanding of the size of the project. DoD understands this to be an estimate so DCMA/DCAA do not use it as a source to reconcile invoices.
Q: To comply with DFARS, do companies have to submit project data for classified projects?
A: No, the DFARS rule requiring companies to provide project data only applies to unclassified projects. Classified projects submitted for allowability consideration to the ACO should use whatever processes the ACO established prior to the release of the new DFARS rule.
Q: Are there penalties for non-compliance?
A: Yes. DFARS 231.205-18(c)(iii)(C) is very explicit: “For a contractor’s annual IR&D costs to be allowable, the IR&D projects generating the costs must be reported…” The regulation is very specific on what criteria must be met for the costs to be allowable. Because there is no uncertainty in this position, the costs are “expressly unallowable” and therefore subject to the penalty provision of FAR 42.709-1. Specifically, major contractors with IR&D costs incurred after the effective date of the rule (January 30, 2012) are required to submit their project data before the company's annual incurred cost final rate submission in order to support the allowability of the claimed IR&D.
Q: Will the determination of cost allowability of a project be made by the Cognizant ACO at the time of audit?
A: Yes. The ACO will make the determination of cost allowability of a project based on the facts available during the audit and ACO review.
- For projected costs in forward pricing rates, the ACO will assume that the contractor intends to comply, unless the contractor demonstrates by word or deed that it does not intend to comply.
- For incurred costs, the contractor will demonstrate compliance just as it does for all other costs it proposes to be allowed as incurred costs.
Q: Does this new Rule pertain to prior years, or just starting in 2012?
A: This rule is not retroactive and does not require entry of IR&D from years prior to 2012.
Q: What is the guideline for reporting projects less than $50,000?
A: Major contractors are required to report all IR&D projects that are claimed as allowable costs. The $50,000 amount was originally used to distinguish contractors by size, and was never meant to identify projects by size for reporting.
Q: What technologies are critical under 10 U.S.C. 2372?
A: The Administrative Contracting Officer (ACO) will determine if a claimed IR&D project meets the allowability criteria of potential interest to the Department of Defense. The term "critical technologies" is further discussed at 10 USC 2506 and 10 USC 2501(a); however, the determination of potential interest is a judgment made by the ACO.
Q: Company A received $3 Million dollars to do research on Project B. This year they plan to spend $2 Million on the Project and next year they plan to spend the remaining $1 million. What does the company put in “Approximate Expenditures?” Is this expenditure for the current year, the upcoming year or all approximate expenditures?
A: The company would put current fiscal year expenditure amounts in "Approximate Expenditures." In this example, $2 Million would be entered for this year and the remaining about ($1 Million) would be reported the next fiscal year.
Q: Who is leading the updates to the Independent Research & Development (IR&D) program?
A: The Assistant Secretary of Defense for Research and Engineering (ASD(R&E)) will manage the current IR&D efforts. ASD(R&E) is coordinating with the Deputy Assistant Secretary of Manufacturing and Industrial Base Policy, Defense Contracts Management Agency, Defense Procurement Acquisition Policy, Defense Technical Information Center and the Services.
Q: Why was a DFARS rule needed to collect this information?
A: In the 1990s, DoD reduced its technical exchanges with industry, in part to ensure the independence of research and development. Since this time, there has been a loss of visibility into the technical opportunities available from industry's IR&D investments and an updated DFARS rule was a mechanism to do this.