IR&D Frequently Asked Questions
This page is a compilation of Frequently Asked Questions received to date categorized as:
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: http://www.acq.osd.mil/dpap/.
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/requestpin.htm and request your unique PIN.
Q: Can any firm enter IR&D project data into the Defense Innovation Marketplace (Marketplace)?
A: Upon request, all current Department of Defense (DoD) contractors will be provided a PIN to enter their IR&D project data into the Marketplace. Go to https://www.defenseinnovationmarketplace.mil/input/requestpin.htm to request your unique PIN.
Q: What methods are available to upload our IR&D project data?
A: Firms/contractors can enter the data in any of the following formats:
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 on the Marketplace to enter many projects via XML/Batch;
An overview of the new 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 firms' data?
A: The department hired an independent team to perform a security review of the Defense Innovation Marketplace. The review included the flow of data, firewalls and database accesses that are tied to the Defense Innovation Marketplace.
In addition, access restrictions are in place for:
- Upon request and verification, companies will be issued a unique and secure PIN, which is required to enter data.
- The PIN must be used to access the site to enter data; no other functionality is available to industry beyond data entry. Firms have no access to information submitted by other PIN holders.
- Access to view IR&D project data is restricted to only those Government Personnel granted access based on a defined requirement.
Q: If an organization needs to make an update or change our IR&D project data, how do we do it?
A: To have a record updated in the secure marketplace, you will need to contact email@example.com with the project number/ascension number you were given when you entered the project. The administrator will work with you to manually update or replace the record. This process enhances security protocols.
Q. Who has access to the IR&D database and who is using it?
A: Access to industry data is restricted and protected. Those that use the database are required to be DoD personnel; have CAC card; and have a valid need for access. There are also a limited number of contractors from the ASD(R&E) staff and DTIC support that have access to develop and refine the SEARCH site and its functionality.
Q. How is this industry IR&D data being used?
A: The goal of this BBP initiative is to reinvigorate innovation. The specific uses of the data are a product of the responsibilities of the users. Examples of approximate and actual use 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. Information is treated the same as all other proprietary information.
Q. What are the benefits to the Contractor of sharing their IR&D project data?
A: As evidenced by possible uses above, submitting information into the IR&D projects database provides visibility of technology development to relevant S&T PMs and Senior leaders in the Department.
Q. What additional demands on industry do you see this creating, i.e., additional inquiries from government agencies, etc.?
A: The Beta test of SEARCH begins in April and we welcome your feedback on engagement with DoD personnel either positively or negatively moving forward.
Q. Is or will there be a systematic review and evaluation of our IR&D project descriptions?
A: Inputs are currently in the early stages and we don’t yet have one entire Fiscal Year of data. So there are no initial plans for a comprehensive review of the IR&D projects but the intent is to use the information to support strategic planning and influence investment decisions.
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 this database.
Q.While reviewing Federal Register DFARS, "The requirement to determine the allowability of IR&D costs is a pre-established requirement in 231.205-18(c)(iii)(B), which sets forth that allowable IRAD/B&P costs are limited to those for projects that are of "potential" interest to DoD. For costs to be allowable, the IR&D projects generating the costs must be reported to the DTIC." 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: DoD understands that not all IR&D efforts will result in success. We are interested in the types of research underway among firms in the defense industrial base as it informs our S&T investment and policy decisions. The data information provided in the IR&D project summaries is a key data source to inform these decisions. To minimize your administrative burden, a brief two or three sentence for IR&D projects where "a relatively small amount of money was spent and little or no significant progress was made" is all that is needed in the project summary section of the DTIC form.
Q.For these projects to be considered "allowable”, does a DTIC project summary need to be completed for each one?
A: Yes, for the claimed project costs (however small) to be considered allowable, the project summaries must be posted.
Q. If a DTIC project summary is not completed for each project (projects were started, but cancelled after a
relatively small amount of money was spent, and little or no significant progress was made) are the costs
A: If the costs of projects are claimed for a contractor fiscal year, the project summaries for the projects generating the costs must be posted.
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 are carry-over costs from the prior year, to finish outstanding operations builds and/or to receive invoices that were outstanding at the end of the year, as well as annual administrative costs for project management and schedule management. 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 these allowability decisions left up to the ACO, or are more thorough guidelines published somewhere?
A: 10 USC 2372 provides for IR&D allowability as long as any of the following conditions are met. The ACO uses these criteria when
- 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. Are aggregate IR&D totals considered since the threshold for companies that are required to submit it $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. 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. 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 science and technology (S&T) program managers can gain visibility and leverage their projects.
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: Will mandatory compliance be required for 2012?
A: Yes. If IR&D costs for major contractors have been incurred after the effective date of the rule (January 30, 2012), compliance will be required.
The rule also encourages firms that fall below the $11 million threshold to voluntarily submit IR&D project data so that Department acquisition and science and technology (S&T) program managers can gain visibility and leverage their projects.
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 to the Defense Technical Information Center (DTIC)…” 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: Will industry be required to report all their IR&D in 2012?
A: Major contractors are required to report 2012 IR&D data for projects whose costs are submitted in the 2012 incurred cost final rate submission. The period for the report is Jan 30, 2012 to Dec 31, 2012, or the end date of the firm’s 2012 FY, whichever is later. No data submission is required if the firm chooses not to seek reimbursement and does not include the IR&D project expenses in the incurred cost final rate submission.
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 past IR&D projects into the Defense Innovation Marketplace.
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, 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. The new DFARS rule provides the needed mechanism for industry to submit their IR&D project data most quickly and will help strengthen communication between industry and government.