Independent Research and Development(IR&D)
Company-funded R&D that contractors may recover as allowable indirect costs on defense contracts.
Overview
Independent Research and Development (IR&D) is research and development undertaken at the contractor's discretion, not under a specific contract. Under DoD rules, qualifying IR&D costs can be allocated as allowable indirect costs and recovered through overhead on defense contracts.
Why It Matters in GovCon
IR&D enables defense contractors to invest in technology and innovation while recouping a portion of costs through the overhead allocation to DoD contracts. Strict technical and cost accounting rules apply; noncompliance can result in cost disallowance.
Key Details
- DFARS 231.205-18: Governs allowability and allocability of IR&D.
- Technical Interchange: Contractors must engage in technical interchange with DoD before costs are allocable.
- B&P: Bid and Proposal (B&P) costs have separate rules but are often discussed with IR&D.
- Audit: DCAA reviews IR&D for allowability and allocability.
Related Terms
- Bid and Proposal (B&P)
- Indirect Cost
- DFARS
- DCAA
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