We reported in December 2016 that the Department of Defense had issued a final DFARS rule requiring major contractors to engage in technical interchanges with the DOD before such costs are generated.  These interchanges were required to “improve the effectiveness of independent research and development (IR&D) investments by the defense industrial base” that are reimbursed as allowable costs.

On September 14, 2017, Shay Assad, DOD Director, Defense Pricing, issued a Class Deviation 2017-O0010 directing contracting officers, effective immediately, to NOT require a major contractor (defined at DFARS 231.207-18(c)(iii)) to engage in or document a technical interchange, as described in DFARS 231.205-18(c)(iii)(C)(4) as part of the criteria for determining contractor’s annual IR&D costs as allowable.

The contractor still needs to report at least annually IR&D projects to the Defense Technical Information Center (DTIC) using the online input form as a condition of allowability (https://www.defenseinnovationmarketplace.mil)

This deviation is effective until it is incorporated in the DFARS or until this class deviation is otherwise rescinded. Questions should be directed to Mr. Mark Gomersall at 571-372-6099 / mark.r.gomersall.civ@mail.mil.