DoD Relaxes IR&D Technical Interchange Rules for Fiscal Year 2017

Last month, a new regulation requiring DoD contractors who expend more than $11 million a year on IR&D activities to engage in technical interchanges with DoD employees before the costs were incurred as a condition of allowability, went into effect (see Contractors Must Now Engage in Technical Exchanges with DoD Prior to Incurring IR&D Costs).

Many contractors are already in their fiscal years 2017 and for calendar year contractors, 2017 is just a month away. It seemed impractical, if impossible, for contractors to engage in constructive technical interchanges with DoD personnel in such a short period of time so DoD last week, relaxed the rules to allow discussion to occur sometime during fiscal year 2017 instead of requiring discussions prior to the incurrence of costs in 2017 (see Class Deviation - Enhancing the Effectiveness of Independent Research and Development).

The old and new requirements read as follows. Differences are italicized.

OLD: For IR&D projects initiated in the contractor's fiscal year 2017 and later, as a prerequisite for the subsequent determination of allowability, the contractor shall engage in a technical interchange with a technical or operational DoD Government employee before IR&D costs are generated so that contractor plans and goals for IR&D projects benefit from the awareness of and feedback by a DoD Government employee who is informed of related ongoing and future potential interest opportunities. 

NEW: For IR&D projects initiated in the contractor's fiscal year 2017, as a prerequisite for the subsequent determination of allowability, the contractor shall engage in a technical interchange with a technical or operational DoD Government employee sometime during the contractor's fiscal year 2017 so that contractor plans and goals for IR&D projects benefit from the awareness of and feedback by a DoD Government employee who is informed of related ongoing and future potential interest opportunities.

The class deviation applies only to contractor fiscal years 2017 and alleviates the requirement that the technical interchanges occur before costs are generated for IR&D projects initiated in the contractor's fiscal year 2017 to afford contractors a phase-in period to develop processes and procedures.