But it’s close enough for government work.) Thus, the value of any IRAD projects, for price evaluation purposes, is not the value of the IRAD projects- the value for price evaluation purposes is in fact the value of the IRAD projects that ends up being allocated to the awarded contract after it is awarded. (It’s commonly held that IR&D and B&P costs are part of G&A. You heard it here first.)Īdditionally, if this proposed methodology is implemented we’ll all have to deal with the fact that IRAD projects are allocated to final cost objectives using the same base as is used to allocate G&A expense. But you wait and see how many auditors assert those notional IR&D project values are actually cost or pricing data. Because cost or pricing data are facts, not estimates.
… If a contractor puts those notional values into its proposal, does that make those estimates certified cost or pricing data? If those notional values are certified cost or pricing data, then if the contractor spends less than ‘promised’-is that somehow defective pricing? (Well, no. It is subject to change based on the financial fortunes of the company and the whims of management. … the value of any related future IR&D projects is an estimated value. When the DAR Council issued its Advanced Noticed of Proposed Rule Making (ANPRM) we commented as follows. We must (once again) tell you we saw this one coming long ago, and warned our readers about it. If the Offeror, in the performance of any contract resulting from this solicitation, intends to use IR&D to meet the contract requirements, the Offeror's proposal shall include documentation in its price proposal to support this proposed approach.įor evaluation purposes only, the Contracting Officer will adjust the Offeror's total evaluated cost or price to include the amount that such future IR&D investments reduce the price of the proposal. The proposed rule, if finalized as drafted, would dramatically affect how Source Selection Teams evaluate offerors’ prices during a competition.
At the same time, a proposed DFARS rule change was issued that would also impact contractors’ IRAD projects. We already wrote about the final DFARS rule that conditions the allowability of contractors’ Independent Research & Development (IR&D or IRAD) costs on having “informal technical exchanges” with unspecified DOD officials prior to incurring those costs.
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