Title 10 — Armed ForcesRelease 119-73
§3762 Independent research and development costs: allowable costs
Title 10 › Subtitle Subtitle A— - General Military Law › Part PART V— - ACQUISITION › Subpart Subpart D— - General Contracting Provisions › Chapter CHAPTER 273— - ALLOWABLE COSTS › Subchapter SUBCHAPTER II— - OTHER ALLOWABLE COST PROVISIONS › § 3762
Summary
The Secretary of Defense must make rules for how the Department of Defense pays contractors for independent research and development (IR&D). The rules must make IR&D costs reportable separately from other indirect costs and must treat those costs as fair, reasonable, and allowable on DoD contracts. The rules may include checks to prove costs were for IR&D and ways for DoD to tell contractors about future technology needs and for contractors to report IR&D progress. The rules cannot stop a contractor from choosing its own technologies if the contractor’s chief executive officer decides the spending supports DoD needs the Department communicated. The rules apply to indirect costs incurred on or after October 1, 2017.
Full Legal Text
Title 10, §3762
Armed Forces — Source: USLM XML via OLRC
(a)The Secretary of Defense shall prescribe regulations governing the payment by the Department of Defense of expenses incurred by contractors for independent research and development costs. Such regulations shall provide that expenses incurred for independent research and development shall be reported independently from other allowable indirect costs.
(b)The regulations prescribed under subsection (a) shall provide that independent research and development costs shall be considered a fair and reasonable, and allowable, indirect expense on Department of Defense contracts.
(c)Subject to subsection (d), the regulations prescribed under subsection (a) may include the following provisions:
(1)Controls on the reimbursement of costs to the contractor for expenses incurred for independent research and development to ensure that such costs were incurred for independent research and development.
(2)Implementation of regular methods for transmission—
(A)from the Department of Defense to contractors, in a reasonable manner, of timely and comprehensive information regarding planned or expected needs of the Department of Defense for future technology and advanced capability; and
(B)from contractors to the Department of Defense, in a reasonable manner, of information regarding progress by the contractor on the independent research and development programs of the contractor.
(d)Regulations prescribed under subsection (a) may not include provisions that would infringe on the independence of a contractor to choose which technologies to pursue in its independent research and development program if the chief executive officer of the contractor determines that expenditures will advance the needs of the Department of Defense for future technology and advanced capability as transmitted pursuant to subsection (c)(2)(A).
(e)The regulations prescribed under subsection (a) shall apply to indirect costs incurred on or after October 1, 2017.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2021—Pub. L. 116–283 renumbered section 2372 of this title as this section. 2017—Subsec. (d). Pub. L. 115–91 substituted “subsection (c)(2)(A)” for “subsection (c)(3)(A)”. 2016—Pub. L. 114–328 amended section generally. Prior to amendment, section related to payments to contractors for independent research and development and bid and proposal costs. 1996—Subsec. (i)(1). Pub. L. 104–106 substituted “2324(l)” for “2324(m)”. 1993—Subsec. (g)(5). Pub. L. 103–35 substituted “section 2506” for “section 2522”. 1992—Subsec. (e)(1). Pub. L. 102–484 substituted “on December 4, 1991” for “on the day before the date of the enactment of the National Defense Authorization Act for Fiscal Years 1992 and 1993”. 1991—Pub. L. 102–190 substituted section catchline for one which read “Independent research and development” and amended text generally, substituting present provisions for provisions authorizing payment of independent research and development or bid and proposal costs, encouraging contractors to engage in research and development activities, and authorizing advance agreements regarding the manner and extent in which the Department of Defense may pay independent research and development costs or bid and proposal costs. Subsec. (d)(2)(B). Pub. L. 102–25 substituted “subsection (b), including” for “subsection (b) or”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2021 AmendmentAmendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.
Effective Date
of 1996 AmendmentFor
Effective Date
and applicability of amendment by Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set out as a note under section 2220 of this title.
Effective Date
of 1991 Amendment Pub. L. 102–190, div. A, title VIII, § 802(e), Dec. 5, 1991, 105 Stat. 1414, provided that: “The
Amendments
made by this section [amending this section and section 4501 of this title] shall take effect on October 1, 1992, and shall apply to independent research and development and bid and proposal costs incurred by a contractor during fiscal years of that contractor that begin on or after that date.”
Regulations
Pub. L. 102–190, div. A, title VIII, § 802(b), Dec. 5, 1991, 105 Stat. 1414, provided that: “The Secretary of Defense shall prescribe proposed
Regulations
to implement the amendment made by subsection (a)(1) [amending this section] not later than April 1, 1992, and shall prescribe final
Regulations
for that purpose not later than June 1, 1992.”
Reference
Citations & Metadata
Citation
10 U.S.C. § 3762
Title 10 — Armed Forces
Last Updated
Apr 6, 2026
Release point: 119-73