§3763 Bid and proposal costs: allowable costs

Summary

The Secretary of Defense must make rules for how the Department of Defense pays contractors for costs of preparing bids and proposals. The rules must require that those costs be reported separately from other indirect costs. Under the rules, bid and proposal costs can be paid as indirect costs on "covered contracts" (see section 3741) if the costs can be assigned to the contract, are reasonable, and are not otherwise barred by law or the Federal Acquisition Regulation. Each year the Secretary must set a goal so that reimbursed bid and proposal costs do not exceed 1% of total industry sales to the Department of Defense. The Secretary may not refuse to pay allowable costs for the covered year just to meet that goal. If the Department goes over the goal in a fiscal year, the Secretary must, within 180 days, set up an advisory panel of nine acquisition experts (supported by the Defense Acquisition University and the National Defense University). The panel must have members from both public and private backgrounds, review laws and practices that drive bid and proposal costs, and recommend ways to reduce them. The panel must send an interim report in six months and a final report in one year, and ends when the final report is sent. The Secretary may use the Acquisition Workforce Development Fund to support the panel. The rules apply to indirect costs incurred on or after October 1, 2017.