§3763 — Title 10 Armed Forces | U.S. Code

Summary

The Secretary of Defense must write rules for how the Department of Defense pays contractors for bid and proposal costs. Those rules must make contractors report those costs separately from other indirect costs. Bid and proposal costs can be paid as indirect expenses on covered contracts (see section 3741 for what those are) if the costs can be fairly assigned to the contract, are reasonable, and are not forbidden by law or the Federal Acquisition Regulation. Each year the Secretary must set a goal so that reimbursed bid and proposal costs are no more than 1% of total industry sales to the Department of Defense. The rules apply to costs incurred on or after October 1, 2017. If the Department goes over that 1% goal in any year, the Secretary must create an advisory panel within 180 days. The panel gets administrative help from the Defense Acquisition University and the National Defense University. It must have nine experts chosen to reflect different public and private experience. The panel will review the laws, rules, and practices that led to the extra costs and suggest changes. It must send an interim report in six months and a final report in one year, and it ends when the final report is sent. The Secretary may use the Acquisition Workforce Development Fund to help pay for the panel.

Title 10, §3763

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 bid and proposal costs. Such regulations shall provide that expenses incurred for bid and proposal costs shall be reported independently from other allowable indirect costs.

(b)The regulations prescribed under subsection (a) shall provide that bid and proposal costs shall be allowable as indirect expenses on covered contracts, as defined in section 3741 of this title, to the extent that those costs are allocable, reasonable, and not otherwise unallowable by law or under the Federal Acquisition Regulation.

(c)The Secretary shall establish a goal each fiscal year limiting the amount of reimbursable bid and proposal costs paid by the Department of Defense to an amount equal to not more than one percent of the total aggregate industry sales to the Department of Defense. To achieve such goal, the Secretary may not limit the payment of allowable bid and proposal costs for the covered year.

(d)(1)If the Department of Defense exceeds the goal established under subsection (c) for a fiscal year, within 180 days after exceeding the goal, the Secretary shall establish an advisory panel. The panel shall be supported by the Defense Acquisition University and the National Defense University, including administrative support.

(2)The panel shall be composed of nine individuals who are recognized experts in acquisition and procurement policy appointed by the Secretary. In making such appointments, the Secretary shall ensure that the members of the panel reflect diverse experiences in the public and private sector.

(3)The panel shall review laws, regulations, and practices that contribute to the expenses incurred by contractors for bids and proposals in the fiscal year concerned and recommend changes to such laws, regulations, and practices that may reduce expenses incurred by contractors for bids and proposals.

(4)(A)Not later than six months after the establishment of the panel, the panel shall submit to the Secretary and the congressional defense committees an interim report on the findings of the panel.

(B)Not later than one year after the establishment of the panel, the panel shall submit to the Secretary and the congressional defense committees a final report on the findings of the panel.

(5)The panel shall terminate on the day the panel submits the final report under paragraph (4)(B).

(6)The Secretary of Defense may use amounts available in the Department of Defense Acquisition Workforce Development Fund established under section 1705 of this title to support the activities of the panel established under this subsection.

(e)The regulations prescribed under subsection (a) shall apply to indirect costs incurred on or after October 1, 2017.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2021—Pub. L. 116–283, § 1832(j)(2), renumbered section 2372a of this title as this section. Subsec. (b). Pub. L. 116–283, § 1832(j)(4), substituted “section 3741” for “section 2324(l)”.

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.

§3763 Bid and Proposal Costs: Allowable Costs