Posted on Sep 22, 2015
What do you think about DoD Issuing a White Paper Aimed at IR&D Costs?
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What do you think about DoD Issuing a White Paper Aimed at IR&D Costs?
This isn't as exciting as most posts or discussions, but it does have a big impact on spending and costs.
RP Members is this a good step in the right direction for DoD to get a handle on Defense Contractor Costs?
http://www.natlawreview.com/article/dod-issues-white-paper-aimed-ird-costs
On August 26, 2015, the Department of Defense (“DOD”) issued a White Paper announcing that, beginning in FY 2017, all defense contractors will be required to notify DOD before undertaking any new Independent Research and Development (“IR&D”) projects if contractors would like their IR&D costs to be deemed allowable. Entitled “Enhancing the Effectiveness of Independent Research and Development,” the White Paper explains that both DOD and the Industrial Base need to work together to ensure the department has visibility into “government-reimbursed IR&D efforts.” Specifically, the White Paper states, “[t]o ensure that a two way dialogue occurs between the Department and IR&D performing organizations and to provide for some minimum oversight of IR&D, the department believes that proposed new IR&D efforts should be communicated to appropriate DOD personnel prior to the initiation of these investments and that results from these investments should also be shared with appropriate DOD personnel.”
This isn't as exciting as most posts or discussions, but it does have a big impact on spending and costs.
RP Members is this a good step in the right direction for DoD to get a handle on Defense Contractor Costs?
http://www.natlawreview.com/article/dod-issues-white-paper-aimed-ird-costs
On August 26, 2015, the Department of Defense (“DOD”) issued a White Paper announcing that, beginning in FY 2017, all defense contractors will be required to notify DOD before undertaking any new Independent Research and Development (“IR&D”) projects if contractors would like their IR&D costs to be deemed allowable. Entitled “Enhancing the Effectiveness of Independent Research and Development,” the White Paper explains that both DOD and the Industrial Base need to work together to ensure the department has visibility into “government-reimbursed IR&D efforts.” Specifically, the White Paper states, “[t]o ensure that a two way dialogue occurs between the Department and IR&D performing organizations and to provide for some minimum oversight of IR&D, the department believes that proposed new IR&D efforts should be communicated to appropriate DOD personnel prior to the initiation of these investments and that results from these investments should also be shared with appropriate DOD personnel.”
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Posted 9 y ago
Responses: 7
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Having been a government contractor for well over 25 years I have some serious concern with this policy. IR&D is internal company money not government provided funding. Very often the technologies being developed internally will have at a minimum a duel use application commercial and military. The commercial development will almost always, due to the very same ponderous oversight and procurement process imposed by DoD, accelerate much faster then the government application. Government oversight at this stage is a drag on such programs . This amounts to nothing more then a make work opportunity for an overstaffed government workforce that should be downsized instead of eliminating war fighters.
That said the government does have a ligitamate need to know what it is paying for and to get a fair return on its investment. If you have been a government contractor you know they already have policies and programs in place to manage that. Anyone out there ever spend a month with their "friendly" DCAA auditor. I for one would rather have a root canal but I digress.
Less intrusion into business is the better course for continued innovation in the private sector. If it's government R&D provided through the appropriated funding process then oversight it is.... If it is Internal R&D stay out till I invite you in. If you want to buy it then we talk.
That said the government does have a ligitamate need to know what it is paying for and to get a fair return on its investment. If you have been a government contractor you know they already have policies and programs in place to manage that. Anyone out there ever spend a month with their "friendly" DCAA auditor. I for one would rather have a root canal but I digress.
Less intrusion into business is the better course for continued innovation in the private sector. If it's government R&D provided through the appropriated funding process then oversight it is.... If it is Internal R&D stay out till I invite you in. If you want to buy it then we talk.
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Suspended Profile
I think notifying congress for R&D expenses for acquisition cost can work because they already do that in the engineers. The engineers need to notify congress 60 days to several years for contingency construction for unlimited dollars and the Army Corps of Engineers use earned value management (EVM) to make sure the project is on time and on budget from all stages. Expected Cost overruns for major construction need notification to congress. You can overrun minor projects up to 2.5 million. It's all going to come down to how material those independent reviews are. In engineering, quality assurance, independent reviews has been best practice for 50 years for the engineering profession inside and outside the DOD. In R&D in 2015, I'm not sure, but it technology could warrant it.
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I see the intent here, but it has some 2nd and 3rd order effects that may not make this worth it. IR&D helps us a lot in improving our equipment and developing new capabilities. When they do IR&D they do so at their own risk, if we don't buy it then they eat the cost. If we do buy it than we eat the cost. As a general rule DOD lacks innovation and this process will probably compound the problem in reducing the innovation that contractors bring to the table. After all the contractor's strength is their ability to innovate free of the bureaucracy, if we attempt to impose the bureaucratic process in this area, it may come back to bite us. I think a better way to look at costs is to go Commercial Off the Shelf (COTS) as much as possible. Sure on some things we can't do that but there are plenty of places where we can but don't.
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