10 U.S.C. § 3763 — Bid and proposal costs: allowable costs

Page 2547 TITLE 10—ARMED FORCES § 3763 and allowable, indirect expense on Department of Defense contracts. (c) ADDITIONAL CONTROLS.—Subject to sub- section (d), the regulations prescribed under subsection (a) may include the following provi- sions: (1) Controls on the reimbursement of costs to the contractor for expenses incurred for independent research and development to en- sure that such costs were incurred for inde- pendent 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 re- garding planned or expected needs of the De- partment of Defense for future technology and advanced capability; and (B) from contractors to the Department of Defense, in a reasonable manner, of informa- tion regarding progress by the contractor on the independent research and development programs of the contractor. (d) LIMITATIONS ON REGULATIONS.—Regulations prescribed under subsection (a) may not include provisions that would infringe on the independ- ence of a contractor to choose which tech- nologies to pursue in its independent research and development program if the chief executive officer of the contractor determines that ex- penditures will advance the needs of the Depart- ment of Defense for future technology and ad- vanced capability as transmitted pursuant to subsection (c)(2)(A). (e) EFFECTIVE DATE.—The regulations pre- scribed under subsection (a) shall apply to indi- rect costs incurred on or after October 1, 2017. (Added Pub. L. 101–510, div. A, title VIII, § 824(a)(1), Nov. 5, 1990, 104 Stat. 1603, § 2372; amended Pub. L. 102–25, title VII, § 701(c), Apr. 6, 1991, 105 Stat. 113; Pub. L. 102–190, div. A, title VIII, § 802(a)(1), Dec. 5, 1991, 105 Stat. 1412; Pub. L. 102–484, div. A, title X, § 1052(27), Oct. 23, 1992, 106 Stat. 2500; Pub. L. 103–35, title II, § 201(c)(5), May 31, 1993, 107 Stat. 98; Pub. L. 104–106, div. D, title XLIII, § 4321(b)(11), Feb. 10, 1996, 110 Stat. 672; Pub. L. 114–328, div. A, title VIII, § 824(a)(1), Dec. 23, 2016, 130 Stat. 2277; Pub. L. 115–91, div. A, title X, § 1081(a)(35), Dec. 12, 2017, 131 Stat. 1596; renumbered § 3762, Pub. L. 116–283, div. A, title XVIII, § 1832(j)(2), Jan. 1, 2021, 134 Stat. 4225.) 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 ‘‘sub- section (c)(2)(A)’’ for ‘‘subsection (c)(3)(A)’’. 2016—Pub. L. 114–328 amended section generally. Prior to amendment, section related to payments to contrac- tors 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 ‘‘sec- tion 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 develop- ment’’ 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 inde- pendent research and development costs or bid and pro- posal costs. Subsec. (d)(2)(B). Pub. L. 102–25 substituted ‘‘sub- section (b), including’’ for ‘‘subsection (b) or’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment 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 AMENDMENT For 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.’’ § 3763. Bid and proposal costs: allowable costs (a) REGULATIONS.—The Secretary of Defense shall prescribe regulations governing the pay- ment by the Department of Defense of expenses incurred by contractors for bid and proposal costs. Such regulations shall provide that ex- penses incurred for bid and proposal costs shall be reported independently from other allowable indirect costs. (b) COSTS ALLOWABLE AS INDIRECT EXPENSES.— The regulations prescribed under subsection (a) shall provide that bid and proposal costs shall be allowable as indirect expenses on covered con- tracts, as defined in section 3741 of this title, to the extent that those costs are allocable, rea- sonable, and not otherwise unallowable by law or under the Federal Acquisition Regulation. (c) GOAL FOR REIMBURSABLE BID AND PROPOSAL COSTS.—The Secretary shall establish a goal each fiscal year limiting the amount of reim- bursable bid and proposal costs paid by the De- partment of Defense to an amount equal to not more than one percent of the total aggregate in- dustry 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) PANEL.—(1) If the Department of Defense exceeds the goal established under subsection (c) Page 2548 TITLE 10—ARMED FORCES § 3763 for a fiscal year, within 180 days after exceeding the goal, the Secretary shall establish an advi- sory 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 indi- viduals who are recognized experts in acquisi- tion 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 in- curred 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 contrac- tors for bids and proposals. (4)(A) Not later than six months after the es- tablishment 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 establish- ment of the panel, the panel shall submit to the Secretary and the congressional defense com- mittees 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 Acquisi- tion Workforce Development Fund established under section 1705 of this title to support the ac- tivities of the panel established under this sub- section. (e) EFFECTIVE DATE.—The regulations pre- scribed under subsection (a) shall apply to indi- rect costs incurred on or after October 1, 2017. (Added Pub. L. 114–328, div. A, title VIII, § 824(b)(1), Dec. 23, 2016, 130 Stat. 2278, § 2372a; re- numbered § 3763 and amended Pub. L. 116–283, div. A, title XVIII, § 1832(j)(2), (4), Jan. 1, 2021, 134 Stat. 4225.) 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 AMENDMENT Amendment 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. Page 2549 TITLE 10—ARMED FORCES § 3771 CHAPTER 275—PROPRIETARY CONTRACTOR DATA AND RIGHTS IN TECHNICAL DATA Subchapter Sec. I. Rights in Technical Data ...................... 3771 II. Validation of Proprietary Data Restric- tions ................................................... 3781 III. Other Provisions Relating to Propri- etary Contractor Data and Rights in Technical Data ................................... 3791 Editorial Notes PRIOR PROVISIONS A prior chapter 275 ‘‘PROPRIETARY CONTRACTOR DATA AND TECHNICAL DATA’’, as added by Pub. L. 115–232, div. A, title VIII, § 801(a), Aug. 13, 2018, 132 Stat. 1828, and consisting of reserved section 3771, was re- pealed by Pub. L. 116–283, div. A, title XVIII, § 1833(a)(1), Jan. 1, 2021, 134 Stat. 4225. SUBCHAPTER I—RIGHTS IN TECHNICAL DATA Sec. 3771. Rights in technical data: regulations. 3772. Rights in technical data: provisions required in contracts. 3773. Domestic business concerns: programs for re- plenishment parts. 3774. Major weapon systems and subsystems: long- term technical data needs. 3775. Definitions. § 3771. Rights in technical data: regulations (a) REGULATIONS REQUIRED.— (1) IN GENERAL.—The Secretary of Defense shall prescribe regulations to define the legiti- mate interest of the United States and of a contractor or subcontractor in technical data pertaining to an item or process. Such regula- tions shall be included in regulations of the Department of Defense prescribed as part of the Federal Acquisition Regulation. (2) OTHER RIGHTS NOT IMPAIRED.—Regula- tions prescribed under paragraph (1) may not impair— (A) any right of the United States or of any contractor or subcontractor with re- spect to patents or copyrights or any other right in technical data otherwise established by law; or (B) the right of a contractor or subcon- tractor to receive from a third party a fee or royalty for the use of technical data per- taining to an item or process developed ex- clusively at private expense by the con- tractor or subcontractor, except as other- wise specifically provided by law. (b) REQUIRED PROVISIONS.—Regulations pre- scribed under subsection (a) shall include the following provisions: (1) DEVELOPMENT EXCLUSIVELY WITH FEDERAL FUNDS.—In the case of an item or process that is developed by a contractor or subcontractor exclusively with Federal funds (other than an item or process developed under a contract or subcontract to which regulations under sec- tion 9(j)(2) of the Small Business Act (15 U.S.C. 638(j)(2)) apply), the United States shall have the unlimited right to— (A) use technical data pertaining to the item or process; or (B) release or disclose the technical data to persons outside the government or permit the use of the technical data by such per- sons. (2) DEVELOPMENT EXCLUSIVELY AT PRIVATE EXPENSE.—Except as provided in paragraphs (3), (4), and (7), in the case of an item or proc- ess that is developed by a contractor or sub- contractor exclusively at private expense, the contractor or subcontractor may restrict the right of the United States to release or dis- close technical data pertaining to the item or process to persons outside the government or permit the use of the technical data by such persons. (3) EXCEPTION TO PARAGRAPH (2).—Paragraph (2) does not apply to technical data that— (A) constitutes a correction or change to data furnished by the United States; (B) relates to form, fit, or function; (C) is necessary for operation, mainte- nance, installation, or training (other than detailed manufacturing or process data, in- cluding such data pertaining to a major sys- tem component); or (D) is otherwise publicly available or has been released or disclosed by the contractor or subcontractor without restriction on fur- ther release or disclosure. (4) EXCEPTION TO PARAGRAPH (2).—Notwith- standing paragraph (2), the United States may release or disclose technical data to persons outside the Government, or permit the use of technical data by such persons, if— (A) such release, disclosure, or use— (i) is necessary for emergency repair and overhaul; (ii) is a release, disclosure, or use of technical data pertaining to an interface between an item or process and other items or processes necessary for the seg- regation of an item or process from, or the reintegration of that item or process (or a physically or functionally equivalent item or process) with, other items or processes; or (iii) is a release or disclosure of technical data (other than detailed manufacturing or process data) to, or use of such data by, a foreign government that is in the inter- est of the United States and is required for evaluational or informational purposes; (B) such release, disclosure, or use is made subject to a prohibition that the person to whom the data is released or disclosed may not further release, disclose, or use such data; and (C) the contractor or subcontractor assert- ing the restriction is notified of such re- lease, disclosure, or use. (5) DEVELOPMENT WITH MIXED FUNDING.— (A) IN GENERAL.—Except as provided in paragraphs (6) and (7), in the case of an item or process that is developed in part with Federal funds and in part at private expense, the respective rights of the United States and of the contractor or subcontractor in technical data pertaining to such item or process shall be established as early in the acquisition process as practicable (pref- erably during contract negotiations) and