10 U.S.C. § 3762 — Independent research and development

Page 2546 TITLE 10—ARMED FORCES § 3761 ed for or on behalf of the Department of Defense on or after May 1, 2007.’’ REIMBURSEMENT OF INDIRECT COSTS OF INSTITUTIONS OF HIGHER EDUCATION UNDER DEPARTMENT OF DE- FENSE CONTRACTS Pub. L. 103–160, div. A, title VIII, § 841, Nov. 30, 1993, 107 Stat. 1719, as amended by Pub. L. 105–244, title I, § 102(a)(2)(C), Oct. 7, 1998, 112 Stat. 1617, provided that: ‘‘(a) PROHIBITION.—The Secretary of Defense may not by regulation place a limitation on the amount that the Department of Defense may reimburse an institu- tion of higher education for allowable indirect costs in- curred by the institution for work performed for the Department of Defense under a Department of Defense contract unless that same limitation is applied uni- formly to all other organizations performing similar work for the Department of Defense under Department of Defense contracts. ‘‘(b) WAIVER.—The Secretary of Defense may waive the application of the prohibition in subsection (a) in the case of a particular institution of higher education if the governing body of the institution requests the waiver in order to simplify the overall management by that institution of cost reimbursements by the Depart- ment of Defense for contracts awarded by the Depart- ment to the institution. ‘‘(c) DEFINITIONS.—In this section: ‘‘(1) The term ‘allowable indirect costs’ means costs that are generally considered allowable as indirect costs under regulations that establish the cost reim- bursement principles applicable to an institution of higher education for purposes of Department of De- fense contracts. ‘‘(2) The term ‘institution of higher education’ has the meaning given such term in section 101 of the Higher Education Act of 1965 [20 U.S.C. 1001].’’ § 3761. Restructuring costs (a) LIMITATION ON PAYMENT OF RESTRUCTURING COSTS.—The Secretary of Defense may not pay, under subchapter I, a defense contractor for re- structuring costs associated with a business combination of the contractor that occurs after November 18, 1997, unless the Secretary deter- mines in writing either— (1) that the amount of projected savings for the Department of Defense associated with the restructuring will be at least twice the amount of the costs allowed; or (2) that the amount of projected savings for the Department of Defense associated with the restructuring will exceed the amount of the costs allowed and that the business combina- tion will result in the preservation of a crit- ical capability that otherwise might be lost to the Department. (b) LIMITATION ON DELEGATION.—The Secretary may not delegate the authority to make a deter- mination under subsection (a), with respect to a business combination, to an official of the De- partment of Defense— (1) below the level of an Assistant Secretary of Defense for cases in which the amount of re- structuring costs is expected to exceed $25,000,000 over a 5-year period; or (2) below the level of the Director of the De- fense Contract Management Agency for all other cases. (c) DEFINITION.—In this section, the term ‘‘business combination’’ includes a merger or ac- quisition. (Added Pub. L. 105–85, div. A, title VIII, § 804(a)(1), Nov. 18, 1997, 111 Stat. 1832, § 2325; amended Pub. L. 106–65, div. A, title X, § 1066(a)(19), Oct. 5, 1999, 113 Stat. 771; Pub. L. 108–375, div. A, title VIII, § 819, Oct. 28, 2004, 118 Stat. 2016; Pub. L. 112–239, div. A, title X, § 1076(g)(2), Jan. 2, 2013, 126 Stat. 1955; renum- bered § 3761 and amended Pub. L. 116–283, div. A, title XVIII, § 1832(j)(2), (3), Jan. 1, 2021, 134 Stat. 4225.) Editorial Notes AMENDMENTS 2021—Pub. L. 116–283, § 1832(j)(2), renumbered section 2325 of this title as this section. Subsec. (a). Pub. L. 116–283, § 1832(j)(3)(B), (E), in in- troductory provisions, struck out par. (1) designation before ‘‘The Secretary’’ and substituted ‘‘subchapter I’’ for ‘‘section 2324 of this title’’ and redesignated sub- pars. (A) and (B) as pars. (1) and (2), respectively. Former par. (2) of subsec. (a) redesignated subsec. (b). Subsec. (b). Pub. L. 116–283, § 1832(j)(3)(C)–(E), redesig- nated par. (2) of subsec. (a) as subsec. (b), inserted head- ing, substituted ‘‘subsection (a)’’ for ‘‘paragraph (1)’’ in introductory provisions, and redesignated subpars. (A) and (B) as pars. (1) and (2), respectively. Former subsec. (b) redesignated (c). Subsec. (c). Pub. L. 116–283, § 1832(j)(3)(A), redesig- nated subsec. (b) as (c). 2013—Subsec. (b). Pub. L. 112–239 redesignated subsec. (c) as (b) and struck out former subsec. (b) which re- quired reports relating to business combinations occur- ring on or after August 15, 1994. 2004—Subsec. (a)(2). Pub. L. 108–375 substituted ‘‘para- graph (1), with respect to a business combination, to an official of the Department of Defense—’’ for ‘‘paragraph (1) to an official of the Department of Defense below the level of an Assistant Secretary of Defense.’’ and added subpars. (A) and (B). 1999—Subsec. (a)(1). Pub. L. 106–65 inserted ‘‘that oc- curs after November 18, 1997,’’ after ‘‘of the contractor’’ in introductory provisions. 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 Pub. L. 105–85, div. A, title VIII, § 804(c), Nov. 18, 1997, 111 Stat. 1834, provided that: ‘‘Section 2325(a) of title 10, United States Code [now 10 U.S.C. 3761(a)], as added by subsection (a), shall apply with respect to business combinations that occur after the date of the enact- ment of this Act [Nov. 18, 1997].’’ § 3762. Independent research and development 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 independent re- search and development costs. Such regulations shall provide that expenses incurred for inde- pendent research and development shall be re- ported independently from other allowable indi- rect costs. (b) COSTS TREATED AS FAIR AND REASONABLE, AND ALLOWABLE, EXPENSES.—The regulations prescribed under subsection (a) shall provide that independent research and development costs shall be considered a fair and reasonable, 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)