IR&D/B&P Cost Principle Revisions

Pursuant to a legislative requirement, GAO provided information on regulatory changes to Department of Defense contractors' allowable research and development costs. GAO noted that: (1) revisions to the independent research and development/bid and proposal (IR&D/B&P) cost principles were consistent with recent legislation; (2) the regulatory changes increased contractors' maximum allowable IR&D/B&P costs and helped reduce contract cost misclassification; (3) because of potentially large increases in contractor research and development costs, close oversight and impact assessments will be needed to control IR&D/B&P costs; (4) the Defense Contract Audit Agency will continue to provide financial information on contractor IR&D/B&P expenditures and reimbursements; and (5) the Office of Technology Assessment will report on whether the regulatory changes are encouraging greater contractor research and development investment.