STATISTICS RELATING TO I.R. & D., B. & P., AND OTE FOR MAJOR DEFENSE CONTRACTORS The present bibliography contains a brief description of what Independent WHAT IS INDEPENDENT R&D? All firms which are active in an industry that relies on science and sophisticated Such "Company R&D" is known as "Independent Research and Development" HOW IS IR&D PAID FOR? IR&D is indirectly paid for by all customers. But, unlike sponsored R&D The means used in many cases to pay the costs of IR&D is to treat these costs IR&D may also be looked upon as an investment rather than as a current In most cases the costs of a company's IR&D activity are paid for through WHAT IS THE GOVERNMENT'S ROLE IN IR&D? When a company takes on Government contracts, such contracts are charged a share of the firm's indirect costs including its IR&D costs. If the procurement is of the fixed-price type, most commonly arising from competitive biding, then the Government pays the IR&D costs along with all the other indirect costs. But the amount and purpose of these indirect costs are of no concern to Government. Only the total price asked by the lowest bidder is paid. But, if a high degree of uncertainty and risk exists, such as for example in contracting for development or research, then it may be impossible to make firm cost estimates ahead of time. In such cases bidding can not be used and the contract instead calls for an arrangement whereby the Government agrees to reimburse the contractor for the costs he incurs to do the work plus a fixed or incentive fee which constitutes his profit. The costs reimbursed to the contractor include both the direct costs of materials and labor and the indirect costs including a reasonable share of the IR&D costs. HOW DO PROCUREMENT REGULATIONS APPLY TO IR&D? To exercise some measure of control of the costs being reimbursed each Government department and agency has established procurement regulations. The oldest and most widely used are those issued by the Department of Defense under the name "Armed Services Procurement Regulations" (ASPR). In the field of indirect costs these regulations prescribe which of the firm's direct and indirect costs are allowable for reimbursement on Government-reimbursement contracts and which are not. Among the indirect cost categories, for example, the costs of entertainment and of interest on borrowings are not allowable, while the costs of building maintenance and of labor relations are allowable. The allowable indirect costs must be shared among all the company's contracts both commercial and Government. Under these regulations the costs of IR&C are considered an allowable item of indirect cost. HOW MUCH IS SPENT ON IR&D? Exact figures for the total IR&D conducted by American industry do not exist. The best estimate is that in 1968 total non-sponsored R&D conducted by major Government contractors amounted to $1.39 billion. This, however, includes both the costs of IR&D as well as the costs of the R&D carried out in the preparation of proposals submited to the Government. These costs, known as Bid and Proposal Costs or "B&P", are also allowable as indirect costs. More than half of this total sum, amounting to about $700 million, was paid for through indirect cost charges on Government contracts. This amount compares with the less than $500 million total budget of the National Science Foundation for the same year. FREQUENTLY USED ABBREVIATIONS AECPR-Atomic Energy Commission Procurement Regulations AIA-Aerospace Industries Association APP-Army Procurement Procedure ASPR-Armed Services Procurement Regulations B&P—Bidding and Proposal Expenses CODSIA-Council of Defense and Space Industry Associations DCAA-Defense Contract Audit Agency DOD-Department of Defense DSPR-Defense Supply Procurement Regulations EIA-Electronic Industries Association FPR-Federal Procurement Regulations GAO General Accounting Office IR&D Independent Research and Development NASAPR-NASA Procurement Regulations NPD-Navy Procurement Directive OTE-Other Technical Effort WEMA-Western Electronic Manufacturers Association BIBLIOGRAPHY The following bibliography is divided into three major parts. Part I includes the most recent Congressional publications on IR&D. Part II includes other published items dealing directly with the question on IR&D. And Part III includes items dealing with the larger context of governmental and industrial R&D in which the IR&D question can be viewed. PART I-CONGRESSIONAL PUBLICATIONS The Congressional publications listed below include only those judged to be of current interest. No exhaustive search of committee publications was conducted. A. Congressional Record The IR&D question was raised in the 1st session of the 91st Congress (1969) by Senator William Proxmire. Senator Proxmire's floor statements together with the statements relating to the action taken on the 1970 defense authorization are listed below. All references are to the Daily Edition of the Congressional Record. Senate Committee on Armed Services, Subcommittee on Research and Development Hearings on Independent Research and Development, March 1970 (forthcoming) House Committee on Armed Services, Subcommittee No. 1, Hearings on Independent Research and Development, February-March 1970 (forthcoming) House Committee on Appropriations, Subcommittee on DOD Appropriations, Department of Defense Appropriations for 1967, 1966. See section on "Independent Research and Development" pp 117–121. PART II-ITEMS DEALING SPECIFICALLY WITH IR&D The literature on IR&D is sparse. In this part all known items on the subject have been included. The items in this part treat both the policy questions related to IR&D in general and the interpretation of the applicable government regulations as they existed at the time of publication. Since these regulations have changed over the years the older items should be read with this in mind. Within each section of this part the items are arranged in the order of publication with the most recent listed first. A. Periodical Articles Grover Heiman, "How Independent Should Independent R&D Be?" Armed Forces Management, vol 16 (Jan 1970). pp 38-40. "Senate to Probe Industrial R&D Charges," Scientific Research, vol 4 (Dec. 8, 1969), pp 11-12. "White Paper Summarizes Industry Views on Independent R&D," Federal Contract Report, No. 285 (Aug 4, 1969), pp A-1, A-15 to A-17. The entire CODSIA report is reprinted on pp D-1 to D-7. Gilbert A. Cuneo, "Research Cost Recovery," in: Conference on United States Government Research & Development Contracts (Washington, 1968), Proceedings Manual, Federal Publications, Inc. and The George Washington University, 1968, pp 1-1 to 1-8. Paul Sherwood, "Independent Research and Development Under Government Contracts," The United States Air Force Judge Advocate General Law Review, vol 6 (Nov-Dec 1964), pp 38-40. Richard N. Flint, "Independent Research and Development Expeditures: A Study of the Government Contract as an Instrument of Public Policy," Law and Contemporary Problems, vol 29 (Spring 1964), pp 611–630. Howard H. Cork, "Cost Problems-Compensation for Personal Services Interest on Borrowings, Contributions and Donations, Research and Development Costs," The Federal Bar Journal, vol 8 (Jul-Sep 958), pp 253–260. B. GAO Reports Comptroller General of the United States, Allowances for Independent Research and Development Costs in Negotiated Contracts-Issues and Alternatives, General Accounting Office, Report B-64912, February 16, 1970. Comptroller General of the United States, Report on the Feasibility of Applying Uniform Cost-Accounting Standards to Negotiated Defense Contracts, House Committee on Banking and Currency, Committee Print, 91st Congress Second Session, January 1970. See sections "Independent research and development" pp 57-62 and pp 93–94. Comptroller General of the United States, Review of Costs of Bidding and Related Technical Efforts Charged to Government Contracts, General Accounting Office, Report B-133386, March 1967. C. Reports of Special Studies Council of Defense and Space Industry Associations (CODSIA), Independent Research and Development, Report published for CODSIA by the Aerospace Industries Association, 1969. Reconnaissance Study of Defense Contractor Bid and Proposal and Independent Research and Development Costs, Logistics Management Institute, Aug 1967. Defense Science Board Task Group, Report on Independent Research and Development, Department of Defense, Feb 1, 1967. D. Books on Government Contract Administration John D. McBride and Isodore H. Wachtel, Government Contracts-Cyclopedic Guide to Law, Administration, Procedure, D. P. Indices, Inc., 1968. See paragraph 24.630 in volume 3 "Research and Development Costs," pp 24-409 to 24-421. W. H. Reimer, Handbook of Government Contract Administration, PrenticeHall, 1968. See section "Research and Development Costs" pp 813-814. 1968 Government Contracts Guide, Commerce Clearing House, Inc., 1968. See section "Research and Development" pp 533–534. John Cibinic, Jr., Cost Determination-Government Contracts Monograph No. 8. Government Contracts Program, The George Washington University, 1964. See especially section "Research and Development Costs" pp 114–119. Jack Paul, United States Government Contracts & Subcontracts, Joint Committee on Continuing Legal Education of the American Law Institute and the American Bar Association, 1964. See sections "Reimbursement of Research and Development Costs" pp 109-111 and "Research and Development" pp 415-417. E. Books on Defense Contract Accounting Paul M. Trueger, Accounting Guide for Defense Contracts, Commerce Clearing House, Inc., 5th edition, 1966. See Chapter "Accounting Methods and Controls for Engineering Overhead" pp 225–244. Howard W. Wright, Accounting for Defense Contracts, Prentice-Hall, 1962. See section "Research and Development Costs" pp 103-106. PART III-THE LARGER CONTEXT OF IR&D The IR&D question can usefully be analyzed in the context of the larger environments of defense and industrial R&D policies, government procurement policies, and the general questions related to the government-industry relationship. Part III of the bibliography lists selected items dealing with these broader questions. A. Articles Edwin P. Bledsoe and Harry I. Ravitz, "The Evolution of Research and Development as a Procurement Function of the Federal Government," The Federal Bar Journal, vol 17 (Jul-Sep 1957), pp 189–215. Yale Brozen, "R&D Difference Among Industries," in: Richard A. Tybout (ed), Economics of Research and Development, Ohio State University Press, 1965. Lawrence E. Chermak, "Determination of Costs under Part 2 of Section XV of Armed Services Procurement Regulation," in: Conference on United States Government Research & Development Contracts (Washington, 1962), Summary of Proceedings, The George Washington University and Federal Publications, Inc., 1962. pp 71-76. Donald W. Collier, "The Road Ahead for Profit-Supported Industrial Research," Research Management, vol 7 (March 1964), pp 129–141. James A. Dobkin, "Patent Policy in Government Research and Development Contracts," Virginia Law Review, vol 53 (April 1967), pp 564–653. J. Stefan Dupre and W. Eric Gustafson, "Contracting for Defense: Private Firms and the Public Interest," Political Science Quarterly, vol 77 (June 1962), pp 161-177. Robert B. Hall and Timothy D. Desmond, "The GAO Role in the Business Decisions Process of Defense Procurement-What Should it Be?," National Contract Management Journal, vol 3 (Fall 1969), pp 89–100. Robert M. Hinrichs, "Proprietary Data and Trade Secrets Under Department of Defense Contracts," Military Law Review, vol 36 (April 1967), pp 61–90. See especially section "Restrictions on Disclosure of Data Submitted with Bids and Proposals" pp 82-86. Charles J. Hitch, "Character of Research and Development in a Competitive Economy," in: Proceedings of a Conference on Research and Development and its Impact on the Economy, National Science Foundation, NSF-58-36, 1958. pp 129-152. Paul R. Ignatius, “Government Involvement in Management Decisions," The Business Lawyer, vol 21 (Nov 1965), pp 255–258. Leroy Kahn, "The Lawyer and the Scientific Community," Law and Contemporary Problems, vol 29 (Spring 1964), pp 631–646. Burton H. Klein, "Policy Issues Involved in the Conduct of Military Development Programs," in: Richard A. Tybout (ed), Economics of Research and Development, Ohio State University Press, 1965. pp 309–326. Richard R. Nelson, "The Simple Economics of Basic Scientific Research," The Journal of Political Economy, vol 67 (Jun 1959), pp 297–306. Richard R. Nelson, "The Allocation of Research and Development Resources: Some Problems of Public Policy," in: Richard A. Tybout (ed), Economics of Research and Development, Ohio State University Press, 1965. Paul A. Reck, "Historically Difficult Cost Areas," The Federal Bar Journal, vol 18 (Jul-Sep 1958), pp 235–243. Murray L. Weidenbaum, "The Effects of Government Contracting on Private Enterprise," The George Washington Law Review, vol 35 (Dec 1966), pp 378–384. Raymond J. Woodrow and Neil O. Hines, "Cost Sharing in GovernmentSponsored Research," in: Stephen Strickland (ed), Sponsored Research in American Universities and Colleges, American Council on Education, 1968. pp 228–235. B. Reports A Position Paper on the Cost Principles of the Armed Services Procurement Regulation, Aerospace Industries Association, n.d. (1969?) C. Books John Cibinic, Jr., Cost Determination-Government Contracts Monograph No. 8, Government Contracts Program, The George Washington University, 1964. See especially chapter III "Allowable Costs-General Considerations" pp 17-31, and chapter V "Allocability" pp 51-73. Clarence H. Danhof, Government Contracting and Technological Change, Brookings Institution, 1968. See section "Research by Business Firms" pp 252–254. Charles J. Hitch and Roland N. McKean, The Economics of Defense in the Nuclear Age, Harvard University Press, 1965. See chapter 13 "Military Research and Development" pp 243-265. |