Government contractors should be reimbursed by the government for independent research and development (“IR&D”) costs even where those costs also support the contractor’s work under a contract, according to a Jenner & Block amicus brief recently filed in the U.S. Court of Appeals for the Federal Circuit on behalf of the National Defense Industrial Association (“NDIA”).
The amicus brief, filed in the case ATK Thiokol v. United States, urges the appeals court to affirm a decision by the Court of Federal Claims which held that the IR&D cost principle, which promotes cost sharing as a means of encouraging the development of state-of-the-art technologies, should apply where the contracting parties intend to exclude the effort from the contract.
In contrast, the Government’s position in the case is that any effort even implicitly required to perform the contract should not be charged to IR&D and must be charged to the contract.
Adopting the government’s position regarding the IR&D cost principle “would stifle innovation throughout the defense industry and, ironically, undermine the Government's ability to acquire cutting-edge technologies,” the Firm wrote in its brief. The brief asserts that IR&D promotes innovation critical to both Government and industry, and if the development of state-of-the-art technologies lacks initial funding, government interests will suffer. The brief also notes the lower court’s ruling in the case tracks the plain meaning of the regulation in question and follows Federal Circuit precedent.