On December 1, 2016, the Office of the Under Secretary of Defense Acquisition, Technology and Logistics issued a class deviation for the Department of Defense’s (DoD) November 4, 2016, final rule, “Enhancing the Effectiveness of Independent Research and Development.” As previously discussed, the final rule requires contractors to engage in a technical interchange with DoD technical or operational personnel prior to incurring allowable independent research and development (IR&D) costs in fiscal year 2017. With this class deviation, the DoD now appears willing to acknowledge the concerns of industry commenters, including recent CODSIA comments, highlighting the logistical and administrative obstacles contractors and the DoD face in order to accomplish the thousands of technical interchanges required to permit allowable FY 2017 IR&D costs in a very short period of time.

The class deviation suspends the requirement that a technical interchange occur before allowable IR&D costs are generated and, instead, permits contractors to conduct technical interchanges “sometime during the contractor’s fiscal year 2017.” The class deviation memorandum states that the class deviation was implemented “to afford contractors a phase-in period to develop processes and procedures.” The class deviation remains in effect until it is incorporated into the Defense Federal Acquisition Regulation Supplement or is otherwise rescinded.