31.205-48
Research and development costs
Excess research and development costs beyond the contract or grant amount are unallowable and cannot be charged to any other government contract.
Overview
FAR 31.205-48 addresses the allowability of research and development (R&D) costs incurred under government contracts and grants. It clarifies that R&D, as defined in FAR 31.205-18, includes technical efforts sponsored by grants or required by contract. Importantly, if a contractor incurs R&D costs that exceed the contract price or grant amount, those excess costs are unallowable and cannot be charged to any other government contract. This rule ensures that the government does not pay for R&D costs beyond what was agreed upon in the original contract or grant.
Key Rules
- Definition of R&D
- R&D refers to technical efforts as described in FAR 31.205-18, whether sponsored by a grant or required by contract.
- Unallowability of Excess Costs
- Any R&D costs incurred above the contract price or grant amount are unallowable and cannot be transferred to other government contracts.
Responsibilities
- Contracting Officers: Must ensure that only allowable R&D costs are reimbursed and that excess costs are not shifted to other contracts.
- Contractors: Must track and segregate R&D costs, ensuring that any excess over the contract or grant amount is not billed to the government.
- Agencies: Should monitor compliance and review cost submissions for unallowable excess R&D charges.
Practical Implications
- This rule prevents contractors from recovering R&D overruns by charging them to unrelated government contracts.
- Contractors must have robust accounting systems to track R&D costs by contract or grant.
- Failure to comply can result in cost disallowances, audit findings, or penalties.