Contractor Groups Raise Concerns Over Defense Department Rule

An obscure new regulation proposed by the Department of Defense (DoD) is raising major concerns for groups representing federal contractors.

In a letter sent to the Pentagon by the Council of Defense and Space Industry Associations, a coalition of trade groups, CODSIA called on DoD to suspend the rulemaking process on a proposed regulation that would require more scrutiny of independent research and development (IR&D) funds that the Pentagon provides to contractors to encourage them to develop new technologies.

CODSIA members—which include the Professional Services Council (PSC), the National Defense Industrial Association, and other groups—say the DoD has failed to carry out the procedural steps necessary to implement a major rule change.

“The proposed rule represents a gigantic shift in IR&D policy and a break from procurement and oversight processes in place for many years,” the council wrote in the letter  (opens in a new tab) [PDF]. “It thus deserves extensive and deliberate consideration before finalizing, including meeting all relevant regulatory requirements for a significant regulatory action.”

CODSIA, which says the rule change could have a $100 million impact on the U.S. economy, is calling on the Pentagon to submit the change to the Office of Information and Regulatory Affairs for full review.

According to Federal News Radio  (opens in a new tab), Defense Department officials who support the rule argue that IR&D funding is not being used for its intended purpose of developing innovative new technologies but is instead used to lower bids on contracts.

In a statement, PSC President and CEO David Berteau suggested that IR&D changes should be considered more fully with other regulatory changes that may be required under the latest version of the National Defense Authorization Act.

“Given the significance and uncertainties of these changes to the department’s IR&D policies for many of our member companies, and for others in the defense community, we joined in this simple and straightforward request to the department,” Berteau said in a news release  (opens in a new tab).

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