Are IR&D Costs For Commercial Items Allowable
Q. Are IR&D costs for commercial items allowable.
A, IR&D costs, whether they are for contractors’ government or commercial work are allowable where both the FAR and CAS 420 address such costs. However, that does not prevent some auditors from attempting to make them unallowable asserting they are not allocable to government contracts. It is similar to marketing and sales costs associated with commercial items – all such costs contribute to the government because they are intended to expand revenue and hence the G&A base which tends to lower indirect costs and hence benefit the government.
