Research OTs are required to provide for a 50-50 cost sharing between the government and OT recipient "to the extent determined practical" while prototype OTs do not require any cost sharing. Cost sharing for the latter OTs is not prohibited and some prototype OTs do require some form of cost sharing thought usually much less than 50%. For the research OT, the 50% cost share requirement must be met by the consortium as a whole, thus enabling one or more participants to make larger cost-sharing contributions to make up for any shortfall.

Cost sharing may be satisfied by either cash or concurrent in-kind contributions. The value of past research may also be considered acceptable contribution. Cash contributions can include a wide range of resources such as: expenditures for material, equipment, direct labor, labor associated overhead and other cash outlays for OT performance. The source of cash may be in-house (e.g. retained earnings, current IR&D funds), outside resources (e.g. donations from state or local governments, venture capitalist investments), nonfederal contracts, grant revenues or profit or fee from federal contracts. IR&D funds are considered a company’s own inhouse funds even though these same funds remain eligible for reimbursement as indirect costs by the government under FAR-covered contracts. The condition is that the IR&D project must be relevant to the OT project to be eligible for cost sharing. IR&D costs accumulated and reimbursed as a direct government contract are not eligible for in-kind contributions.

In-kind contributions include the reasonable fair market value of equipment, materials, intellectual property and other property used in performance of the OT’s statement of work. "Fair market value" is defined to mean what a prudent business person would pay not the cost of development or manufacture of the property. (Editor’s Note. Where fair market value was impossible to quantify, we have used cost of development as a surrogate method of quantifying the in-kind contribution when reviewing a contributor’s voucher.)

The value of past research is the least preferred in-kind contribution but DARPA will accept the value of prior research when, for example, the OT recipient possesses significant technical knowledge useful for the consortium but is unable or unwilling to provide other cash or in-kind contributions.

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