In its Department of Defense FAR Supplement (DFARS) Part 231.205-18, DOD provides an additional condition for allowability of IR&D costs to DOD contracts – they must have "potential interest" to DOD. These activities should accomplish at least one of the following:

Enable superior performance of future U.S. weapon systems and components;

Reduce acquisition costs and life-cycle costs of military systems

Strengthen the defense and technology base of the U.S.

Enhance the industrial competitiveness of the US

Promote the development of technology identified as critical in the DOD plan

Increase the development of technology useful for both the private commercial sector and the public sector

Develop efficient and effective technologies for achieving environment benefit.

In practice, these seven conditions are so broad that virtually any IR&D efforts could qualify and as such we have not seen any successful challenges to IR&D expenses on the grounds they were not of "potential interest" to DOD.

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