[Code of Federal Regulations]
[Title 32, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR37.625]

[Page 216-217]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
PART 37_TECHNOLOGY INVESTMENT AGREEMENTS--Table of Contents
 
 Subpart F_Award Terms Affecting Participants' Financial, Property, and 
                           Purchasing Systems
 
Sec.  37.625  What cost principles or standards do I require for for-profit participants?

    (a) So as not to require any firm to needlessly change its cost-
accounting system, your expenditure-based TIAs are to apply the 
Government cost principles in 48 CFR parts 31 and 231 to for-profit 
participants that currently perform under expenditure-based Federal 
procurement contracts or assistance awards (other than TIAs) and 
therefore have existing systems for identifying allowable costs under 
those principles. If there are programmatic or business reasons to do 
otherwise, you may grant an exception from this requirement and use 
alternative standards as long as the alternative satisfies the 
conditions described in paragraph (b) of this section; if you do so, you 
must document the reasons in your award file.
    (b) For other for-profit participants, you may establish alternative 
standards in the agreement as long as that alternative provides, as a 
minimum, that Federal funds and funds counted as recipients' cost 
sharing will be used only for costs that:
    (1) A reasonable and prudent person would incur in carrying out the 
research project contemplated by the agreement. Generally, elements of 
cost that appropriately are charged are those identified with research 
and development activities under the Generally Accepted Accounting 
Principles (see Statement of Financial Accounting Standards Number 2, 
``Accounting for Research and Development Costs,'' October 1974 \1\). 
Moreover, costs must be allocated to DoD and other projects in 
accordance with the relative benefits the projects receive. Costs 
charged to DoD projects must be given consistent treatment with costs 
allocated to the

[[Page 217]]

participants' other research and development activities (e.g., 
activities supported by the participants themselves or by non-Federal 
sponsors).
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    \1\ Copies may be obtained from the Financial Accounting Standards 
Board (FASB), 401 Merritt 7, P.O. Box 5116, Norwalk, CT 06856-5116. 
Information about ordering also may be found at the Internet site http:/
/www.fasb.org or by telephoning the FASB at (800) 748-0659.
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    (2) Are consistent with the purposes stated in the governing 
Congressional authorizations and appropriations. You are responsible for 
ensuring that provisions in the award document address any requirements 
that result from authorizations and appropriations.