Rate stabilization at Navy industrial fund research and development activities

Abstract

Recently the Assistant Secretary of Defense (Comptroller) directed that all DOD industrially funded activities bill their customers on the basis of stabilized rates. Industrially-funded R&D activities are included in the policy change. The writers address the subject of stabilized rates at R&D activities. The writers (1) identify the policy change, (2) trace its emergence in the DOD organization and (3) assess potential impacts. The writers conclude that stabilized rates are more appropriate for on-R&D activities than for R&D activities. However, stabilized rates are workable in the R&D environment as long as it is recognized that the R&D workload is essentially a level-of-effort concept, and as long as minimal adjustments to locally established rates are made at higher levels. Sources of information included official correspondence and interviews at selected Navy Laboratories and other NIF activities.