---
kind: "section"
citation: "10 U.S.C. § 3763"
title: "10"
title_heading: "Armed Forces"
number: "3763"
heading: "Bid and proposal costs: allowable costs"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/10/3763"
units:
  - "Subtitle A — General Military Law"
  - "Part V — Acquisition"
  - "Subpart D — General Contracting Provisions"
  - "Chapter 273 — Allowable Costs"
  - "Subchapter II — Other Allowable Cost Provisions"
---

# §3763. Bid and proposal costs: allowable costs

- (a) **Regulations.—** The [Secretary](/usc/10/4951.md?p=3) of Defense shall prescribe regulations governing the payment by the [Department](/usc/10/101.md?p=a-6) of Defense of expenses incurred by contractors for bid and proposal costs. Such regulations shall provide that expenses incurred for bid and proposal costs shall be reported independently from other allowable indirect costs.
- (b) **Costs Allowable as Indirect Expenses.—** The regulations prescribed under [subsection (a)](#a) shall provide that bid and proposal costs shall be allowable as indirect expenses on [covered contracts](/usc/10/3741.md?p=2), as defined in [section 3741 of this title](/usc/10/3741.md), to the extent that those costs are allocable, reasonable, and not otherwise unallowable by law or under the Federal Acquisition Regulation.
- (c) **Goal for Reimbursable Bid and Proposal Costs.—** The [Secretary](/usc/10/4951.md?p=3) shall establish a goal each [fiscal year](/usc/10/3741.md?p=3) limiting the amount of reimbursable bid and proposal costs paid by the [Department](/usc/10/101.md?p=a-6) of Defense to an amount equal to not more than one percent of the total aggregate industry sales to the [Department](/usc/10/101.md?p=a-6) of Defense. To achieve such goal, the [Secretary](/usc/10/4951.md?p=3) may not limit the payment of allowable bid and proposal costs for the covered year.
- (d) **Panel.—**
  - (1) If the [Department](/usc/10/101.md?p=a-6) of Defense exceeds the goal established under [subsection (c)](#c) for a [fiscal year](/usc/10/3741.md?p=3), within 180 days after exceeding the goal, the [Secretary](/usc/10/4951.md?p=3) shall establish an advisory panel. The panel shall be supported by the Defense Acquisition University and the National Defense University, including administrative support.
  - (2) The panel shall be composed of nine individuals who are recognized experts in acquisition and [procurement](/usc/10/3011.md?p=1) policy appointed by the [Secretary](/usc/10/4951.md?p=3). In making such appointments, the [Secretary](/usc/10/4951.md?p=3) shall ensure that the members of the panel reflect diverse experiences in the public and private sector.
  - (3) The panel shall review laws, regulations, and practices that contribute to the expenses incurred by contractors for bids and proposals in the [fiscal year](/usc/10/3741.md?p=3) concerned and recommend changes to such laws, regulations, and practices that may reduce expenses incurred by contractors for bids and proposals.
  - (4)
    - (A) Not later than six months after the establishment of the panel, the panel shall submit to the [Secretary](/usc/10/4951.md?p=3) and the [congressional defense committees](/usc/10/101.md?p=a-16) an interim report on the findings of the panel.
    - (B) Not later than one year after the establishment of the panel, the panel shall submit to the [Secretary](/usc/10/4951.md?p=3) and the [congressional defense committees](/usc/10/101.md?p=a-16) a final report on the findings of the panel.
  - (5) The panel shall terminate on the day the panel submits the final report under [paragraph (4)(B)](#d-4-B).
  - (6) The [Secretary](/usc/10/4951.md?p=3) of Defense may use amounts available in the [Department](/usc/10/101.md?p=a-6) of Defense [Acquisition Workforce](/usc/10/101.md?p=a-18) Development Fund established under [section 1705 of this title](/usc/10/1705.md) to support the activities of the panel established under this subsection.
- (e) **Effective Date.—** The regulations prescribed under [subsection (a)](#a) shall apply to indirect costs incurred on or after October 1, 2017.

## Source credit

(Added Pub. L. 114–328, div. A, title VIII, § 824(b)(1), Dec. 23, 2016, 130 Stat. 2278, § 2372a; renumbered § 3763 and amended Pub. L. 116–283, div. A, title XVIII, § 1832(j)(2), (4), Jan. 1, 2021, 134 Stat. 4225.)

## Notes

### Editorial Notes

### Amendments

2021—Pub. L. 116–283, § 1832(j)(2), renumbered section 2372a of this title as this section.

Subsec. (b). Pub. L. 116–283, § 1832(j)(4), substituted “section 3741” for “section 2324(l)”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2021 Amendment

Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.