Cooperative research and development agreements

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1. The authority to develop equipment together

The main statutory basis for joint weapons development with allies sits in the second subchapter of chapter 138 of title 10, headed other cooperative agreements. The Secretary of Defense may enter into a memorandum of understanding, or other formal agreement, with one or more partners to conduct cooperative research and development projects on defense equipment and munitions (10 U.S.C. 2350a(a)(1)).

The eligible partners are listed (10 U.S.C. 2350a(a)(2)). They are the North Atlantic Treaty Organization, a NATO organization, a NATO member nation, a major non-NATO ally, and any other friendly foreign country. The European Union, including the European Defence Agency, the European Commission, the Council of the European Union and their suborganizations, is also eligible.

An agreement with a country in the last category, a friendly foreign country that is not a NATO member or major non-NATO ally, takes longer. It may go into effect only after the Secretary reports on it to the Armed Services and foreign affairs committees of both houses, and 30 days have passed (10 U.S.C. 2350a(a)(3)).

2. What counts as a project

A cooperative research and development project means joint participation by the United States and one or more eligible partners in a joint research and development program. The participation is under a memorandum or other formal agreement (10 U.S.C. 2350a(i)(1)). The program must either develop new conventional defense equipment and munitions or modify existing military equipment to meet American military requirements.

Each project must also pass a capability test. The Secretary may not enter into a project agreement unless the Secretary determines that the project will improve conventional defense capabilities through the application of emerging technology (10 U.S.C. 2350a(b)(1)). The capabilities improved can be NATO’s, or the common capabilities of the United States and the partner. The determination may be delegated only to the Deputy Secretary of Defense or to the Under Secretaries for Acquisition and Sustainment or for Research and Engineering (10 U.S.C. 2350a(b)(2)).

3. Sharing the cost

The default is equitable cost sharing. Each project must share its costs, including the costs of claims, between the participants on an equitable basis (10 U.S.C. 2350a(c)(1)). Cost here means the total value of cash and non-cash contributions (10 U.S.C. 2350a(c)(3)).

Unequal shares are possible with a written determination. The Secretary, or one of the officials to whom the capability determination can be delegated, must find in writing that unequal cost sharing provides strategic value to the United States or another participant (10 U.S.C. 2350a(c)(2)).

4. Where the money may and may not go

Two restrictions protect the cooperative character of the work. To assure substantial participation by the partners, funds made available for a project may not be used to procure equipment or services from any foreign government, foreign research organization or other foreign entity (10 U.S.C. 2350a(d)(1)). The American share is therefore not a channel for buying from the partner.

The partner’s share must be its own. A partner may not use any military or economic assistance grant, loan or other funds provided by the United States to make its contribution to a cooperative program (10 U.S.C. 2350a(d)(2)).

5. Considering cooperation early

The statute pushes cooperation into ordinary acquisition planning. Opportunities for cooperative development must be addressed in the acquisition strategy of any planned Defense Department project, so that they are considered early in the formal development review process (10 U.S.C. 2350a(e)(1)).

The discussion covers four matters (10 U.S.C. 2350a(e)(2)). The first is whether a similar project is in development or production by an eligible partner or NATO organization. The second, if so, is whether that project could satisfy the requirement, or be modified to do so. The third weighs the advantages and disadvantages of a cooperative program for timing, development and life cycle costs, technology sharing, and Rationalization, Standardization, and Interoperability (RSI). The fourth is a recommendation to the milestone decision authority on whether to explore a cooperative program.

6. Side-by-side testing of foreign and domestic items

The same section encourages comparative testing. It is the sense of Congress that the Secretary should test covered equipment, munitions and technologies to see whether they satisfy American military requirements or correct operational deficiencies (10 U.S.C. 2350a(g)(1)). Nondevelopmental items and items late in development are preferred, but testing may also be done to identify procurement alternatives. Covered items are conventional equipment, munitions and technologies made and developed by eligible partners, or made and developed domestically (10 U.S.C. 2350a(g)(4)).

The Secretary may buy covered items to test them (10 U.S.C. 2350a(g)(2)). Side-by-side testing has a procurement consequence. It may be treated as the use of competitive procedures when items are procured within 5 years after an initial determination that they were tested successfully and met requirements or corrected deficiencies (10 U.S.C. 2350a(g)(3)). The Secretary must also encourage NATO members, major non-NATO allies and other friendly countries to set up similar programs (10 U.S.C. 2350a(h)).

7. Lending equipment for joint testing

A companion authority in the Arms Export Control Act supports the same work. The Secretary may lend materials, supplies or equipment to a NATO or major non-NATO ally for a program of cooperative research, development, testing or evaluation. The Secretary may also accept them from such an ally as a loan or gift (22 U.S.C. 2796d(a)(1)). Each loan or gift must be covered by a written agreement (22 U.S.C. 2796d(a)(2)).

Testing for standardization, interchangeability or technical evaluation alone qualifies if the borrower agrees to give the results to the United States without charge (22 U.S.C. 2796d(a)(3)). Loaned items may be consumed in testing without reimbursement where the Secretary finds success depends on it and approves the consumption (22 U.S.C. 2796d(b)). Strategic and critical materials may not be lent while the National Defense Stockpile holds less than its goal (22 U.S.C. 2796d(c)).

Key terms

Cooperative research and development project	A joint program under a formal agreement to develop new conventional equipment or modify existing equipment.
Major non-NATO ally	For this section, a country the Secretary of Defense so designates with the Secretary of State’s concurrence.
Equitable cost sharing	The default rule for dividing project costs, counting cash and non-cash contributions.
Cooperative opportunities	The acquisition strategy discussion of whether a planned project could be done with partners.
Side-by-side testing	Testing foreign and domestic items against requirements, which can count as competitive procedures.

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This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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