[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.205-25]

[Page 629]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
Sec. 31.205-25  Manufacturing and production engineering costs.

    (a) The costs of manufacturing and production engineering effort as 
described in (1) through (4) below are all allowable:
    (1) Developing and deploying new or improved materials, systems, 
processes, methods, equipment, tools and techniques that are or are 
expected to be used in producing products or services;
    (2) Developing and deploying pilot production lines;
    (3) Improving current production functions, such as plant layout, 
production scheduling and control, methods and job analysis, equipment 
capabilities and capacities, inspection techniques, and tooling analysis 
(including tooling design and application improvements); and
    (4) Material and manufacturing producibility analysis for production 
suitability and to optimize manufacturing processes, methods, and 
techniques.
    (b) This cost principle does not cover:
    (1) Basic and applied research effort (as defined in 31.205-18(a)) 
related to new technology, materials, systems, processes, methods, 
equipment, tools and techniques. Such technical effort is governed by 
31.205-18, Independent research and development costs and bid and 
proposal costs; and
    (2) Development effort for manufacturing or production materials, 
systems, processes, methods, equipment, tools and techniques that are 
intended for sale is also governed by 31.205-18.
    (c) Where manufacturing or production development costs are 
capitalized or required to be capitalized under the contractor's 
capitalization policies, allowable cost will be determined in accordance 
with the requirements of 31.205-11, Depreciation.