Independent Research And Development (IRAD)
Independent Research and Development (IRAD) is a U.S. Department of Defense funding mechanism that allows defense contractors to conduct self-directed research and development not directly tied to specific government contracts. Under IRAD policy, contractors submit annual IRAD plans to the Defense Technical Information Center (DTIC) and are partially reimbursed by the government for allowable IRAD costs, which are factored into overhead rates on government contracts. IRAD is intended to encourage innovation and maintain contractor technical capabilities. Department of Defense policy changes in recent decades removed requirements for contractors to submit IRAD plans for prior approval and eliminated spending ceilings on IRAD reimbursements, dramatically expanding contractor discretion over how IRAD funds are directed.
IRAD is alleged in UAP research to have become a primary vehicle for funding clandestine Legacy Programs beyond standard oversight. Following the post-9/11 reallocation of defense funding to overseas contingency operations, contractors allegedly exploited IRAD to continue UAP-related research with minimal government visibility. David Grusch testified under oath before Congress that UAP legacy programs are funded in part through IRAD overcharging — a scheme in which contractors report artificially low IRAD figures to the government while conducting substantially larger undisclosed IRAD programs, with the unreported surplus funding covert UAP work. Northrop Grumman's annual IRAD spending rose from approximately $331 million to over $500 million following its 2002 acquisition of TRW, a surge that UAP researchers cite as consistent with this alleged mechanism.