Are Any Of These 9 Unallowable Costs Being Charged To Your Government Contracts?

DCAA Compliance News

January 12, 2023
2 guys after the beach ball

Time to remove them!

31.205-14 Entertainment Costs

Costs of amusements, diversions, social activities, and any directly related costs such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities are unallowable.

As a general rule, keep in mind that if an activity sounds like fun, it's probably unallowable!

31.205-15 Fines, Penalties, and Mischarging Costs

These costs are not allowed if they represent a violation of federal, state, or local laws or regulations.

31.205-20 Interest and Other Financial Costs

Interest on borrowings, bond discounts, costs of financing and refinancing capital and related legal professional fees are not allowed.

31.205-22 Lobbying and Political Activity Costs

Costs associated with lobbying or attempting to influence the outcomes of elections or supporting any political party, campaign, or committee are unallowable.

31.205-23 Losses on Other Contracts

Costs in excess of income (including the contractor's contributed portion under cost-sharing contracts) are not allowed.

31.205-30 Patent Costs

Patent costs are allowable only insofar as they are incurred as a direct requirement of a government contract. Costs for preparation of invention disclosures and filings or prosecution of a U.S. patent are allowable, for instance, only under these strict circumstances. But general counseling services related to advice on patent laws and regulations are allowed.

31.205-32 Precontract Costs

These expenses are only allowable if they are negotiated as part of a contract when necessary to comply with a contract delivery schedule.

31.205-38 Selling Costs

These costs are unallowable unless they are specifically intended to induce a particular customer to purchase particular products or services. Allowable selling costs include

familiarizing a potential customer with the contractor's products or services, or technical and consulting efforts and demonstrations.

31.205-51 Alcoholic Beverages

These costs are unallowable.

The only time alcoholic beverages are allowed is when a bottle of champagne or wine is used to christen a ship.

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