Selected Costs that ARE Allowable FAR 31.205 - Selected Cost Series #2

In the realm of government contracts, contractors and subcontractors must adhere to specific guidelines when it comes to allowable costs. These guidelines are outlined in the Federal Acquisition Regulation (FAR), which serves as a comprehensive source of procurement regulations for federal agencies. One crucial section within FAR, is the “Selected Cost” section - FAR 31.205. It sheds light on the allowable costs that can be reimbursed to contractors. 

In our first blog on selected cost, we covered the 10 Expressly Unallowable costs.  Those for which contractors cannot be reimbursed. We continue our blog series on selected cost by listing those costs which are ALWAYS considered allowable. Out of the 46 specific types of selected costs listed in FAR, only 7 are identified as ALLOWABLE. However, FAR always has the “except for” included.  Below are the allowable costs and their caveats:

31.205-	Title	Info
4	Bonding Costs	To the extent that such bonding is in accordance with sound business practice and the rates and premiums are reasonable under the circumstances
21	Labor relations costs	Examples of unallowable costs under this paragraph include, but are not limited to, the costs of-(1) Preparing and distributing materials;(2) Hiring or consulting legal counsel or consultants;(3) Meetings (including paying the salaries of the attendees at meetings held for this purpose); and (4) Planning or conducting activities by managers, supervisors, or union representatives during work hours. Note: Costs listed are only unallowable if incurred for the purpose of persuading employees to join or not to join unions.
25	Manufacturing and production engineering costs	This cost principle does not cover-Basic and applied research effort and development effort (as defined in 31.205-18) and where manufacturing or production development costs are capitalized, then they are limited to the requirements described in 31.205-11
26	Material Costs	Considerations must include regulated processes such as:   Adjustments and credits, inter-organizational transfers and adjustments to commercial products or services.
28	Other business expenses	Specifically: (a) Registry and transfer charges resulting from changes in ownership of securities issued by the contractor. (b) Cost of shareholders’ meetings. (c) Normal proxy solicitations. (d) Preparing and publishing reports to shareholders. (e) Preparing and submitting required reports and forms to taxing and other regulatory bodies. (f) Incidental costs of directors’ and committee meetings. (g) Other similar costs.
29	Plant protection costs	Specifically: (a) Wages, uniforms, and equipment of personnel engaged in plant protection, (b) Depreciation on plant protection capital assets, and (c) Necessary expenses to comply with military requirements, are allowable.
39	Service and warranty costs	Those arising from fulfillment of any contractual obligation

deClermont Consulting can help identify and segregate costs which may or may not be claimed under Federal Contracts.