Waivers of Penalties for Unallowable Costs

Expressly unallowable costs are particular items or types of costs which under the express provisions of an applicable law, regulation, or contract, is specifically named and stated to be unallowable (FAR 31.001). Contractors who include expressly unallowable costs in their final indirect cost rate proposals are subject to penalty equal to the amount of the expressly unallowable costs (FAR 42.709-1). We have written extensively about expressly unallowable costs in past years and how DCAA (Defense Contract Audit Agency) continuously tries to expand the definition to make almost any cost exception an “expressly unallowable” costs with the ASBCA countering their push by narrowing the definition and throwing out the Agency’s charges. For a recap of these issues, see “Expressly Unallowable Costs – ASBCA Narrows the Definition” and follow the various links.

Source: PNWC’s Government Contracting Update: Waivers of Penalties for Unallowable Costs