Expressly Unallowable Cost Matrix

“It doesn’t hurt to ask; the worst they can say is ‘no.’”

Most of us have been told that or said that many times. While that philosophy works in some circumstances, it is quite risky in the context of government contracting. This is because when a contractor claims an “expressly unallowable cost,” the government can say something much worse than “no.”

The “cost principles” set forth in FAR Part 31 describe what costs the government will and will not reimburse on cost-type government contracts. In some cases, the cost principles are general and require judgment and discretion to apply to specific costs and circumstances. In other cases, the cost principles are clear and the costs are described with certainty as either allowable or unallowable. Unallowable costs in this category are called “expressly unallowable costs.”

Human nature being what it is, contractors might be tempted to claim any cost that could conceivably be allowable on the theory the worst the government can say is “no.” However, if the government views the claimed costs as expressly unallowable, the contractor will have to refund double the claimed cost, and if claimed again, triple that amount.

Aprio’s Government Contracting team can provide the guidance and expertise you need to navigate these types of matters and more. Schedule a consultation with an experienced advisor today.