Defining “Expressly Unallowable” Costs

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Expressly unallowable costs claimed on federal contracts are costly since such costs are subject to penalties pursuant to FAR 42.709 as well as CAS 405 noncompliance. Many disputes arise surrounding the assessment of penalties on costs disallowed under audit interpreted as “expressly” unallowable. Recently, for example, Raytheon entered an appeal to the Armed Services Board of Contract Appeals (ASBCA) disputing how the government applied the “expressly unallowable” costs designation to some of Raytheon’s claimed costs. The government alleged that Raytheon overstated its cost submissions by failing to exclude bonus and incentive compensation for …read more

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