§4310 Proceeding Costs Not Allowable

Summary

Contractors, subcontractors, and people working under personal services contracts usually cannot charge the government for expenses tied to a criminal, civil, or administrative case about breaking a law or the kinds of problems listed in section 4712 when the case ends badly for them. Costs means all money spent on the case, like office and clerical work, lawyer fees (including in-house lawyers), accountants and consultants, and pay for company staff time. Penalty does not mean restitution, reimbursement, or compensatory damages. Proceeding also includes investigations. There are specific bad endings that block reimbursement: a criminal conviction (including nolo contendere), a civil or admin finding of liability for fraud-like misconduct, a fine or an order to fix things under section 4712, a final decision to debar or suspend, to cancel or void the contract, or to end the contract for default, and any settlement that could have led to those results. If the federal government starts the case but agrees in a settlement to let some costs be paid, those costs can be allowed if the settlement says so. If a State starts the case, the agency that gave the contract can permit costs only if the agency says the costs came from a contract term or from the agency’s written instructions and follows the Federal Acquisition Regulation. Otherwise allowable costs may be paid up to 80 percent of the actual costs (subject to the FAR), except when the same misconduct is the basis of another case whose costs were already disallowed.