Selected FAR Cost Principles: IR&D, B&P, Selling and ...
Selected FAR Cost Principles: IR&D, B&P, Selling and Related Costs
Phillip R. Seckman Gale R. Monahan
Introduction
? The "Selling" Cost Family
? Selling Costs ? Advertising/Public Relations Costs ? Market Planning ? Lobbying Costs
? B&P Costs ? IR&D Costs ? MP&E Costs
2
The "Selling" Cost Family
3
Selling and Related Costs
? Complex area of cost and fact-driven
? Selling Costs (31.205-38) ? Public Relations and Advertising Costs (31.205-1) ? Economic Planning Costs (31.205-12) ? Entertainment Costs (31.205-14) ? IR&D/B&P Costs (31.205-18) ? Manufacturing & Production Engineering (31.205-25) ? Lobbying and Political Activity Costs (31.205-22) ? Organization Costs (31.205-27) ? Recruitment Costs (31.205-34) ? Trade, business, technical and professional activity costs
(31.205-43) ? Training and education costs (31.205-44) ? Travel Costs (31.205-46) ? Alcohol Costs (31.205-51)
4
Selling Costs
? "Selling" is a generic term encompassing all efforts to market the contractor's products or services (FAR 31.205-38)
? Limits allowability to five categories of selling type costs:
? Advertising (FAR 31.205-1): the use of media to promote the sale of products or services; narrow/limited rules for allowability
? Corporate Image Enhancement (FAR 31.205-1): generally includes public relations costs; broadly targeted sales efforts
? B&P costs (FAR 31.205-18): costs incurred in preparing, submitting, and supporting bids and proposals
? Market Planning (FAR 31.205-12): market research and analysis and general management planning concerned with business development; long-range economic planning costs under
5
Selling Costs (cont.)
? Five allowable categories (cont.)
? Direct selling: acts or actions to induce particular customers to purchase particular products or services by person-toperson contact.
? Familiarization of potential customers with products or services, conditions of sale, service capabilities, etc.
? Negotiation, liaison between customer and contractor, technical and consulting efforts, individual demonstrations
? Any other efforts "having as their purpose the application or adaptation of the contractor's products or services for a particular customer's use"
? Seller compensation, fees, commissions limited to bona fide employees/established commercial agency
6
Identifying Direct Selling Costs
? "Person-to-person" contact ? Generally occurs prior to issuance of RFP (communication
is unlikely after RFP is issued) ? Distinction is important: selling can include technical effort
similar to IR&D where direct selling is primary purpose
? Prototype construction that involves no development (e.g., Technical Readiness Level remains unchanged)
? Design effort to permit use of a product for a particular application that involves no development (e.g., application engineering)
? Development to pursue single potential contract opportunity (e.g., to demonstrate a capability)
7
Distinguishing Selling Costs
? Pre-RFP presentation to existing customer about products and capabilities
? Pre-RFP presentation to potential customer about products and capabilities
? Development of a prototype aircraft (Gen. Dynamics Corp. v. United States, 202 Ct. Cl. 347 (1973))
? Customer is considering updates to its software and asks whether contractor offers a better product; contractor responds
8
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.