31.205-1
Public relations and advertising costs
Only specific, contract-related public relations and advertising costs are allowable; most promotional and image-enhancing expenses are unallowable under government contracts.
Overview
FAR 31.205-1 defines and regulates the allowability of public relations and advertising costs under government contracts. It distinguishes between allowable and unallowable costs, providing clear definitions for both "public relations" and "advertising," and outlines specific circumstances under which such costs may be charged to government contracts. The regulation aims to prevent the government from subsidizing contractor promotional activities that do not directly benefit contract performance or public communication required by the contract.
Key Rules
- Definitions
- Public relations includes activities to maintain or enhance a company’s image or relations with the public. Advertising is defined as media use to promote sales or related activities, with the contractor controlling content and placement.
- Allowable Costs
- Only certain advertising and public relations costs are allowable, such as those required by contract, related to acquiring scarce items, disposing of surplus, promoting export sales, or as specified in FAR 31.205-34.
- Allowable public relations costs include contract-required activities, responding to inquiries, general communication with stakeholders, community service, plant tours, and certain ceremonies if contractually required.
- Unallowable Costs
- Most costs aimed at promoting sales, enhancing company image, or sponsoring events are unallowable, including promotional materials, souvenirs, memberships, and most ceremonies not required by contract.
Responsibilities
- Contracting Officers: Must review and approve only those public relations and advertising costs that meet the allowability criteria.
- Contractors: Must segregate and document allowable versus unallowable costs, ensuring only eligible expenses are charged to government contracts.
- Agencies: Should provide oversight and ensure compliance with cost principles during audits and contract administration.
Practical Implications
- This section prevents contractors from charging the government for general promotional activities, focusing reimbursement on contract-specific or public interest communications. Contractors must carefully track and justify any public relations or advertising costs billed to government contracts, as improper charges are a common audit finding.