31.205-22 Lobbying and political activity costs
Source: FAR 31.205-22 on acquisition.gov
Lobbying and political activity costs are generally unallowable under government contracts, and contractors must segregate and document these costs to ensure compliance.
Overview
FAR 31.205-22 establishes that costs associated with lobbying and political activities are generally unallowable for reimbursement under government contracts. This includes expenses related to influencing elections, legislation, or regulatory actions, as well as supporting political parties or campaigns. However, there are specific exceptions, such as providing technical information in response to a documented legislative request, lobbying to reduce contract costs or avoid impairment of contract authority, and activities expressly authorized by statute. Contractors must separately identify lobbying costs in indirect cost rate proposals and maintain adequate records to support the allowability of claimed costs. Disputes or uncertainties about the application of these rules should be resolved in advance using established procedures.
Key Rules
- Unallowable Lobbying and Political Activity Costs
- Costs for influencing elections, legislation, or regulatory matters, or supporting political organizations, are unallowable.
- Exceptions to Unallowability
- Certain technical presentations, cost-reducing lobbying, and statutorily authorized activities may be allowable.
- Cost Identification and Recordkeeping
- Lobbying costs must be separately identified in indirect cost proposals and treated as unallowable; adequate records must be maintained.
- Advance Resolution of Disputes
- Contractors should use existing procedures to resolve questions about the regulation’s interpretation or application before incurring costs.
Responsibilities
- Contracting Officers: Ensure contractors comply with lobbying cost restrictions and review cost proposals for proper identification of unallowable costs.
- Contractors: Segregate lobbying costs, maintain supporting records, and certify cost allowability; seek clarification on ambiguous situations.
- Agencies: Oversee compliance and assist in resolving disputes or questions about the regulation.
Practical Implications
- This regulation prevents government funds from being used for lobbying or political purposes, ensuring taxpayer money is not misused.
- Contractors must be diligent in identifying, segregating, and documenting lobbying-related costs to avoid disallowance or penalties.
- Common pitfalls include failing to properly segregate costs, misunderstanding allowable exceptions, or inadequate recordkeeping.
(a) Costs associated with the following activities are unallowable:
(1) Attempts to influence the outcomes of any Federal, State, or local election, referendum, initiative, or similar procedure, through in kind or cash contributions, endorsements, publicity, or similar activities;
(2) Establishing, administering, contributing to, or paying the expenses of a political party, campaign, political action committee, or other organization established for the purpose of influencing the outcomes of elections;
(3) Any attempt to influence-
(i) The introduction of Federal, state, or local legislation, or
(ii) The enactment or modification of any pending Federal, state, or local legislation through communication with any member or employee of the Congress or state legislature (including efforts to influence state or local officials to engage in similar lobbying activity), or with any government official or employee in connection with a decision to sign or veto enrolled legislation;
(4) Any attempt to influence-
(i) The introduction of Federal, state, or local legislation, or
(ii) The enactment or modification of any pending Federal, state, or local legislation by preparing, distributing or using publicity or propaganda, or by urging members of the general public or any segment thereof to contribute to or participate in any mass demonstration, march, rally, fund raising drive, lobbying campaign or letter writing or telephone campaign;
(5) Legislative liaison activities, including attendance at legislative sessions or committee hearings, gathering information regarding legislation, and analyzing the effect of legislation, when such activities are carried on in support of or in knowing preparation for an effort to engage in unallowable activities; or
(6) Costs incurred in attempting to improperly influence (see 3.401), either directly or indirectly, an employee or officer of the Executive branch of the Federal Government to give consideration to or act regarding a regulatory or contract matter.
(b) The following activities are excepted from the coverage of (a) of this section:
(1) Providing a technical and factual presentation of information on a topic directly related to the performance of a contract through hearing testimony, statements or letters to the Congress or a state legislature, or subdivision, member, or cognizant staff member thereof, in response to a documented request (including a Congressional Record notice requesting testimony or statements for the record at a regularly scheduled hearing) made by the recipient member, legislative body or subdivision, or a cognizant staff member thereof; provided such information is readily obtainable and can be readily put in deliverable form; and further provided that costs under this section for transportation, lodging or meals are unallowable unless incurred for the purpose of offering testimony at a regularly scheduled Congressional hearing pursuant to a written request for such presentation made by the Chairman or Ranking Minority Member of the Committee or Subcommittee conducting such hearing.
(2) Any lobbying made unallowable by paragraph (a)(3) of this subsection to influence state or local legislation in order to directly reduce contract cost, or to avoid material impairment of the contractor’s authority to perform the contract.
(3) Any activity specifically authorized by statute to be undertaken with funds from the contract.
(c) When a contractor seeks reimbursement for indirect costs, total lobbying costs shall be separately identified in the indirect cost rate proposal, and thereafter treated as other unallowable activity costs.
(d) Contractors shall maintain adequate records to demonstrate that the certification of costs as being allowable or unallowable (see 42.703-2) pursuant to this subsection complies with the requirements of this subsection.
(e) Existing procedures should be utilized to resolve in advance any significant questions or disagreements concerning the interpretation or application of this subsection.