Lobbying and political activity costs
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.