31.205-28
Other business expenses
FAR 31.205-28 allows certain recurring business expenses—such as shareholder meeting costs and regulatory filings—to be charged as allowable costs under government contracts when properly documented.
Overview
FAR 31.205-28 outlines which recurring business expenses are considered allowable costs under government contracts. This section specifically addresses costs related to corporate governance and regulatory compliance, clarifying that certain routine expenses are reimbursable when incurred in the normal course of business. The regulation provides examples such as registry and transfer charges for securities, costs of shareholders’ meetings, proxy solicitations, preparing reports for shareholders, submitting required reports to regulatory bodies, incidental costs of directors’ meetings, and other similar expenses.
Key Rules
- Allowable Recurring Costs
- Registry and transfer charges from changes in ownership of contractor-issued securities are allowable.
- Corporate Governance Expenses
- Costs for shareholders’ meetings, proxy solicitations, and preparing/publishing reports to shareholders are allowable.
- Regulatory Compliance Costs
- Preparing and submitting required reports and forms to taxing and regulatory bodies is allowable.
- Incidental Meeting Costs
- Incidental costs of directors’ and committee meetings are allowable.
- Other Similar Costs
- Other recurring, similar business expenses may also be allowable if they align with the examples listed.
Responsibilities
- Contracting Officers: Must ensure claimed costs fall within the allowable categories and are reasonable.
- Contractors: Must accurately identify, document, and claim only those recurring business expenses that are allowable under this section.
- Agencies: May review and audit claimed costs for compliance with these rules.
Practical Implications
- This section exists to clarify which routine business expenses are reimbursable, reducing disputes over cost allowability.
- Contractors should maintain clear records and justification for these expenses.
- Common pitfalls include claiming non-recurring or excessive costs, or misclassifying unallowable expenses as allowable under this section.