31.205-33 Professional and consultant service costs
Source: FAR 31.205-33 on acquisition.gov
Professional and consultant service costs are only allowable if they are reasonable, necessary, properly documented, and not associated with improper or illegal activities.
Overview
FAR 31.205-33 addresses the allowability of costs for professional and consultant services in government contracts. It defines such services as those provided by individuals with specialized skills who are not employees of the contractor, and sets forth the conditions under which these costs are allowable or unallowable. The regulation emphasizes the need for reasonableness, prohibits costs related to improper or illegal activities, and requires thorough documentation and justification for both retainer fees and service payments.
Key Rules
- Definition and Scope
- Professional and consultant services must be provided by qualified individuals or firms not employed by the contractor, and are typically used for specialized advice, studies, or representation.
- Allowability of Costs
- Costs are allowable if reasonable, not contingent on government reimbursement, and compliant with related FAR sections.
- Unallowable Circumstances
- Costs are unallowable if services involve improper use of protected information, improper influence on procurement, violation of laws or regulations, or are inconsistent with the contracted purpose.
- Determining Allowability
- Contracting officers must consider factors such as necessity, past practices, cost-effectiveness, qualifications, and adequacy of agreements.
- Retainer Fees
- Retainer fees are allowable only if justified by necessity, past service levels, reasonableness, and proper documentation.
- Documentation Requirements
- All service fees must be supported by detailed agreements, invoices, and work products to substantiate the nature and scope of services provided.
Responsibilities
- Contracting Officers: Evaluate allowability using specified factors, ensure documentation, and enforce compliance with legal and regulatory standards.
- Contractors: Ensure services are necessary, reasonable, properly documented, and not in violation of laws or regulations; maintain detailed records for all agreements and services.
- Agencies: Oversee compliance, review documentation, and audit service costs as needed.
Practical Implications
- This section exists to prevent abuse or misuse of consultant and professional service costs in government contracts, ensuring only legitimate, necessary, and well-documented expenses are charged. Contractors must be diligent in documenting agreements and services, and avoid any activities that could be construed as improper or illegal. Common pitfalls include inadequate documentation, improper influence, or charging for unnecessary or unperformed services.
(a) Definition. "Professional and consultant services," as used in this subsection, means those services rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of the contractor. Examples include those services acquired by contractors or subcontractors in order to enhance their legal, economic, financial, or technical positions. Professional and consultant services are generally acquired to obtain information, advice, opinions, alternatives, conclusions, recommendations, training, or direct assistance, such as studies, analyses, evaluations, liaison with Government officials, or other forms of representation.
(b) Costs of professional and consultant services are allowable subject to this paragraph and paragraphs (c) through (f) of this subsection when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Government (but see 31.205-30 and 31.205-47).
(c) Costs of professional and consultant services performed under any of the following circumstances are unallowable:
(1) Services to improperly obtain, distribute, or use information or data protected by law or regulation (e.g., 52.215-1(e), Restriction on Disclosure and Use of Data).
(2) Services that are intended to improperly influence the contents of solicitations, the evaluation of proposals or quotations, or the selection of sources for contract award, whether award is by the Government, or by a prime contractor or subcontractor.
(3) Any other services obtained, performed, or otherwise resulting in violation of any statute or regulation prohibiting improper business practices or conflicts of interest.
(4) Services performed which are not consistent with the purpose and scope of the services contracted for or otherwise agreed to.
(d) In determining the allowability of costs (including retainer fees) in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the contracting officer shall consider the following factors, among others:
(1) The nature and scope of the service rendered in relation to the service required.
(2) The necessity of contracting for the service, considering the contractor’s capability in the particular area.
(3) The past pattern of acquiring such services and their costs, particularly in the years prior to the award of Government contracts.
(4) The impact of Government contracts on the contractor’s business.
(5) Whether the proportion of Government work to the contractor’s total business is such as to influence the contractor in favor of incurring the cost, particularly when the services rendered are not of a continuing nature and have little relationship to work under Government contracts.
(6) Whether the service can be performed more economically by employment rather than by contracting.
(7) The qualifications of the individual or concern rendering the service and the customary fee charged, especially on non-Government contracts.
(8) Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation, termination provisions).
(e) Retainer fees, to be allowable, must be supported by evidence that-
(1) The services covered by the retainer agreement are necessary and customary;
(2) The level of past services justifies the amount of the retainer fees (if no services were rendered, fees are not automatically unallowable);
(3) The retainer fee is reasonable in comparison with maintaining an in-house capability to perform the covered services, when factors such as cost and level of expertise are considered; and
(4) The actual services performed are documented in accordance with paragraph (f) of this subsection.
(f) Fees for services rendered are allowable only when supported by evidence of the nature and scope of the service furnished (see also 31.205-38(c)). However, retainer agreements generally are not based on specific statements of work. Evidence necessary to determine that work performed is proper and does not violate law or regulation shall include-
(1) Details of all agreements (e.g., work requirements, rate of compensation, and nature and amount of other expenses, if any) with the individuals or organizations providing the services and details of actual services performed;
(2) Invoices or billings submitted by consultants, including sufficient detail as to the time expended and nature of the actual services provided; and
(3) Consultants’ work products and related documents, such as trip reports indicating persons visited and subjects discussed, minutes of meetings, and collateral memoranda and reports.