DoD Revises its Cost Principle on Public Relations and Advertising

The Defense Federal Acqusition Regulation Supplement (DFARS) 231.205-1, Public Relations and Advertising Costs, has been added to disallow amounts paid by contractors to the Government for leasing Government equipment, including lease payments and reimbursement for support services.

Specifically, the new DFARS states:

"Unallowable public relations and advertising costs also include monies paid to the Government associated with the leasing of Govrnment equipment, including lease payments and reimbursement for support services..."

Often times, Government contractors will lease Government equipment to use in public relations and advertising effort such as trade shows, air shows and other special events. For contracts awarded after December 24, 2009, these costs will no longer be allowable under Government contracts. This new provision does not apply to Foreign Military Sales.

DCAA has instructed its audit staff to ensure that DoD contactors have the requisite controls in place to preclude recoupment of these cots.