Political Campaign Activities at Contractor Facilities

This is an audit alert for contractors who might have hosted a political event at their facility or may do so in the future. Costs associated with campaign activities, such as political candidates' appearances and speeches at contractor facilities are unallowable when those activities are clearly an attempt by the contractor to influence the outcome of an election by soliciting votes (see FAR 31.205-22(a)(1)).

Auditors are being instructed to consider (i) how the candidate is portrayed by the contractor and (ii) the subject matter of the candidate's speech in determining whether costs meet the definition of legislative lobbying costs. Any activity that is remotely related to lobbying activities will be questioned and subject to penalty for claiming unallowable costs. If, for some reason, the information to make such a determination is not available or is not made available to the auditor, the auditor may still question the costs as unsupported. Auditors are also being instructed to carefully consider directly associated costs such as protocol activities. Also, employees who attend campaign activities should charge an appropriate indirect and/or unallowable charge code for the time spent at that activity.
Contractors who host political activities at their facilities should make certain that those functions do not constitute unallowable legislative lobbying activities before charging related costs to any indirect cost pool that gets allocated to Government contracts.