New Cost Prohibition included in Senate Version of the 2015 NDAA

The 2015 National Defense Authorization Act (NDAA) is scheduled to be acted upon during the "lame duck" session of Congress beginning November 11th. The House has already passed a version, the Senate is considering a version and the two Chambers will need to meet and iron out any differences.

One of the provisions in the Senate version, Section 827, would prohibit contractors from charging certain costs to Government contracts. 10 USC Section 2324(e)(1) would be amended by adding the following:

Costs incurred by a contractor in connection with a congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described in subsection (k)(2).

The key to understanding this provision is to understand the term "disposition" as defined in Subsection (k)(2). A disposition is any of the following

• In the case of a criminal proceeding, a conviction (including a conviction pursuant to a plea of nolo contendere) by reason of the violation or failure
• In the case of a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of contractor liability on the basis of the violation or failure
• In the case of any civil or administrative proceeding, the imposition of a monetary penalty or an order to take corrective action 
• A final decision to debar or suspend the contractor, to rescind or void the contract, or to terminate the contract for default
• A disposition of the proceeding by consent or compromise if such action could have resulted in a disposition 

It is well established that costs related to dispositions of the above proceedings are unallowable. This new provision would disallow preparation, travel, and related costs when Congress hauls a contractor before a committee to explain the dirty deeds to whoever watches CSPAN and CSPAN2.