Conventional wisdom says that you cannot charge a cost both direct and indirect. This is true to a certain extent because that would result in double counting. FAR (Federal Acquisition Regulations) and CAS (Cost Accounting Standards) require that each type of costs be allocated only once on on one basis to contracts and other final cost objectives. So, for example, you wouldn't charge QC labor direct to a Government contract but charge QC labor for commercial contracts to an indirect rate pool because then, the Government contract would be charged twice, once direct and once indirect. Some contractors take this idea a little too far, however, and try to force employee's into either direct or indirect. The requirements focus on "types" of costs, not categories of costs. So, QC labor is different than Management labor and both are different than Bid and Proposal labor. It is common, especially among smaller companies, for employees to wear multiple hats. One employee, in a given day, might charge work to a contract (direct), perform sustaining engineering effort (could be direct or indirect), work on a proposal for new work (indirect) and supervise some staff (indirect). Obviously, a good timekeeping system is necessary to accurately track, accumulate, and distribute these labor costs to the proper direct or indirect bucket.
For CAS covered contractors, these charging practices must be documented in a disclosure statement. But even for non-CAS covered contractors, we recommend documentation. It clarifies things for employees, ensures consistent practices, and will help when supporting incurred cost proposals or forward pricing proposals.
There are other situations, besides labor, where it would be appropriate to charge costs both direct and indirect. CAS gives a good example concerning fire protection. A contractor charges fire protection indirect but a contract requires fire protection services over and above what the contractor normally provides. The "over and above" effort can be charged direct while the normal services continue as an indirect charge. Security guard services is a similar example that we see or hear of quite often - especially in classified contracts.