Tuesday, April 12, 2011

Civil Defense Costs

Its interesting once in awhile to look back at FAR cost principles that have been deleted and to determine the Government's reasoning behind the decision to remove them. One such deletion that recently caught our attention was FAR 31.205-5, Civil Defense Costs (we were briefing a very old contract).

According to the now deleted FAR 31.205-5, civil defense costs are those incurred in planning for, and protecting life and property against the possible effects of enemy attack. Costs related to civil defense measures, such as costs in excess of normal plant protection costs, first-aid training and supplies, fire fighting training and equipment, posting of additional exit notices and directions, and other approved civil defense measures undertaken on the contractor's premises pursuant to suggestions or requirements of civil defense authorities were allowable when allocated to all work of the contractor. Contributions to local civil defense projects however were unallowable.

In 1998, the FAR councils reasoned that with the end of the Cold War, the special guidance provided in the cost principle was no longer necessary so they removed it. In removing the guidance, the FAR councils stated that the acceptability of this type of costs would henceforth be governed by the "catch-all" allocability, allowability, and reasonableness criteria discussed in FAR Part 31.

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