Lobbying Costs and Legislative Earmarks - Part 2

Yesterday we began this series on lobbying costs by discussing the types of lobbying costs that are unallowable. Today we continue with a discussion of the types of lobbying activities that are (or could be, depending upon circumstances) exempt from the general prohibition against lobbying. There are a few.

Congressional Testimony: Costs related to providing a technical and factual presentation of information on a topic directly related to the performance of a contract through hearing testimony, statements or letters to the Congress or a state legislature, or subdivision, member, or cognizant staff member thereof, in response to a documented request provided

• such information is readily obtainable and can be readily put in deliverable form; and 
• costs for related transportation, lodging or meals are incurred for the purpose of offering testimony at a regularly scheduled Congressional hearing.

Cost Reduction: Any lobbying activities that would normally be unallowable but are necessary in order to directly reduce contract costs, or to avoid material impairment of the contractor's authority to perform the contract.

Statutory Authorization: Any activity specifically authorized by statute to be undertaken with funds from the contract.

Government contractors are sometimes subpoenaed or invited to testify at Congressional hearings. If the testimony relates directly to a specific contract, the costs might be allowable. But contractors must be prepared to carefully document the allowability criteria for any form of lobbying activity that they wish to claim on their Government contracts.

There was an ASBCA (Armed Services Board of Contract Appeals) case, later affirmed by a federal district court, involving lobbying costs that were incurred at the direction of an Army Program Manager. The courts ruled that the Army did not have the authority under the cost principle, to waive the prohibition against lobbying activities. Those costs were unallowable.