While most advertising costs are unallowable, FAR specifically lists cost that are allowable. These include:
- Costs specifically required by contract, or that arise from requirements of Government contracts, and that are exclusively for
- Acquiring scarce items for contract performance, or
- Disposing of scrap or surplus materials acquired for contract performance
If a cost meets the definition of "advertising" and does not meet one of these "allowable" examples, the cost is unallowable.
FAR also specifically lists the type of public relations that are allowable under Government contracts. These include:
- Costs specifically required by contract
- Costs of
- Responding to inquiries on company policies and activities
- Communicating with the public press, stockholders, creditors, and customers, and
- Conducting general liaison with news media and Government public relations officers, to the extent that such activities are limited to communication and liaison necessary to keep the public informed on matters of public concern such as notice of contract awards, plant closings or openings, employee layoffs or retirees, financial information, etc
Tomorrow we will look at examples of unallowable public relations costs.