There have been inconsistencies among contractors and Government oversight agencies in applying the requirements of the FAR cost principle on Bid and Proposal Costs (see FAR 31.205-18).
Some contractors and contract auditors and contracting officers maintain that B&P funds cannot be incurred until a formal solicitation has been published. Others take a broader view and maintain that B&P funds can be incurred before a formal solicitation has been published to, for example,
- answer sources sought
- answer requests for information
- preparation after a draft statement of work has been issued
- preparation after a draft request for proposal has been issuedin applying
Bid and proposal (B&P) costs are costs incurred in preparing, submitting, and supporting bids and proposals (whether or not solicited) on potential Government or non-Government contracts. B&P does not include the costs of effort sponsored by a grant or cooperative agreement, or required in the performance of a contract (see FAR 31.205-18).
The DoD response the question on when B&P spending can begin is as follows:
The use of funds in response to sources sought, requests for information, and draft statements of work and draft requests for proposals could reasonably be interpreted as "incurred in preparing, submitting, and supporting bids and proposals.Charging such activities as B&P is probably the cleanest way to account for the costs. The alternative is to charge the costs to Selling (see FAR 31.205-38) which would be subject to "second-guessing" by contract auditors and contracting officers as to whether such costs are allowable. Follow the DoD lead in this matter.