The costs being questioned relate to various printed material Contractor produces and makes available to whoever asks for information. Contractor receives numerous requests from a large number of constituents to provide information about its technologies, capabilities, nature of its projects, experience of personnel, analyses of risks, contacts for follow-up technical questions, etc. Rather than respond individually to these requests, Contractor prepares material in advance to provide the requested information. The constituents who regularly request information include actual and potential clients (government and non-government), actual and potential vendors, various community groups, actual and potential teaming partners, security analysts, representatives of the media, etc.

The disputed material includes the following:

1. Statement of Qualification. These are spiraled notebook-like items consisting of 10-50 pages printed on two color paper. The cover sheet is full colored and glossy while all the pages inside are either one or two colors printed on plain paper. All contain a description of Scope of Services, Project Profile and Professional Profiles for distinct engineering specialties (e.g. OSHA, environmental services, etc.).

2. Comprehensive Resources Strategic Solutions. These are full colored items printed on glossy paper usually including photographs. They are either in the form of a one page foldout with six individuals pages or a small spiraled notebook. For the 6 page foldouts, there is a cover page followed by page(s) containing a list of services (1-5 pages). Some have additional information such as list of offices and information about the company. Like the Statement of Qualification there is separate material for various industries.

3. Financial Reports. These included annual reports for various years.

4. Environmental Regulatory Agency Atlas. This is a 192 page, three color 5" by 3" small manual that lists agencies with maps and directions.

5. Information Sheets. One or four page information sheets that are primarily two color plain sheets that cover a wide range of information. For example, random selection of five Information Sheets included Environmental Site Assessment, Community Outreach In Oakland, Representative Client List, List of Nevada Offices and Projects and Bioremediation Services

6.. Folders. These are two page two colored folders printed on glossy paper which are intended to hold the all the other material.

The material is usually located in one back area of each office so employees may collect and distribute relevant information to provide their constituents.

Responding to A DCAA Disallowance of“Public Relations” Costs - DCAA Position

During its audit of two years of incurred cost proposals, DCAA examined numerous transactions and isolated the invoices of one vendor that produced the material discussed above. The invoices included design and production of the material and DCAA questioned over $250,000 of the invoices in each year. It referenced FAR 31.205-1 as grounds for disallowing the costs stating the design and production costs associated with the material was "unallowable advertising and public relations costs." Also, since FAR 31.205-1 "expressly disallowed the costs" DCAA recommended imposition of penalties on the questioned costs.

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