If the entity is a segment, the co-venturers/parent entities have flexibility in allocating indirect costs to joint ventures and SBUs by either following their established practices for indirect cost allocation or adopting a "special allocation". For example, an organization may track or estimate the costs of services provided by the home office to the joint venture and remove those costs from the home office pool and allocate them to the segment. Further flexibility is allowed when the entity has unequal ownership, providing the minority contractor the option of allocating its residual home office costs to the joint venture or electing not to do so.

Practically, it should be noted that special allocations need advanced approval by the CO which often encounters delay for pricing proposals. Contractors might price the proposal using the special allocation method assuming approval before contract award and if later not approved, the contractor must revert to its established practice resulting in more cost being allocated than planned. Alternatively, the contractor may price the new work using its established practices and to avoid potential defective pricing allegations, will divulge the intent to adopt a special allocation. In taking into account the intended change, the government negotiator may seek a reduced cost and when later the change is adopted, the government will seek a downward adjustment again, getting "two bites at the same apple".

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