It has long been held that legal, accounting and consulting costs incurred in connection with the performance or administration of a contract are allowable while costs incurred in connection with prosecution of a claim under the Contracts Dispute Act (CDA), an appeal or defense against government claims are unallowable. The timing of submitting a claim can affect both the allowability of professional services costs related to it as well as when the interest clock starts, which is only after the claim is submitted. Whether a cost is an allowable cost of contract administration or an unallowable cost of a claim depends upon the purpose for which it was incurred. There is a "strong legal presumption" that costs incurred before a CDA claim is submitted are allowable. Moreover, because only costs associated with the "prosecution" or "defense" of a claim or appeal are unallowable, even after a CDA claim is submitted, the costs may still be allowable provided they are incurred for the genuine purpose of materially furthering the negotiation process. In the important Bill Strong Enterprises case the Court left open the question of whether costs incurred after submission of the claim but in pursuit of contract administration are allowable. Subsequent cases have split on the matter, where the ASBCA has held they can be while the Court of Federal Claims holds they cannot.

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