The CAS Board clarified conditions under which a contractor can charge proposal costs, both direct and indirect, without violating CAS 402. The interpretation concluded that not all proposal costs are incurred in like circumstances – costs of preparing a proposal pursuant to a specific requirement of an existing contract, which can be charged specifically to that contract, was considered to be different circumstances from those which are not required by that contract, which can be charged indirect. Interestingly, the interpretation does not preclude the indirect allocation of costs incurred in preparing all proposals, thus permitting contractors to allocate indirectly those proposal costs that are permitted to be charged direct.

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