Q.  My question relates to cell phone charges where the company pays a fixed rate per month for a fixed number of minutes.  Cell phones are used by employees which have mixture of personal use and business use on a direct contract for employees to communicate with prime contractor and government personnel.  My opinion is the company should allocate the fixed cell phone monthly charge between the contract and to the employees based on the percentage of total minutes actually used for business and personal usage (or allocate the personal use, if it is paid by company, to a fringe benefit pool).  I cannot locate anything specific in the FAR to support my opinion other than a gut feel that it is not proper to charge 100% of a fixed charge if there is non-business, non-contract related usage involved.

A.  There is really no guidance I am aware of that specifies how to charge the cost nor any one definitive way you should handle it.  I'm not sure from your question whether cell phone costs are charged direct to one cost type contract, is considered direct costs to several contracts or is included in an indirect cost pool.  But let me give you some general guidelines.

It is really a matter of judgment and materiality.  If cell phone costs are a material cost element (say more than 3-5 percent) of your indirect cost pool  then you might need to conduct an analysis of what is personal and what is not.  However, if it is an immaterial cost, the entire bill is commonly charged to the pool without the need to distinguish between personal and business expense unless you want to be both conservative and more precise (that's the judgment part). Be aware that once you start making the distinction, then you become vulnerable to assertions that your methodology is inaccurate and hence the cost can become unallowable. If telephone charges are direct charges of one or more contracts and they represent a material amount, then yes you might want to be more precise and conduct a personal versus business analysis and use the results of that analysis for determining costs charged. 

{TAG_FORM_TITLE}