We frequently find contractors reluctant to adopt service centers in fear that such a practice would be inconsistent with “proper cost accounting” and that government auditors and contracting personnel will object. Contractors are given considerable discretion in how they decide to allocate their costs to contracts. Numerous Board and Court cases have established that a contractor-selected allocation method should not be altered by the government unless such a method produces inequitable results.  In fact, the contractor’s method need not even be the “best” method but merely an equitable method. Government auditors frequently see that contractors modify their accounting systems to achieve various goals.

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