Employee Stock Options Included in Indirect Costs Unallowable but Not Subject to Penalty; ASBCA No. 60086, Luna Innovations Inc.

Appeal of contracting officer’s final decision that the cost of employee stock options was an expressly unallowable cost and subject to penalty is denied in part, where the securities costs based on stock price volatility are unallowable, but sustained in part, where the contractor and government had valid reasons to disagree as to its allowability, making the costs unallowable but not subject to penalty.