Unallowable or Expressly Unallowable? It’s Not Even a Question.

Recently, the Defense Contract Audit Agency (DCAA) updated its internal guidance to refine its approach to identifying “expressly unallowable costs,” particular items or types of cost that, under the express provisions of an applicable law, regulation, or contract, are identified as unallowable.  See FAR 31.001; 9904.405-30(a)(2) (Cost Accounting Standard 405).  This is a fundamental concept because contractors must exclude expressly unallowable costs from their proposals, invoices, and claims.  FAR 31.201-6.  If a contractor includes them, the contractor may be subject to penalties (generally the amount paid for the expressly unallowable cost), plus interest.