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  • Question

    Is it unusual or permissible to charge the cost to rent space directly to the contract?


    Answer

    If the rent of the space is solely for the purposes of performing the contract and it complies with FAR 31.204, then yes it is permissible to charge it to the contract. See below for more information:

    FAR 31.204, (a) Costs are allowable to the extent they are reasonable, allocable, and determined to be allowable under 31.201, 31.202, 31.203, and 31.205.

    FAR 2.101 definition of Direct Costs: 
    “Direct cost” means any cost that is identified specifically with a particular final cost objective. Direct costs are not limited to items that are incorporated in the end product as material or labor. Costs identified specifically with a contract are direct costs of that contract All costs identified specifically with other final cost objectives of the contractor are direct costs of those cost objectives.

    FAR 2.101 definition of Indirect Costs:  Indirect cost” means any cost not directly identified with a single final cost objective, but identified with two or more final cost objectives or with at least one intermediate cost objective.

    See also FAR 52.216-7 -- Allowable Cost and Payment clause, which should be in your CPFF contract.

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