Is it permissible to ever charge ODC and labor to the same CLIN? What are the consequences should this action be identified, possibly during an audit?
It would be permissible to charge Other Direct Costs (ODC) to a contract line item (CLIN) if ODCs represented costs of items or services described in the contract and as described for that particular CLIN. In other words, the appropriateness of charging a particular CLIN for costs of an item or service is highly dependent upon that CLIN’s contractual description or scope of work.
Open full Question Details
The acquisition regulation and related guidance provide a fairly high level of detail regarding the appropriate use of Contract Line Items (CLINs), including coverage for when it is appropriate to establish separate line items (see FAR Subpart 4.10, DFARS 204.7103, and PGI 204.71) in the first place and at the time of contract execution. The key provisions of the cited regulation and guidance might be appropriately summarized as follows: Separate contract lines items (CLINs) are to be used when separately identifiable “items or services “ are to be acquired.
Whether or not it is permissible to charge the contract effort represented by Other Direct Costs (ODC) to a particular CLIN is highly dependent upon whether ODCs are within that particular CLIN’s scope or description as called out in the contract itself.
For example, it would be appropriate to charge ODC’s to a particular CLIN if those costs are allocable to the CLIN’s described items or services (section B and C of the Uniform Contract Format). Here, by describing the CLIN at issue as “the labor CLIN”, it is implied that ODCs are not within the scope of “the labor CLIN” as ODC’s are not “labor.” But, additional facts and a more thorough analysis of the CLIN descriptions are needed to better answer this question.