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  • Question

    Is this an allowable cost? FAR 31.205-6 (f) indicates that it may be if (i)Awards are paid or accrued under an agreement entered into in good faith between the contractor and the employees before the services are rendered or pursuant to an established plan or policy followed by the contractor so consistently as to imply, in effect, an agreement to make such payment; and (ii) Basis for the award is supported.


    Answer

    Yes, the basis for allowability includes the reference at FAR 31.205-6(f). However, that is not the only issue to consider. FAR 31.201-2(a) lists other considerations for determining whether a cost is allowable. As for the issue of allocability, the primary consideration is "...the basis of relative benefits received or other equitable relationship" (ref. FAR 31.201-4)). If the bonus is reward for work done specifically on the government contract, it would be charged directly if the salary was charged directly. If the bonus cannot be tied directly and exclusively to work done on the government contract, it should charged as an indirect cost if the salary was charged indirectly. 

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