Is G&A an allocable and allowable indirect cost that can be applied to travel expenses?
Is there a specific FAR reference that can be provided?
1. The FAR Appendix references quoted below in pertinent part are applicable to this response.
Cost Accounting Preambles and Regulations (48 CFR Chapter 99)
Part 9904—Cost Accounting Standards [CAS]
9904.410 – Allocation of business unit general and administrative expenses to final cost objectives.
The purpose of this Cost Accounting Standard is to provide criteria for the allocation of business unit general and administrative (G&A) expenses to business unit final cost objectives based on their beneficial or causal relationship. These expenses represent the cost of the management and administration of the business unit as a whole.
9904.410-30 – Definitions.
(a) The following are definitions of terms which are prominent in this standard.
(3) Cost input
means the cost, except G&A expenses
, which for contract costing purposes is allocable to the production of goods and services during a cost accounting period.
(4) Cost objective
means a function, organizational subdivision, contract
or other work unit for which cost data are desired … .
(5) Final cost objective
means a cost objective which has allocated to it both direct
and indirect costs, and, in the contractor's accumulation systems, is one of the final accumulation points.
(6) General and administrative (G&A) expense
means any management, financial, and other expense which is incurred by or allocated to a business unit and which is for the general management and administration of the business unit as a whole
9904.410-50 – Techniques for application
(d) The cost input base selected to represent the total activity of a business unit during a cost accounting period may be: Total cost input
; value-added cost input; or single element cost input.
(1) A total cost input base is generally acceptable as an appropriate measure of the total activity of a business unit.
(2) … A value-added cost input base is total cost input less material and subcontract costs.
(f) Cost input shall include
those expenses which by operation of this Standard are excluded
from the G&A expense pool and are not part of a combined pool of G&A expenses and other expenses allocated using the same allocation base.
9904.418 Allocation of direct and indirect costs. [CAS 418]
(a) The following are definitions of terms which are prominent in this Standard.
(2) Direct cost
means any cost which is identified specifically
with a particular final cost objective. Direct costs are not limited to items which 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.
2. Our response is based on the application of the CAS Standards described above to the very limited facts provided in this inquiry. If the travel costs in question are allowable direct costs associated with the performance of a particular contract (i.e., cost objective) in accordance with CAS 418, then G&A costs can be allocated to these travel expenses pursuant to CAS 410. However, if the travel costs in question were incurred as part of the general management and administration of the business unit as a whole that are also included in the G&A cost pool, then additional G&A expense may not be allocated to such travel costs.