The Government accepted the Contractor's proposal that did not include bonuses; however, we did accepted and paid for employee retention bonuses. Because we accepted the aforementioned, contractor is attempting to bill for Holiday Bonus. In accordance with FAR 31.205-13, Gifts are unallowable. Is a Holiday Bonus considered a gift? The Government intends to deny Holiday Bonuses.
This response is based on the information provided. We suggest you discuss with your contracting and finance team, program manager and/or legal department as appropriate.
One of the first questions we would ask is, "Is the paying of bonuses part of this company's standard practice...is it in writing?" What does the disclosure statement say, if the company has one? We do not believe holiday bonuses fall within the concept of gifts as described in FAR 31.205-13-- Employee Morale, Health, Welfare, Food Service, and Dormitory Costs and Credits. This issue is more appropriately covered under FAR 31.205-6 -- Compensation for Personal Services.
The question is, "Is this holiday bonus a cost that is a reasonable, allowable incurred cost?" We suggest you take up the question with the cognizant DCAA office.