DOD Proposes to Clarify That Certain Fringe Benefits Are Unallowable Costs

April 9, 2013

DOD Proposes to Clarify That Certain Fringe Benefits Are Unallowable Costs

On February 28, 2013, the Department of Defense (DOD) issued a proposed rule to revise Defense FAR Supplement (DFARS) 231.205-6(m) to explicitly state that fringe benefits costs that are contrary to law, employer-employee agreements, or an established policy of the contractor are unallowable. The current DFARS simply states that the cost of fringe benefits are allowable to the extent that they are reasonable and are required by law, agreement, or the contractor’s established policy. The proposed rule is intended to clarify that any fringe benefit that does not meet this standard is unallowable and that claiming such costs subjects contractors to the penalties at Federal Acquisition Regulation 42.709-1. Written comments on the proposed rule should be submitted on or before April 29, 2013. (78 Fed. Reg. 13606, 2/28/2013.)  

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