Ambiguous Federal Acquisition Regulation Criteria on Defense Contractors' Public Relations Costs.

This GAO report focuses on the need to strengthen the criteria governing allowability of defense contractors public relations PR costs. This hearing focused on such expenses as advertising selling entertainment and trade, business, technical, and professional activity costs. Recently, DoD reviewed contracting officer final overhead cost settlements at 12 contracting activities. GAO work was performed in accordance with generally accepted government standards. In reviewing the settlements, we observed what we believe is a fundamental problem in the way these costs are treated in determining whether or not they are allowable. The problem lies in the ambiguity of certain Federal Acquisition Regulation FAR criteria for determining what is an allowable contract cost. This ambiguity causes contractors, the Defense Contract Audit Agency DCAA, and contracting officers to have differing interpretations on allowability.