The issue of "allowable costs" is applicable in government cost-plus contracts.

Question

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Allowable costs are a key concept in government cost-plus contracts, where the contractor receives reimbursement for all eligible costs related to the project plus a fee or profit margin. These contracts typically require the contractor to follow certain rules and regulations in order to ensure that only allowable costs are charged to the government, such as only charging for direct costs that are necessary and reasonable, and not including certain indirect costs such as excessive entertainment or lobbying expenses. The government may audit the contractor's records to ensure that allowable costs are being properly charged and documented.

The Issue of "Allowable Costs" Is Applicable in Government Cost-Plus