[Code of Federal Regulations]
[Title 48, Volume 7]
[Revised as of October 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR9905.502-61]

[Page 483-484]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
     CHAPTER 99--COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL 
           PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET
 
PART 9905--COST ACCOUNTING STANDARDS FOR EDUCATIONAL INSTITUTIONS--Table of Contents
 
Sec. 9905.502-61  Interpretation.

    (a) 9905.502, Cost Accounting Standard--Consistency in Allocating 
Costs Incurred for the Same Purpose by Educational Institutions, 
provides, in 9905.502-40, that ``* * * no final cost objective shall 
have allocated to it as a direct cost any cost, if other costs incurred 
for the same purpose, in like circumstances, have been included in any 
indirect cost pool to be allocated to that or any other final cost 
objective.''
    (b) This interpretation deals with the way 9905.502 applies to the 
treatment of costs incurred in preparing, submitting, and supporting 
proposals. In essence, it is addressed to whether or not, under the 
Standard, all such costs are incurred for the same purpose, in like 
circumstances.
    (c) Under 9905.502, costs incurred in preparing, submitting, and 
supporting proposals pursuant to a specific requirement of an existing 
contract are considered to have been incurred in different circumstances 
from the circumstances under which costs are incurred in preparing 
proposals which do not result from such a specific requirement. The 
circumstances are different because the costs of preparing proposals 
specifically required by the provisions of an existing contract relate 
only to that contract while other proposal costs relate to all work of 
the educational institution.
    (d) This interpretation does not preclude the allocation, as 
indirect costs, of costs incurred in preparing all proposals. The cost 
accounting practices used by the educational institution, however, must 
be followed consistently and the method used to reallocate such

[[Page 484]]

costs, of course, must provide an equitable distribution to all final 
cost objectives.