To Commingle or Not to Commingle Indirect Costs, That is the Question

A recent civil False Claims Act settlement is a stark reminder that contractors must be diligent and thoughtful in setting up their cost accounting structures and practices, particularly where the costs of various functions will support both government and commercial work. At the same time, contractors should be careful to not read too much into the settlement agreement or the underlying allegations, which wrongly suggest that contractors have an obligation to establish an infinite number of indirect cost pools and no flexibility to commingle indirect functions simply because the cost pools serve both government and commercial customers.

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