ASBCA Alters The Definition Of Expressly Unallowable Costs Implicating Penalties

The Armed Service Board of Contract Appeals ("ASBCA"), in its recent decisions, continues to back away from its previous definition of expressly unallowable costs. In previous decisions, the ASBCA only found expressly unallowable costs when the cost was unallowable in all circumstances under the Federal Acquisition Regulation ("FAR") § 31.205. In recent decisions, the ASBCA has applied penalties for expressly unallowable costs if the cost was unallowable under FAR § 31.205 in the contractor's specific circumstances. These decisions suggest that contractors must be even more vigilant against claiming costs unallowable under FAR § 31.205 in order to avoid increased FAR penalties under flexibly priced contracts and CAS 405 noncompliances under firm, fixed priced contracts.