DOD Issues New Guidance On B&P - But Is It Right?

CAS 402 has long provided that B&P costs incurred pursuant to a specific requirement of an existing contract may be distinguished from B&P generally and treated as direct costs of the requiring contract. As CAS 402-61 states:

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 contractor.

Given this long-established prescription, the November 10, 2011 memorandum issued by the Office of the Under Secretary of Defense entitled "Direct and Indirect Charging of Contractor Proposal Preparation and Negotiation Support Costs" is, in some ways at least, unremarkable. It hardly breaks new ground for the DOD to state, for example, that: