Can an engineering software be expensed to a contract?

We spend about $16K a year for the use of a high tech engineering software necessary to perform data analysis and modeling. Can we expense each of several in-house government contracts utilizing the software for the cost as a direct charge?

Are you suggesting pro-rating the annual cost among several contracts based on usage?

We spend about $16K a year for the use of a high tech engineering software necessary to perform data analysis and modeling. Can we expense each of several in-house government contracts utilizing the software for the cost as a direct charge?

smallbus, yes, you can.

But before you do so, I recommend you familiarize yourself with 31.205-4 "Determining Allocability" and 31.202 "Direct Costs" and 31.203 "Indirect Costs". Notice the part that says, "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." CAS 402 says much the same thing, but I'm going to assume you're exempt from CAS based on your User Name.

If you decide to treat this "high tech engineering software" as a direct cost, then you need to treat the cost of all such similar software as a direct cost as well. You need to be consistent in how you account for "high tech engineering software" across your portfolio of contracts. In addition, you need to ensure that you have priced those costs into your contract prices, to the extent that FAR Part 31 applies to them.

So go ahead, but make sure you've thought your decision through carefully, and are prepared to be consistent across all contracts and keep similar software costs out of your overhead/G&A pools. It will be difficult to undo your decision once made.

Hope this helps.