Allowability of fraud costs
Started by Old-Dog · May 5, 2010 · 1 replies
- OOriginal post
Old-Dog
May 5, 2010 · 16y ago
If a prime contractor has a cost plus award fee contract and some of their employees comitted fraud (submitted false documents) which resulted in losses to the prime, is that loss reimbursable by the government?
- h
here_2_help
May 5, 2010 · 16y ago
So you are saying that some of the prime's own employees committed wrongful acts and, as a result, the prime suffered a financial loss? How is that loss a cost to the government? A cost-plus-award-fee contract is one in which the government will reimburse actual, allowable costs. You need to incur a cost, not record a loss, in order to get reimbursed.
And even if the "loss" was somehow a cost (debit to an expense account) it would be unallowable per 31.205-15(
. So you wouldn't get reimbursed in any possible case.However, the company may have legal recourse against the employees.
Hope this helps.