Question: Concerning immigration fees incurred by a consulting firm for people hired from overseas as contractors to work in the US on a specific contract. Would these costs be allowable G&A costs or direct costs to the contract? I'm thinking when these people have completed the current contract they will probably stay in the US and be assigned to work specifically on another contract. What are your thoughts?

Response: I would be more inclined to assign this as direct cost to the contract. Why? Well you stated that they are coming specifically to work on the contract and if they work solely on the contract during its entirety than the reason there are immigration fees are specifically related to the contract.

Once the contract is completed is another issue. There will no longer be any immigration fees to assign to new contracts.

Now if there is a chance that they may work on several contracts then I would consider the costs going into Overhead rather than G&A if there are 2 or more Pools. If there is only 1 Indirect Cost Pool than that is where the cost would go.

I say this because other contracts should not bare any cost that is incurred specifically for another contract (Generally).

Now remember that the test is materiality and risk. If it is a small dollar value than it really does not matter because the impact either way would be immaterial.

So the question becomes what should the companies policy be. It depends on how often this may happen and how significant the cost. Also, if the Customer will allow a line item for charging the cost direct or not.

If this is a seldom occuring situation I would first try to get approval for a direct costs. If it is expected to be ongoing and people may work on various contracts than I would include it in my Overhead versus G&A Pool, unless I only had one pool.