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I'm posting this to obtain confirmation that others read the rules the same way as I do. If a company incures costs to re-brand itself, are those costs allowable? The costs would include outside vendors, internal labor expended on the effort, advertising costs and legal costs (associated with trademarking). My question is in two parts:

Part 1 -

My understanding is that most of these costs, excluding the legal cost associated with obtaining a trademark for the brand, would meet the criteria set forth in FAR 31.205-1(f)(1), as being unallowable public relations or advertising costs. Does anyone have an argument to make that would state any of these costs (excluding legal cost for the brand trademark) are allowable?

Part 2-

Trademark legal costs are not expressly unallowable under FAR 31. However - in this circumstance - are they unallowable because they fall under "purchased services performed by outside organizations" as contemplated by FAR 31.205-1©, and/or are directly associated costs with a rebranding effort that is considered unallowable under FAR 31.205-1(f)(1)?

Would be interested in hearing some debate around allowbility of any of these costs, since their primary purpose is to rebrand the company.

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I think you need to look at each cost individually and make a determination. Some may be unallowable, while others, such as purchasing new letterhead stationery, are allowable.

As for the legal costs, I think they fall under 31.205-33 and are probably allowable.

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I almost agree with Retreadfed. I agree you need to look at the transactions individually, but what I would look for would be the essential purpose for the transaction. For example, otherwise allowable legal costs directly associated with an unallowable purpose would, in my view, be unallowable.

Not having all the facts and details, in general I tend to agree with the original poster's position(s). Costs of branding (or rebranding) are generally for purposes of calling favorable attention to the entity; hence, unallowable public relations/advertising. That being said, I would not look to make unallowable such costs as new letterhead or business cards.

Hope this helps.

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H2H, with what unallowable purpose are the legal expenses associated? Registering a trademark is not unallowable. Rebranding itself does not make all costs incurred as a result unallowable as you agreed. A trademark or tradename is a form of intellectual property that can be protected. It is not necessarily a form of public relations or advertising but a way of identifying a business and its products. In this regard, if a rebranding requires a change of name agreement with the government in accordance with FAR 42.12, I would say the cost of pursuing the change of name agreement would be allowable.

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Retreadfed,

I was citing an example of a directly associated unallowable cost, one that would be allowable in and of itself, but would be made unallowable because it was caused by an unallowable purpose. It was an example to show that otherwise allowable costs can be made unallowable. It was an example of why looking at the underlying purpose of transactions is just as important--if not moreso--than just looking at the transactions in a vacuum.

Best to you.

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