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MIKEBP

Defense Contract's B&P Usage for International Bidding

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Hello, wanted to ask a question about a discussion I had recently.   

I work for a Defense Contractor and recently heard that B&P dollars derived from performing on US Government Contracts has restrictions for use when developing International Bids for foreign governments. For instance, if you bid a job for a foreign government and spent $1M preparing the bid and the split of US Content to Foreign Content is 10%/90% (meaning most of the work will be done in the foreign country), then my understanding from the conversation is our pool of $B&P can only be used to absorb 10% ($100K) of the cost spent preparing the bid and the 90% ($900K) is un-absorbable, can't use the $B&P, and will need to come from another source like profit. 

Is my understanding correct or something that government contractors deal with going after international work whose B&P is derived from performing on US Government Contracts? Defined in the FAR? DCAA topic? Or just an accounting practice not applicable to this site?

Thanks for your help.       

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Was there anything in FAR 31.205-18 that was helpful to you?  Or 48 CFR 9904.420 (referenced in FAR 31.205-18(b))?

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MikeBP, did whoever told you this cite a regulation or law to support the statement?  It is good to be leary of statements like this if they are not backed up with some authority to support the statement.

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MikeBP,

The other posters are nicer and more diplomatic than I am. What you heard is nonsense.

Somebody is confusing DOD restrictions on allowable IR&D (found in the DFARS) with fictitious USG restrictions on allowable B&P. Not the same thing at all.

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Thinking about it this morning, there is a provision in CAS 420 that requires both IR&D and B&P expenses to be allocated to the segment that benefits from them, regardless of where the costs are incurred. So ... it's possible that what the OP was hearing was that B&P incurred on behalf of a foreign segment must be allocated to that segment in proportion to the benefit that the foreign segment expects to receive from the awarded contract.

That's a lot of supposition and interpretation of the original question, but I wanted to be thorough in my response.

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