Being new to Acquisition, I was surprised to learn recently that State and Franchise Taxes are considered allowable under FAR 31.205-41. Contractors on cost reimbursable contracts are adding these expenses on a routine basis as ODC allowable expenses. I would be interested in knowing anything about the background and reasoning behind this regulation. I just find it a little hard to understand why we reimburse the contractor for their cost, plus add profit, and pay their taxes too. Shouldn't they pay their own taxes?