---
kind: "section"
citation: "10 U.S.C. § 3750"
title: "10"
title_heading: "Armed Forces"
number: "3750"
heading: "Proceeding costs not allowable"
release: "119-102"
url: "https://uscodex.org/usc/10/3750"
units:
  - "Subtitle A — General Military Law"
  - "Part V — Acquisition"
  - "Subpart D — General Contracting Provisions"
  - "Chapter 273 — Allowable Costs"
  - "Subchapter I — General"
---

# §3750. Proceeding costs not allowable

- (a) **Definitions.—** In this section:
  - (1) **Costs.—** The term “costs”, with respect to a [proceeding](#a-3)—
    - (A) means all [costs](#a-1) incurred by a [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7), whether before or after the commencement of any such [proceeding](#a-3); and
    - (B) [includes](/usc/10/101.md?p=g-4)—
      - (i) administrative and clerical expenses;
      - (ii) the cost of legal services, including legal services performed by an employee of the [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7);
      - (iii) the cost of the services of accountants and consultants retained by the [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7); and
      - (iv) the [pay](/usc/10/101.md?p=a-15) of directors, [officers](/usc/10/101.md?p=b-1), and employees of the [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) for time devoted by such directors, [officers](/usc/10/101.md?p=b-1), and employees to such [proceeding](#a-3).
  - (2) **Penalty.—** The term “penalty” does not include restitution, reimbursement, or compensatory damages.
  - (3) **Proceedings.—** The term “proceeding” [includes](/usc/10/101.md?p=g-4) an investigation.
- (b) **In General.—** Except as otherwise provided in this section, [costs](#a-1) incurred by a [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) in connection with any criminal, civil, or administrative [proceeding](#a-3) commenced by the [United States](/usc/10/101.md?p=a-1), by a [State](/usc/10/2815a.md?p=g-2), or by a [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) employee submitting a complaint under [section 4701 of this title](/usc/10/4701.md) are not allowable as reimbursable [costs](#a-1) under a [covered contract](/usc/10/3741.md?p=2), subcontract, or personal services contract if the [proceeding](#a-3)—
  - (1) relates to a violation of, or failure to comply with, a Federal or [State](/usc/10/2815a.md?p=g-2) statute or regulation or to any other activity described in [section 4701(a)(1) of this title](/usc/10/4701.md?p=a-1); and
  - (2) results in a disposition described in [subsection (c)](#c).
- (c) **Covered Dispositions.—** A disposition referred to in [subsection (b)(2)](#b-2) is any of the following:
  - (1) In the case of a criminal [proceeding](#a-3), a conviction (including a conviction pursuant to a plea of nolo contendere) by reason of the violation or failure referred to in [subsection (b)](#b).
  - (2) In the case of a civil or administrative [proceeding](#a-3) involving an allegation of fraud or similar misconduct, a determination of [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) liability on the basis of the violation or failure referred to in [subsection (b)](#b).
  - (3) In the case of any civil or administrative [proceeding](#a-3), the imposition of a monetary [penalty](#a-2) or an order to take corrective action under [section 4701 of this title](/usc/10/4701.md) by reason of the violation or failure referred to in [subsection (b)](#b).
  - (4) A final decision—
    - (A) to debar or suspend the [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7);
    - (B) to rescind or void the contract, subcontract, or personal services contract; or
    - (C) to terminate the contract, subcontract, or personal services contract for default;

    by reason of the violation or failure referred to in [subsection (b)](#b).

  - (5) A disposition of the [proceeding](#a-3) by consent or compromise if such action could have resulted in a disposition described in paragraphs [(1)](#c-1), [(2)](#c-2), [(3)](#c-3), or [(4)](#c-4).
- (d) **Costs Allowed by Settlement Agreement in Proceeding Commenced by United States.—** In the case of a [proceeding](#a-3) referred to in [subsection (b)](#b) that is commenced by the [United States](/usc/10/101.md?p=a-1) and is resolved by consent or compromise pursuant to an agreement entered into by a [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) and the [United States](/usc/10/101.md?p=a-1), the [costs](#a-1) incurred by the [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) in connection with such [proceeding](#a-3) that are otherwise not allowable as reimbursable [costs](#a-1) under such subsection may be allowed to the extent specifically provided in such agreement.
- (e) **Costs Specifically Authorized in Proceeding Commenced by State.—** In the case of a [proceeding](#a-3) referred to in [subsection (b)](#b) that is commenced by a [State](/usc/10/2815a.md?p=g-2), the [head of the agency](/usc/10/3741.md?p=4) or Secretary of the military [department](/usc/10/101.md?p=a-6) concerned that awarded the [covered contract](/usc/10/3741.md?p=2), subcontract, or personal services contract involved in the [proceeding](#a-3) may allow the [costs](#a-1) incurred by the [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) in connection with such [proceeding](#a-3) as reimbursable [costs](#a-1) if the [agency head](/usc/10/3741.md?p=4) or Secretary determines, in accordance with the [Federal Acquisition Regulation](/usc/10/3002.md), that the [costs](#a-1) were incurred as a result of (1) a specific term or condition of the contract, subcontract, or personal services contract, or (2) specific written instructions of the [agency](/usc/10/3741.md?p=5) or military [department](/usc/10/101.md?p=a-6).
- (f) **Other Allowable Costs.—**
  - (1) **In general.—** Except as provided in [paragraph (3)](#f-3), [costs](#a-1) incurred by a [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) in connection with a criminal, civil, or administrative [proceeding](#a-3) commenced by the [United States](/usc/10/101.md?p=a-1) or a [State](/usc/10/2815a.md?p=g-2) in connection with a [covered contract](/usc/10/3741.md?p=2), subcontract, or personal services contract may be allowed as reimbursable [costs](#a-1) under the contract, subcontract, or personal services contract if such [costs](#a-1) are not disallowable under [subsection (b)](#b), but only to the extent provided in [paragraph (2)](#f-2).
  - (2) **Amount of Allowable Costs.—**
    - (A) **Maximum amount allowed.—** The amount of the [costs](#a-1) allowable under [paragraph (1)](#f-1) in any case may not exceed the amount equal to 80 percent of the amount of the [costs](#a-1) incurred, to the extent that such [costs](#a-1) are determined to be otherwise allowable and allocable under the [Federal Acquisition Regulation](/usc/10/3002.md).
    - (B) **Content of regulations.—** Regulations issued for the purpose of [subparagraph (A)](#f-2-A) shall provide for appropriate consideration of—
      - (i) the complexity of procurement litigation;
      - (ii) generally accepted principles governing the award of legal fees in civil actions involving the [United States](/usc/10/101.md?p=a-1) as a party; and
      - (iii) such other factors as may be appropriate.
  - (3) **When otherwise allowable costs are not allowable.—** In the case of a [proceeding](#a-3) referred to in [paragraph (1)](#f-1), [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) [costs](#a-1) otherwise allowable as reimbursable [costs](#a-1) under this subsection are not allowable if—
    - (A) such [proceeding](#a-3) involves the same [contractor](/usc/10/9511.md?p=7) or subcontractor, or personal services [contractor](/usc/10/9511.md?p=7) misconduct alleged as the basis of another criminal, civil, or administrative [proceeding](#a-3); and
    - (B) the [costs](#a-1) of such other [proceeding](#a-3) are not allowable under [subsection (b)](#b).

## Source credit

(Added and amended Pub. L. 116–283, div. A, title XVIII, § 1832(a), (i), Jan. 1, 2021, 134 Stat. 4218, 4222; Pub. L. 117–81, div. A, title XVII, § 1701(b)(11), Dec. 27, 2021, 135 Stat. 2134.)

## Notes

### Editorial Notes

### Codification

The text of subsec. (k) of section 2324 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1832(i), was based on Pub. L. 100–700, § 8(b), Nov. 19, 1988, 102 Stat. 4636; Pub. L. 101–189, div. A, title VIII, § 853(a)(1)(A), (b)(3), Nov. 29, 1989, 103 Stat. 1518; Pub. L. 103–355, title II, § 2101(a)(11), Oct. 13, 1994, 108 Stat. 3308; Pub. L. 112–239, div. A, title VIII, § 827(g), Jan. 2, 2013, 126 Stat. 1836; Pub. L. 114–261, § 1(b)(1), Dec. 14, 2016, 130 Stat. 1362.

### Prior Provisions

Prior sections 3750 to 3756 were renumbered sections 7280 to 7286 of this title, respectively.

### Amendments

2021—Subsec. (a). Pub. L. 116–283, § 1832(i)(1)(A), (B), redesignated par. (6) of section 2324(k) of this title as subsec. (a) of this section, inserted heading, substituted “In this section” for “In this subsection” in introductory provisions, and redesignated subpars. (B), (C), and (A) as pars. (1) to (3), respectively.

Subsec. (a)(1). Pub. L. 116–283, § 1832(i)(1)(C), inserted heading and redesignated cls. (i) and (ii) and its subcls. (I) to (IV) as subpars. (A) and (B) and cls. (i) to (iv), respectively.

Subsec. (a)(2), (3). Pub. L. 116–283, § 1832(i)(1)(D), (E), inserted heading.

Subsec. (b). Pub. L. 116–283, § 1832(i)(2), (3), redesignated par. (1) of subsec. (k) of section 2324 of this title as subsec. (b) of this section, inserted heading, substituted “this section” for “this subsection” and “section 4701” for “section 2409”, redesignated inline subpars. (A) and (B) as pars. (1) and (2), respectively, and reformatted text, and substituted “in section 4701(a)(1)” for “in subparagraphs (A) through (C) of section 2409(a)(1)” in par. (1) and “subsection (c)” for “paragraph (2)”in par. (2).

Subsec. (c). Pub. L. 116–283, § 1832(i)(2), (4)(A)–(D), redesignated par. (2) of section 2324(k) of this title as subsec. (c) of this section, inserted heading, substituted “subsection (b)(2)” for “paragraph (1)(B)” in introductory provisions, and “subsection (b)” for “paragraph (1)” wherever appearing, and redesignated subpars. (A) to (E) as pars. (1) to (5), respectively.

Subsec. (c)(3). Pub. L. 116–283, § 1832(i)(4)(E), substituted “section 4701” for “section 2409”.

Subsec. (c)(4). Pub. L. 116–283, § 1832(i)(4)(F), redesignated cls. (i) to (iii) as subpars. (A) to (C), respectively.

Subsec. (c)(5). Pub. L. 116–283, § 1832(i)(4)(G), substituted “paragraphs (1), (2), (3), or (4)” for “subparagraph (A), (B), (C), or (D)”.

Subsec. (d). Pub. L. 116–283, § 1832(i)(2), (5), redesignated par. (3) of section 2324(k) of this title as subsec. (d) of this section, inserted heading, and substituted “subsection (b)” for “paragraph (1)” and “such subsection” for “such paragraph”.

Subsec. (e). Pub. L. 116–283, § 1832(i)(2), (6), redesignated par. (4) of section 2324(k) of this title as subsec. (e) of this section, inserted heading, and substituted “subsection (b)” for “paragraph (1)”, “(1)” for “(A)”, and “(2)” for “(B)”.

Subsec. (f). Pub. L. 116–283, § 1832(i)(2), (7)(A), (B), redesignated par. (5) of section 2324(k) of this title as subsec. (f) of this section, inserted heading, and redesignated subpars. (A) to (C) as pars. (1) to (3), respectively, and realigned margins.

Subsec. (f)(1). Pub. L. 116–283, § 1832(i)(7)(A), (C), inserted heading and substituted “paragraph (3)” for “subparagraph (C)”, “subsection (b)” for “paragraph (1)”, and “paragraph (2)” for “subparagraph (B)”.

Subsec. (f)(2). Pub. L. 116–283, § 1832(i)(7)(D)(i), (ii), inserted heading and redesignated cls. (i) and (ii) as subpars. (A) and (B), respectively.

Subsec. (f)(2)(A). Pub. L. 116–283, § 1832(i)(7)(D)(i), (iii), inserted heading and substituted “paragraph (1)” for “subparagraph (A)”.

Subsec. (f)(2)(B). Pub. L. 116–283, § 1832(i)(7)(D)(iv), (E), inserted heading, substituted “subparagraph (A)” for “clause (i)”, inserted dash after “consideration of”, and reorganized remainder of existing text into designated cls. (i) to (iii).

Subsec. (f)(3). Pub. L. 116–283, § 1832(i)(7)(F), as amended by Pub. L. 117–81, § 1701(b)(11), inserted heading, substituted “paragraph (1)” for “subparagraph (A)” and “under this subsection” for “under this paragraph”, inserted dash after “not allowable if”, redesignated inline cls. (i) and (ii) as subpars. (A) and (B), respectively, and reformatted text, and, in subpar. (B), substituted “subsection (b)” for “paragraph (1)”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2021 Amendment

Amendment by Pub. L. 117–81 applicable as if included in the enactment of title XVIII of Pub. L. 116–283 as enacted, see section 1701(a)(2) of Pub. L. 117–81, set out in a note preceding section 3001 of this title and Effective Date note below.

### Effective Date

Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title.

### Regulations

Pub. L. 100–700, § 8(d), Nov. 19, 1988, 102 Stat. 4638, provided that: “The regulations necessary for the implementation of section 306(e) of the Federal Property and Administrative Services Act of 1949 [now 41 U.S.C. 4304] (as added by subsection (a)) and section 2324(k)(5) of title 10, United States Code [see 10 U.S.C. 3750(f)] (as added by subsection (b))— shall be prescribed not later than 120 days after the date of the enactment of this Act [Nov. 19, 1988]; and shall apply to contracts entered into more than 30 days after the date on which such regulations are issued.”