---
kind: "section"
citation: "41 U.S.C. § 4310"
title: "41"
title_heading: "Public Contracts"
number: "4310"
heading: "Proceeding costs not allowable"
release: "119-102"
url: "https://uscodex.org/usc/41/4310"
units:
  - "Subtitle I — Federal Procurement Policy"
  - "Division C — Procurement"
  - "Chapter 43 — Allowable Costs"
---

# §4310. Proceeding costs not allowable

- (a) **Definitions.—** In this section:
  - (1) **Costs.—** The term “costs”, with respect to a [proceeding](#a-3), means all costs incurred by a contractor, subcontractor, or personal services contractor, whether before or after the commencement of the [proceeding](#a-3), including—
    - (A) administrative and clerical expenses;
    - (B) the cost of legal services, including legal services performed by an [employee](/usc/41/8101.md?p=a-6) of the contractor, subcontractor, or personal services contractor;
    - (C) the cost of the services of accountants and consultants retained by the contractor, subcontractor, or personal services contractor; and
    - (D) the pay of directors, officers, and [employees](/usc/41/8101.md?p=a-6) of the contractor, subcontractor, or personal services contractor for time devoted by those directors, officers, and [employees](/usc/41/8101.md?p=a-6) to the [proceeding](#a-3).
  - (2) **Penalty.—** The term “penalty” does not include restitution, reimbursement, or compensatory damages.
  - (3) **Proceeding.—** The term “proceeding” includes an investigation.
- (b) **In General.—** Except as otherwise provided in this section, [costs](#a-1) incurred by a contractor, subcontractor, or personal services contractor in connection with a criminal, civil, or administrative [proceeding](#a-3) commenced by the Federal Government, by a State, or by a contractor, subcontractor, or personal services contractor or grantee [employee](/usc/41/8101.md?p=a-6) submitting a complaint under [section 4712 of this title](/usc/41/4712.md) are not allowable as reimbursable [costs](#a-1) under a [covered contract](/usc/41/4301.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 statute or regulation or to any other activity described in [section 4712(a)(1) of this title](/usc/41/4712.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 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 a civil or administrative [proceeding](#a-3) involving an allegation of fraud or similar misconduct, a determination of contractor, subcontractor, or personal services contractor liability on the basis of the violation or failure referred to in [subsection (b)](#b).
  - (3) In any civil or administrative [proceeding](#a-3), the imposition of a monetary [penalty](#a-2) or an order to take corrective action under [section 4712 of this title](/usc/41/4712.md) by reason of the violation or failure referred to in [subsection (b)](#b).
  - (4) A final decision to do any of the following, by reason of the violation or failure referred to in [subsection (b)](#b):
    - (A) Debar or suspend the contractor, subcontractor, or personal services contractor.
    - (B) Rescind or void the contract, subcontract, or personal services contract.
    - (C) Terminate the contract, subcontract, or personal services contract for default.
  - (5) A disposition of the [proceeding](#a-3) by consent or compromise if the disposition could have resulted in a disposition described in paragraph [(1)](#c-1), [(2)](#c-2), [(3)](#c-3), or [(4)](#c-4).
- (d) **Costs Allowed by Settlement Agreement in Proceeding Commenced by Federal Government.—** In the case of a [proceeding](#a-3) referred to in [subsection (b)](#b) that is commenced by the Federal Government and is resolved by consent or compromise pursuant to an agreement entered into by a contractor, subcontractor, or personal services contractor and the Federal Government, the [costs](#a-1) incurred by the contractor, subcontractor, or personal services contractor in connection with the [proceeding](#a-3) that are otherwise not allowable as reimbursable [costs](#a-1) under [subsection (b)](#b) may be allowed to the extent specifically provided in that agreement.
- (e) **Costs Specifically Authorized by Executive Agency 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, the [executive agency](/usc/41/3302.md?p=a-1) that awarded the [covered contract](/usc/41/4301.md?p=2), subcontract, or personal services contract involved in the [proceeding](#a-3) may allow the [costs](#a-1) incurred by the contractor, subcontractor, or personal services contractor in connection with the [proceeding](#a-3) as reimbursable [costs](#a-1) if the [executive agency](/usc/41/3302.md?p=a-1) determines, in accordance with the [Federal Acquisition Regulation](/usc/41/106.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 [executive agency](/usc/41/3302.md?p=a-1).
- (f) **Other Allowable Costs.—**
  - (1) **In general.—** Except as provided in [paragraph (3)](#f-3), [costs](#a-1) incurred by a contractor, subcontractor, or personal services contractor in connection with a criminal, civil, or administrative [proceeding](#a-3) commenced by the Federal Government or a State in connection with a [covered contract](/usc/41/4301.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 the [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 the [costs](#a-1) are determined to be otherwise allowable and allocable under the [Federal Acquisition Regulation](/usc/41/106.md).
    - (B) **Content of regulations.—** Regulations issued for the purpose of [subparagraph (A)](#f-2-A) shall provide for appropriate consideration of the complexity of [procurement](/usc/41/111.md) litigation, generally accepted principles governing the award of legal fees in civil actions involving the Federal Government as a party, and 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, subcontractor, or personal services contractor [costs](#a-1) otherwise allowable as reimbursable [costs](#a-1) under this subsection are not allowable if—
    - (A) the [proceeding](#a-3) involves the same contractor, subcontractor, or personal services contractor misconduct alleged as the basis of another criminal, civil, or administrative [proceeding](#a-3); and
    - (B) the [costs](#a-1) of the other [proceeding](#a-3) are not allowable under [subsection (b)](#b).

## Source credit

(Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3789; Pub. L. 112–239, div. A, title VIII, § 828(d), Jan. 2, 2013, 126 Stat. 1841; Pub. L. 114–261, § 1(b)(2)(A), Dec. 14, 2016, 130 Stat. 1362.)

## Notes

| Historical and Revision Notes |  |  |
| --- | --- | --- |
| Revised<br>Section | Source (U.S. Code) | Source (Statutes at Large) |
| 4310(a) | 41:256(k)(6). | June 30, 1949, ch. 288, title III, § 306(k), as added Pub. L. 100–700, § 8(a)(1), Nov. 19, 1988, 102 Stat. 4634; Pub. L. 103–355, title II, § 2151, Oct. 13, 1994, 108 Stat. 3313. |
| 4310(b) | 41:256(k)(1). |  |
| 4310(c) | 41:256(k)(2). |  |
| 4310(d) | 41:256(k)(3). |  |
| 4310(e) | 41:256(k)(4). |  |
| 4310(f) | 41:256(k)(5). |  |

### Editorial Notes

### Amendments

2016—Pub. L. 114–261, § 1(b)(2)(A)(i), (ii), inserted “, subcontractor, or personal services contractor” after “contractor” and “, subcontract, or personal services contract” after “contract” wherever appearing.

Subsec. (b)(1). Pub. L. 114–261, § 1(b)(2)(A)(iii), inserted “or to any other activity described in section 4712(a)(1) of this title” after “statute or regulation”.

2013—Subsec. (b). Pub. L. 112–239, § 828(d)(1), substituted “commenced by the Federal Government, by a State, or by a contractor or grantee employee submitting a complaint under section 4712 of this title” for “commenced by the Federal Government or a State”.

Subsec. (c)(3). Pub. L. 112–239, § 828(d)(2), substituted “the imposition of a monetary penalty or an order to take corrective action under section 4712 of this title” for “the imposition of a monetary penalty”.