FAR 31.205-1—Public relations and advertising costs.
Plain-English Summary
FAR 31.205-1 explains how to identify, classify, and cost public relations and advertising expenses under government contracts. It defines what counts as "public relations" and "advertising," describes the types of costs included in those activities (such as media time and space, outside services, and related employee labor, travel, and fringe benefits), and then separates allowable from unallowable costs. The section is especially important because many marketing, image-building, trade show, event, and promotional expenses are unallowable unless they fit a narrow exception tied to contract requirements, disposal of scrap or surplus, export promotion for products normally sold to the U.S. Government, or other specific FAR provisions such as 31.205-34 and 31.205-38(b)(5). It also identifies certain public relations activities that are allowable, including contract-required communications, limited public information efforts, community service participation, plant tours and open houses, and certain ceremonies when specifically provided for by contract. In practice, this section helps contractors avoid charging promotional or image-enhancing costs to the Government when those costs are primarily for sales, branding, or goodwill, while allowing only the limited communications and contract-driven activities the FAR expressly permits.
Key Rules
Define public relations broadly
Public relations includes activities aimed at maintaining, protecting, or enhancing a company’s image, as well as promoting favorable relations with the public or any segment of the public. The definition is broad and can include customer relations and similar image-management functions.
Advertising requires media control
Advertising means using media to promote products or services, or to carry out the activities described in paragraph (d), when the advertiser controls the form, content, media, and timing of the message. The definition covers many media types, including conventions, exhibits, direct mail, print, radio, television, and similar channels.
Include all related cost elements
Public relations and advertising costs are not limited to direct media purchases. They also include purchased services from outside organizations and the allocable share of employee salaries, travel, and fringe benefits for staff performing these functions.
Allowable advertising is narrowly limited
Advertising costs are allowable only when specifically required by contract, when they arise from Government contract requirements and are exclusively for acquiring scarce items or disposing of scrap or surplus from contract performance, when they promote sales of products normally sold to the U.S. Government and significantly support export promotion, or when otherwise allowable under 31.205-34.
Certain public relations costs are allowable
Allowable public relations costs include contract-required costs, limited communications with the public and media on matters of public concern, participation in community service activities, plant tours and open houses, and certain keel laying, ship launching, commissioning, and roll-out ceremonies when specifically provided for by contract.
Most promotional costs are unallowable
Costs whose primary purpose is to stimulate sales, build goodwill, or enhance the contractor’s image are generally unallowable unless they fit a specific exception. This includes most promotional materials, trade shows without the required export emphasis, special events, ceremonies, souvenirs, memberships in civic organizations, and similar image-building expenses.
Trade show and event exceptions are limited
Trade shows and special events are allowable only when they contain a significant effort to promote export sales of products normally sold to the U.S. Government. Sponsoring meetings, conventions, symposia, seminars, and similar events is unallowable when the principal purpose is not technical information dissemination or stimulation of production.
Specific exclusions remain unallowable
Even where some promotional activity may be allowable, the FAR expressly excludes memorabilia, alcoholic beverages, entertainment, and facilities used primarily for entertainment rather than product promotion. Costs of souvenirs, models, imprinted clothing, buttons, and similar mementos are also unallowable.
Responsibilities
Contractor
Identify public relations and advertising costs accurately, segregate allowable from unallowable amounts, and ensure only costs that fit a specific FAR exception are charged to Government contracts. The contractor must also document the contract requirement, export-promotion purpose, or other basis for allowability and exclude promotional, image-building, entertainment, and similar costs from billings and claims.
Contracting Officer
Specify in the contract when public relations, advertising, ceremonies, or similar activities are required and ensure the requirement is clear enough to support allowability. The contracting officer should also review cost representations carefully when these expenses are claimed as contract-related or allowable under a specific exception.
Agency
When public information, community relations, or ceremonial activities are needed, the agency should define the scope and purpose so the contractor can distinguish allowable contract-required costs from general promotional expenses. Agencies should also apply the Federal Food Donation Act and related subpart 26.4 requirements when excess food donation costs are involved.
Auditor or Cost Reviewer
Test whether claimed costs truly fit the narrow allowability exceptions, verify that trade shows or events have the required export-promotion element, and confirm that promotional materials, souvenirs, entertainment, and similar items are excluded when unallowable. Reviewers should also ensure employee labor and overhead allocations are properly supported.
Practical Implications
This section is a common source of unallowable cost findings because many marketing and branding expenses look business-related but are not reimbursable under FAR cost principles.
Contractors should create separate accounting codes for advertising, public relations, trade shows, community outreach, and ceremonial events so they can isolate allowable from unallowable portions.
A key pitfall is assuming that a Government customer or public benefit makes a cost allowable; the cost still must fit one of the specific exceptions in paragraphs (d) or (e).
Trade show and event costs need close review: if the main purpose is general promotion, goodwill, or networking, the cost is likely unallowable even if the event has some technical or sales content.
Employee time, travel, and fringe benefits tied to these activities are part of the cost and must be evaluated the same way as direct media or vendor charges.
When a contract specifically requires a public relations, advertising, or ceremonial activity, contractors should keep the contract language and supporting records because that documentation is often the basis for allowability.
Costs for souvenirs, branded giveaways, entertainment, and image-enhancing materials are especially risky and should generally be treated as unallowable unless another FAR provision clearly applies.
Official Regulatory Text
(a) "Public relations" means all functions and activities dedicated to- (1) Maintaining, protecting, and enhancing the image of a concern or its products; or (2) Maintaining or promoting reciprocal understanding and favorable relations with the public at large, or any segment of the public. The term public relations includes activities associated with areas such as advertising, customer relations, etc. (b) "Advertising" means the use of media to promote the sale of products or services and to accomplish the activities referred to in paragraph (d) of this subsection, regardless of the medium employed, when the advertiser has control over the form and content of what will appear, the media in which it will appear, and when it will appear. Advertising media include but are not limited to conventions, exhibits, free goods, samples, magazines, newspapers, trade papers, direct mail, dealer cards, window displays, outdoor advertising, radio, and television. (c) Public relations and advertising costs include the costs of media time and space, purchased services performed by outside organizations, as well as the applicable portion of salaries, travel, and fringe benefits of employees engaged in the functions and activities identified in paragraphs (a) and (b) of this subsection. (d) The only allowable advertising costs are those that are- (1) Specifically required by contract, or that arise from requirements of Government contracts, and that are exclusively for- (i) Acquiring scarce items for contract performance; or (ii) Disposing of scrap or surplus materials acquired for contract performance; (2) Costs of activities to promote sales of products normally sold to the U.S. Government, including trade shows, which contain a significant effort to promote exports from the United States. Such costs are allowable, notwithstanding paragraphs (f)(1), (f)(3), (f)(4)(ii), and (f)(5) of this subsection. However, such costs do not include the costs of memorabilia ( e.g., models, gifts, and souvenirs), alcoholic beverages, entertainment, and physical facilities that are used primarily for entertainment rather than product promotion; or (3) Allowable in accordance with 31.205-34 . (e) Allowable public relations costs include the following: (1) Costs specifically required by contract. (2) Costs of- (i) Responding to inquiries on company policies and activities; (ii) Communicating with the public, press, stockholders, creditors, and customers; and (iii) Conducting general liaison with news media and Government public relations officers, to the extent that such activities are limited to communication and liaison necessary to keep the public informed on matters of public concern such as notice of contract awards, plant closings or openings, employee layoffs or rehires, financial information, etc. (3) Costs of participation in community service activities ( e.g. , blood bank drives, charity drives, savings bond drives, disaster assistance, etc.) (But see paragraph (f)(8) of this section.) (4) Costs of plant tours and open houses (but see paragraph (f)(5) of this subsection). (5) Costs of keel laying, ship launching, commissioning, and roll-out ceremonies, to the extent specifically provided for by contract. (f) Unallowable public relations and advertising costs include the following: (1) All public relations and advertising costs, other than those specified in paragraphs (d) and (e) of this subsection, whose primary purpose is to promote the sale of products or services by stimulating interest in a product or product line (except for those costs made allowable under 31.205-38 (b)(5)), or by disseminating messages calling favorable attention to the contractor for purposes of enhancing the company image to sell the company’s products or services. (2) All costs of trade shows and other special events which do not contain a significant effort to promote the export sales of products normally sold to the U.S. Government. (3) Costs of sponsoring meetings, conventions, symposia, seminars, and other special events when the principal purpose of the event is other than dissemination of technical information or stimulation of production. (4) Costs of ceremonies such as- (i) Corporate celebrations and (ii) New product announcements. (5) Costs of promotional material, motion pictures, videotapes, brochures, handouts, magazines, and other media that are designed to call favorable attention to the contractor and its activities. (6) Costs of souvenirs, models, imprinted clothing, buttons, and other mementos provided to customers or the public. (7) Costs of memberships in civic and community organizations. (8) Costs associated with the donation of excess food to nonprofit organizations in accordance with the Federal Food Donation Act of 2008 ( 42 U.S.C. 1792 , see subpart 26.4 ).