FAR 31.205-22—Lobbying and political activity costs.
Plain-English Summary
FAR 31.205-22 makes lobbying and political activity costs unallowable, and it does so broadly. It covers attempts to influence elections, referenda, initiatives, political parties, campaigns, PACs, and other election-focused organizations; efforts to influence legislation through direct communications with legislators or executive officials; publicity, propaganda, mass demonstrations, rallies, fundraisers, letter-writing and telephone campaigns aimed at legislation; legislative liaison activities when they support or prepare for unallowable lobbying; and attempts to improperly influence executive branch employees on regulatory or contract matters. The section also identifies narrow exceptions, including certain technical and factual presentations to Congress or a state legislature made in response to a documented request, limited lobbying to reduce contract cost or avoid material impairment of performance, and activities specifically authorized by statute to be funded by the contract. In practice, this rule is meant to keep federal contract funds from subsidizing political advocacy or lobbying, while still allowing legitimate, documented communications that are directly tied to contract performance or expressly authorized by law. Contractors must segregate these costs, support their treatment with records, and be prepared to justify allowability in indirect cost proposals and audits.
Key Rules
Election-related costs unallowable
Costs tied to influencing elections, referenda, initiatives, or similar procedures are unallowable. This includes cash or in-kind contributions, endorsements, publicity, and similar political activity.
Political organizations barred
A contractor may not use contract-related costs to establish, administer, contribute to, or pay expenses of a political party, campaign, PAC, or similar election-influencing organization.
Legislative lobbying unallowable
Attempts to influence the introduction, enactment, or modification of legislation are unallowable when done through communications with legislators, legislative staff, or officials involved in signing or vetoing legislation.
Publicity and mass campaign efforts unallowable
Using publicity, propaganda, or public mobilization efforts to influence legislation is unallowable, including urging the public to participate in demonstrations, rallies, fundraisers, lobbying drives, or mass correspondence campaigns.
Legislative liaison tied to lobbying is unallowable
Attendance at hearings, gathering information, and analyzing legislation become unallowable when they support or are knowingly prepared for unallowable lobbying activity.
Improper influence on executive branch barred
Costs incurred to improperly influence executive branch employees on regulatory or contract matters are unallowable, whether the effort is direct or indirect.
Limited exceptions apply
Certain technical and factual presentations to Congress or a state legislature are excepted when made in response to a documented request, and some lobbying to reduce contract cost or avoid material impairment of performance is excepted for state or local legislation. Activities specifically authorized by statute to be funded by the contract are also excepted.
Separate identification and recordkeeping required
When indirect costs are claimed, total lobbying costs must be separately identified in the indirect cost rate proposal and treated as unallowable. Contractors must keep adequate records to support allowable versus unallowable classifications.
Resolve disputes early
Contractors should use existing procedures to resolve significant interpretation or application questions in advance, rather than waiting until audit or cost proposal review.
Responsibilities
Contractor
Identify lobbying and political activity costs, exclude unallowable amounts from claims, and maintain records that support the allowable/unallowable classification. The contractor must separately identify total lobbying costs in indirect cost rate proposals and ensure unallowable costs are not billed or allocated to the Government.
Contracting Officer
Review cost issues involving lobbying and political activity when they arise, and use existing procedures to resolve significant questions or disagreements before they become disputes. The contracting officer should ensure the contractor understands any contract-specific statutory authorization or documentation requirements.
Agency
Apply the cost principle consistently in evaluating indirect cost proposals, audits, and cost allowability determinations. The agency should ensure unallowable lobbying and political activity costs are not reimbursed and that any statutory exceptions are recognized only when properly supported.
Auditors/Review Officials
Examine whether lobbying and political activity costs were properly segregated, excluded, and documented. They should verify that claimed indirect costs do not include unallowable political or lobbying expenses and that exceptions are supported by the required documentation.
Practical Implications
Contractors need strong accounting controls because lobbying-related expenses can be embedded in travel, labor, consulting, communications, and public affairs costs.
A common pitfall is treating “government relations” or “legislative liaison” work as allowable when it actually supports lobbying or political advocacy.
Documented requests matter: technical testimony to Congress or a legislature may be allowable, but only if it is a factual presentation directly related to contract performance and meets the rule’s conditions.
Indirect cost proposals must clearly separate total lobbying costs; failure to do so can trigger questioned costs, penalties, or disallowance in audit.
When a contractor is unsure whether an activity is lobbying, political activity, or a permitted technical presentation, it should seek advance resolution rather than wait for a cost review or audit.
Official Regulatory Text
(a) Costs associated with the following activities are unallowable: (1) Attempts to influence the outcomes of any Federal, State, or local election, referendum, initiative, or similar procedure, through in kind or cash contributions, endorsements, publicity, or similar activities; (2) Establishing, administering, contributing to, or paying the expenses of a political party, campaign, political action committee, or other organization established for the purpose of influencing the outcomes of elections; (3) Any attempt to influence- (i) The introduction of Federal, state, or local legislation, or (ii) The enactment or modification of any pending Federal, state, or local legislation through communication with any member or employee of the Congress or state legislature (including efforts to influence state or local officials to engage in similar lobbying activity), or with any government official or employee in connection with a decision to sign or veto enrolled legislation; (4) Any attempt to influence- (i) The introduction of Federal, state, or local legislation, or (ii) The enactment or modification of any pending Federal, state, or local legislation by preparing, distributing or using publicity or propaganda, or by urging members of the general public or any segment thereof to contribute to or participate in any mass demonstration, march, rally, fund raising drive, lobbying campaign or letter writing or telephone campaign; (5) Legislative liaison activities, including attendance at legislative sessions or committee hearings, gathering information regarding legislation, and analyzing the effect of legislation, when such activities are carried on in support of or in knowing preparation for an effort to engage in unallowable activities; or (6) Costs incurred in attempting to improperly influence (see 3.401 ), either directly or indirectly, an employee or officer of the Executive branch of the Federal Government to give consideration to or act regarding a regulatory or contract matter. (b) The following activities are excepted from the coverage of (a) of this section: (1) Providing a technical and factual presentation of information on a topic directly related to the performance of a contract through hearing testimony, statements or letters to the Congress or a state legislature, or subdivision, member, or cognizant staff member thereof, in response to a documented request (including a Congressional Record notice requesting testimony or statements for the record at a regularly scheduled hearing) made by the recipient member, legislative body or subdivision, or a cognizant staff member thereof; provided such information is readily obtainable and can be readily put in deliverable form; and further provided that costs under this section for transportation, lodging or meals are unallowable unless incurred for the purpose of offering testimony at a regularly scheduled Congressional hearing pursuant to a written request for such presentation made by the Chairman or Ranking Minority Member of the Committee or Subcommittee conducting such hearing. (2) Any lobbying made unallowable by paragraph (a)(3) of this subsection to influence state or local legislation in order to directly reduce contract cost, or to avoid material impairment of the contractor’s authority to perform the contract. (3) Any activity specifically authorized by statute to be undertaken with funds from the contract. (c) When a contractor seeks reimbursement for indirect costs, total lobbying costs shall be separately identified in the indirect cost rate proposal, and thereafter treated as other unallowable activity costs. (d) Contractors shall maintain adequate records to demonstrate that the certification of costs as being allowable or unallowable (see 42.703-2 ) pursuant to this subsection complies with the requirements of this subsection. (e) Existing procedures should be utilized to resolve in advance any significant questions or disagreements concerning the interpretation or application of this subsection.