FAR 31.205-33—Professional and consultant service costs.
Plain-English Summary
FAR 31.205-33 addresses when professional and consultant service costs are allowable as contractor incurred costs and when they are unallowable. It defines what counts as professional and consultant services, explains the basic allowability standard, and then identifies specific prohibited uses such as improperly obtaining or using protected information, improperly influencing solicitations or source selections, violating statutes or regulations on improper business practices or conflicts of interest, or performing work outside the agreed purpose and scope. The section also tells contracting officers what factors to consider in judging reasonableness, including the nature and necessity of the service, the contractor’s capability, past use of such services, the relationship to Government business, whether hiring would be cheaper than contracting, the provider’s qualifications and customary fee, and the adequacy of the agreement. It separately sets out special rules for retainer fees, requiring proof that the services are necessary and customary, that the retainer is supported by past usage, that the fee is reasonable compared with maintaining in-house capability, and that actual services are documented. Finally, it specifies the documentation needed to support fees for services rendered, including agreements, invoices, and work products. In practice, this section is important because consultant costs are often scrutinized for reasonableness, scope, and compliance risk, and contractors must be able to prove both that the services were legitimate and that the amounts charged were properly supported.
Key Rules
Define covered services
Professional and consultant services are those provided by persons with special skill or professional status who are not the contractor’s officers or employees. The definition includes services used to obtain information, advice, opinions, alternatives, conclusions, recommendations, training, direct assistance, studies, analyses, evaluations, liaison with Government officials, and other representation.
Basic allowability standard
These costs are allowable only if they are reasonable in relation to the services rendered and are not contingent on recovery from the Government. They are also subject to the specific limitations in paragraphs (c) through (f), and related rules in 31.205-30 and 31.205-47 may also apply.
Prohibited purposes are unallowable
Costs are unallowable if the services are used to improperly obtain, distribute, or use protected information; improperly influence solicitations, proposal evaluations, or source selections; violate statutes or regulations on improper business practices or conflicts of interest; or perform work inconsistent with the contracted purpose and scope.
Reasonableness requires multiple factors
No single factor controls allowability. The contracting officer considers the service’s nature and scope, whether the contractor needed to outsource the work, the contractor’s historical use of such services, the impact of Government business, whether the work could be done more economically in-house, the provider’s qualifications and customary fee, and whether the agreement is adequately documented.
Retainer fees need support
Retainer fees are allowable only when the services are necessary and customary, the amount is supported by past service levels, the fee is reasonable compared with maintaining in-house capability, and the actual services performed are documented. A retainer is not automatically unallowable just because no services were rendered in a period, but the contractor must still justify the arrangement.
Actual services must be documented
Fees for services rendered are allowable only when supported by evidence of the nature and scope of the work. Required support includes the agreement terms, invoices or billings with sufficient detail, and work products or related records such as trip reports, meeting minutes, memoranda, and reports.
Responsibilities
Contractor
Ensure consultant and professional service costs are reasonable, properly scoped, and not contingent on Government recovery. Maintain agreements, invoices, work products, and other records that prove the services were actually performed and were lawful, necessary, and within scope.
Contracting Officer
Evaluate allowability and reasonableness using the listed factors, including necessity, scope, customary fees, and adequacy of the agreement. Scrutinize retainer fees and documentation to determine whether the costs are supported and consistent with the regulation.
Consultant or Service Provider
Perform only the services agreed to, provide detailed invoices and work products, and avoid any conduct that would improperly influence procurement actions, misuse protected information, or violate conflict-of-interest or business-practice rules.
Agency
Apply the cost principle consistently when reviewing claimed costs, and ensure that consultant services tied to procurement integrity, protected data, or conflicts of interest are identified and treated as unallowable when appropriate.
Practical Implications
Consultant costs are a frequent audit and negotiation issue, so vague descriptions like "professional services" are not enough; the contractor needs a clear agreement and proof of actual work performed.
A fee can be reasonable even if the consultant is highly specialized, but the contractor must still show why outsourcing was necessary and why the rate was customary or justified.
Retainers are especially sensitive because they can look like standby or relationship-based payments; contractors should document why the retainer is customary, how it compares to in-house staffing, and what services were actually delivered.
If the consultant’s work touches proposal strategy, source selection, lobbying, or access to protected information, the contractor should assess unallowability and compliance risk before charging the cost.
Poor documentation is one of the most common reasons these costs are questioned; invoices, time records, meeting notes, and deliverables should be retained and tied directly to the contract purpose.
Official Regulatory Text
(a) Definition. " Professional and consultant services," as used in this subsection, means those services rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of the contractor. Examples include those services acquired by contractors or subcontractors in order to enhance their legal, economic, financial, or technical positions. Professional and consultant services are generally acquired to obtain information, advice, opinions, alternatives, conclusions, recommendations, training, or direct assistance, such as studies, analyses, evaluations, liaison with Government officials, or other forms of representation. (b) Costs of professional and consultant services are allowable subject to this paragraph and paragraphs (c) through (f) of this subsection when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Government (but see 31.205-30 and 31.205-47 ). (c) Costs of professional and consultant services performed under any of the following circumstances are unallowable: (1) Services to improperly obtain, distribute, or use information or data protected by law or regulation ( e.g., 52.215-1 (e), Restriction on Disclosure and Use of Data). (2) Services that are intended to improperly influence the contents of solicitations, the evaluation of proposals or quotations, or the selection of sources for contract award, whether award is by the Government, or by a prime contractor or subcontractor. (3) Any other services obtained, performed, or otherwise resulting in violation of any statute or regulation prohibiting improper business practices or conflicts of interest. (4) Services performed which are not consistent with the purpose and scope of the services contracted for or otherwise agreed to. (d) In determining the allowability of costs (including retainer fees) in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the contracting officer shall consider the following factors, among others: (1) The nature and scope of the service rendered in relation to the service required. (2) The necessity of contracting for the service, considering the contractor’s capability in the particular area. (3) The past pattern of acquiring such services and their costs, particularly in the years prior to the award of Government contracts. (4) The impact of Government contracts on the contractor’s business. (5) Whether the proportion of Government work to the contractor’s total business is such as to influence the contractor in favor of incurring the cost, particularly when the services rendered are not of a continuing nature and have little relationship to work under Government contracts. (6) Whether the service can be performed more economically by employment rather than by contracting. (7) The qualifications of the individual or concern rendering the service and the customary fee charged, especially on non-Government contracts. (8) Adequacy of the contractual agreement for the service ( e.g., description of the service, estimate of time required, rate of compensation, termination provisions). (e) Retainer fees, to be allowable, must be supported by evidence that- (1) The services covered by the retainer agreement are necessary and customary; (2) The level of past services justifies the amount of the retainer fees (if no services were rendered, fees are not automatically unallowable); (3) The retainer fee is reasonable in comparison with maintaining an in-house capability to perform the covered services, when factors such as cost and level of expertise are considered; and (4) The actual services performed are documented in accordance with paragraph (f) of this subsection. (f) Fees for services rendered are allowable only when supported by evidence of the nature and scope of the service furnished (see also 31.205-38 (c)). However, retainer agreements generally are not based on specific statements of work. Evidence necessary to determine that work performed is proper and does not violate law or regulation shall include- (1) Details of all agreements ( e.g., work requirements, rate of compensation, and nature and amount of other expenses, if any) with the individuals or organizations providing the services and details of actual services performed; (2) Invoices or billings submitted by consultants, including sufficient detail as to the time expended and nature of the actual services provided; and (3) Consultants’ work products and related documents, such as trip reports indicating persons visited and subjects discussed, minutes of meetings, and collateral memoranda and reports.