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Purchased Labor - Accounting Options To Consider

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Inquiry: Can we charge labor as direct when we do not direct hire; e.g. we subcontract out the work? And how should we handle this in our internal accounting system and indirect rates?

Response: You are asking a lot in your question. Lets look and see what the FAR and the DCAA have to say about this as I will share my thoughts on the issue. Remember, any opinions and recommendations are based on experience, training, and judgment, and do not necessarily reflect the only outcome, nor an exact expectation of government conclusions. In areas that are often gray, two or more individuals can come to different interpretations and conclusions. Thats just the way it is. You must be prepared to support your interpretation and conclusion.


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