Allowable and Allocable Costs Clause Samples

The "Allowable and Allocable Costs" clause defines which expenses a contractor can charge to a contract and under what conditions those costs are considered appropriate. In practice, this clause sets criteria for costs to be both permissible under the contract terms and directly related to the performance of the contract work. For example, it may specify that only reasonable labor, materials, and overhead expenses incurred specifically for the project are reimbursable. The core function of this clause is to ensure that only justified and contract-related costs are billed, thereby preventing overcharging and promoting transparency in contract administration.