10 U.S.C. § 3745 — Required regulations

(a) In General.— The Federal Acquisition Regulation^* shall contain provisions on the allowability of contractor costs. That provisions shall define in detail and in specific terms those costs which are unallowable, in whole or in part, under covered contracts. (b) Specific Items.— The regulations shall, at a minimum, clarify the cost principles applicable to contractor costs of the following: (1) Air shows. (2) Membership in civic, community, and professional organizations. (3) Recruitment. (4) Employee morale and welfare. (5) Actions to influence (directly or indirectly) executive branch action on regulatory and contract matters (other than costs incurred in regard to contract proposals under solicited or unsolicited bids). (6) Community relations. (7) Dining facilities. (8) Professional and consulting services, including legal services. (9) Compensation. (10) Selling and marketing. (11) Travel. (12) Public relations. (13) Hotel and meal expenses. (14) Expense of corporate aircraft. (15) Company-furnished automobiles. (16) Advertising. (17) Conventions. (c) Additional Requirements.— (1) When questioned costs may be resolved.— The Federal Acquisition^* Regulation shall require that a contracting officer^* not resolve any questioned costs until he has obtained— (A) adequate documentation about that costs; and (B) the opinion of the contract auditor on the allowability of that costs. (2) Presence of contract auditor.— The Federal Acquisition Regulation shall provide that, to the maximum extent practicable, the contract auditor be present at any negotiation or meeting with the contractor regarding a determination of the allowability of indirect costs of the contractor. (3) Settlement to reflect amount of individual questioned costs.— The Federal Acquisition Regulation shall require that all categories of costs designated in the report of the contract auditor as questioned about a proposal for settlement be resolved in that a manner that the amount of the individual questioned costs that are paid will be reflected in the settlement.