[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.205-1]

[Page 579-580]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES--Table of Contents
 
          Subpart 31.2--Contracts With Commercial Organizations
 
Sec. 31.205-1  Public relations and advertising costs.

    (a) Public relations means all functions and activities dedicated 
to--
    (1) Maintaining, protecting, and enhancing the image of a concern or 
its products; or
    (2) Maintaining or promoting reciprocal understanding and favorable 
relations with the public at large, or any segment of the public. The 
term public relations includes activities associated with areas such as 
advertising, customer relations, etc.
    (b) Advertising means the use of media to promote the sale of 
products or services and to accomplish the activities referred to in 
paragraph (d) of this subsection, regardless of the medium employed, 
when the advertiser has control over the form and content of what will 
appear, the media in which it will appear, and when it will appear. 
Advertising media include but are not limited to conventions, exhibits, 
free goods, samples, magazines, newspapers, trade papers, direct mail, 
dealer cards, window displays, outdoor advertising, radio, and 
television.
    (c) Public relations and advertising costs include the costs of 
media time and space, purchased services performed by outside 
organizations, as well as the applicable portion of salaries, travel, 
and fringe benefits of employees engaged in the functions and activities 
identified in paragraphs (a) and (b) of this subsection.
    (d) The only allowable advertising costs are those that are--
    (1) Specifically required by contract, or that arise from 
requirements of Government contracts, and that are exclusively for--
    (i) Acquiring scarce items for contract performance; or
    (ii) Disposing of scrap or surplus materials acquired for contract 
performance;
    (2) Costs of activities to promote sales of products normally sold 
to the U.S. Government, including trade shows, which contain a 
significant effort to promote exports from the United States. Such costs 
are allowable, notwithstanding paragraphs (f)(1), (f)(3), (f)(4)(ii), 
and (f)(5) of this subsection. However, such costs do not include the 
costs of memorabilia (e.g., models, gifts, and souvenirs), alcoholic 
beverages, entertainment, and physical facilities that are used 
primarily for entertainment rather than product promotion; or
    (3) Allowable in accordance with 31.205-34.
    (e) Allowable public relations costs include the following:
    (1) Costs specifically required by contract.
    (2) Costs of--
    (i) Responding to inquiries on company policies and activities;
    (ii) Communicating with the public, press, stockholders, creditors, 
and customers; and
    (iii) Conducting general liaison with news media and Government 
public relations officers, to the extent that such activities are 
limited to communication and liaison necessary to keep the public 
informed on matters of public concern such as notice of contract awards, 
plant closings or openings, employee layoffs or rehires, financial 
information, etc.
    (3) Costs of participation in community service activities (e.g., 
blood bank drives, charity drives, savings bond drives, disaster 
assistance, etc.).
    (4) Costs of plant tours and open houses (but see subparagraph 
(f)(5) of this subsection).
    (5) Costs of keel laying, ship launching, commissioning, and roll-
out ceremonies, to the extent specifically provided for by contract.
    (f) Unallowable public relations and advertising costs include the 
following:
    (1) All public relations and advertising costs, other than those 
specified in paragraphs (d) and (e) of this subsection, whose primary 
purpose is to promote the sale of products or services by stimulating 
interest in a product or product line (except for those costs made 
allowable under 31.205-38(c)), or by disseminating messages calling 
favorable attention to the contractor for purposes of enhancing the 
company image to sell the company's products or services.
    (2) All costs of trade shows and other special events which do not 
contain a significant effort to promote the export

[[Page 580]]

sales of products normally sold to the U.S. Government.
    (3) Costs of sponsoring meetings, conventions, symposia, seminars, 
and other special events when the principal purpose of the event is 
other than dissemination of technical information or stimulation of 
production.
    (4) Costs of ceremonies such as (i) corporate celebrations and (ii) 
new product announcements.
    (5) Costs of promotional material, motion pictures, videotapes, 
brochures, handouts, magazines, and other media that are designed to 
call favorable attention to the contractor and its activities.
    (6) Costs of souvenirs, models, imprinted clothing, buttons, and 
other mementos provided to customers or the public.
    (7) Costs of memberships in civic and community organizations.

[51 FR 12298, Apr. 9, 1986, as amended at 53 FR 12130, Apr. 12, 1988; 53 
FR 13274, Apr. 22, 1988; 54 FR 34755, Aug. 21, 1989; 56 FR 15153, Apr. 
15, 1991; 60 FR 42660, Aug. 16, 1995; 61 FR 67423, Dec. 20, 1996; 62 FR 
12704, Mar. 17, 1997; 64 FR 10547, Mar. 4, 1999]