By Steven Masiello and Tyler Thomas (April 20, 2018, 1:03 PM EDT) -- Contractor legal costs, including the costs to settle third-party lawsuits (i.e., suits brought against a contractor by an individual or nongovernmental entity), are allowable if the costs are reasonable, allocable, consistent with the Cost Accounting Standards (or the Generally Accepted Accounting Principles), comply with the terms of the contract and are not limited by the cost principles of FAR Subpart 31.2. The primary cost principle relevant to settlement costs is FAR 31.205-47, which disallows contractor settlement costs for a very narrow category of third-party "proceedings" brought by relators against a contractor on behalf of the government for violation of False Claims Act or brought by whistleblowers against a contractor for alleged reprisal, unless the contractor can demonstrate that there was "very little likelihood" the third party would succeed on the merits of its claim.[1] Not long ago, this was understood to mean that contractor costs incurred reasonably to settle a third-party lawsuit constitute allowable costs of doing business. Since the Federal Circuit's decision in Geren v. Tecom, however, the allowability of settlement costs incurred in just about any type of third-party lawsuit has been unclear.[2]...