DATE:          September 21, 2016

TO:              Procurement Directors/Contracting Officers             

FROM:        Chief
                    Contract and Financial Assistance Policy Division
                    Office of Policy
                    Office of Acquisition Management

SUBJECT:    Acquisition Guide Chapters 31.205-33 and 70.31.205-33: Contractor
                     Legal Management Requirements, Approving Settlements, and Determining the
                     Allowability of Settlement Costs

SUMMARY:   The subject guide chapters, which contain identical language, replace their predecessors (Chapter 31.3 of September 2010 and Chapter 70-31C of September 2010 “Contractor Legal Management Requirements”) and significantly expand upon their guidance. The predecessor chapters only briefly discussed two aspects of managing contractor legal costs: contractors’ hiring outside counsel; and contractors’ exercise of prudent business judgment. These guide chapters provide great detail concerning the requirements of the current version of the Contractor Legal Management Requirements at 10 CFR part 719 (reflecting its May 2013 update), address considerations for approving settlements, and cover several key facets of determining the allowability of settlement costs.

Questions concerning this policy flash should be directed to: