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More Confusion On What Costs Are Allocable To Government Contracts

Client Alert | 1 min read | 01.16.09

In a puzzling decision about what appear to be independent research and development (IR&D) costs associated with creating a new software product, Teknowledge Corp. v. U.S. (Jan. 7, 2009), neither party seems to have cited the relevant allocation and allowability rules in Cost Accounting Standard 420, incorporated by reference in FAR 31.205-18, and the CFC's opinion does not mention them, instead sustaining disallowance of the costs on the ground that they did not "benefit" the government. Under the provisions of CAS 420, IR&D costs of a business unit are generally allocable to the contracts of that business unit, and it is not clear based on the facts as described in the opinion whether the costs at issue were incurred in a commercial business unit, a home office, or a government contracts business unit, so it is impossible to determine whether the costs would have been allocable to and allowable on the contracts of the Government business unit if CAS 420 had been appropriately applied.

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Client Alert | 6 min read | 08.03.26

The Pipe, Not the Posts: How Section 230’s Protections Extend to Generative AI Platforms

Section 230 of the Communications Decency Act (“Section 230”) protects online platforms from liability for user-generated speech. Based on the premise that platforms generally do not create original content but instead curate their users’ own speech, Section 230’s protections have historically applied to a platform’s algorithmically assembled, selected or sequenced content; algorithms or features that amplified or directed user generated speech to particular users were generally protected. Indeed, the old rule of thumb was the more a platform used algorithms or automation, the more likely user generated speech remained user generated speech. GenAI has the potential to change that calculus. A platform that ingests user generated content and publishes a transformed output, can blur Section 230’s line between publication and creation. The central question is whether Section 230 protects GenAI, which analyzes, but does not alter, user-created content to produce an outcome, and its corresponding outputs....

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