DoD Relaxes Cost Rules For Katrina Donated Leave

Under a DoD policy memo issued October 11, 2005 (http://www.acq.osd.mil/dpap/policy/policyvault/2005-1399-DPAP.pdf), the costs of vacation and personal leave – but not sick leave – donated by contractor employees to charitable organizations providing assistance to victims of Hurricane Katrina will be treated as allowable compensation costs rather than unallowable donations. Consistent with parallel guidance from the IRS, the DoD policy applies to payments made to charitable organizations before January 1, 2007.