A decision finding the contracting officer was required to waive penalties for the engineering support services contractor's inclusion of expressly unallowable costs in its proposed indirect costs was modified on reconsideration by the Armed Services Board of Contract Appeals because a waiver was not required under FAR 42.709-5. The government argued the prior decision ( 11-1 BCA ¶34,764) erred as a matter of law in concluding the CO was required to waive the FAR 42.709-1 (a)(1) penalties for individual costs of $2,400 for life insurance, $6,080 for employee morale, $776 for boat title taxes, and $3,866 for a business meeting. The board had ruled waivers were required under FAR 42.709-5 (b) because each of these proposed costs was under $10,000. On reconsideration, the government argued a waiver is required under FAR 42.709-5 (b) only when the aggregate of unallowable costs is less than the $10,000 threshold.