Slowly is the word that always describes Government change, and acquisition process change is no exception. Some of you will remember that the 2017 NDAA required DCAA to reduce the backlog of DoD incurred cost submissions and suspend work for other Departments. But how many of you remember that it also created an Advisory Panel on Streamlining and Codifying Acquisition Regulations, better known as the Section 809 Panel?
Unless you have undergone a DCAA Accounting System audit under the criteria in DFARS 252.242-7006 (a.k.a. DFARS Accounting System Audit), you do not know what a comprehensive audit is. To start with there are eighteen criteria, some of which are as broad as “Accounting practices in accordance with standard promulgated by the Cost Accounting Standards Board, if applicable, otherwise, Generally Accepted Accounting Principles.” This leaves the door open to pretty much endless questions. But don’t worry, DCAA has narrowed it down to only 27 questions.
There are many presents one may enjoy receiving this holiday season. However, one present you do not want during the holiday season is a CAS Disclosure Statement (DS) surprise. There are several surprises related to DS’s you can receive:
It seems like there are a lot of agencies being audited on what they are doing with DCAA audit findings. In September, the DoD-IG announced an audit of 26 contracts issued from FY 2014-2017 by Navy, DLA, Army and Air Force contracting officers. It’s stated objective is “to determine whether contracting officer actions during contract negotiations complied with acquisition regulations when contractor proposals were deemed inadequate by the Defense Contract Audit Agency (DCAA).” At the same time, they announced an audit of DCMA with an audit objective “to determine the appropriateness of contracting officer actions to resolve and disposition compensation costs that the Defense Contract Audit Agency (DCAA) has questioned in audits of DoD contractor incurred cost claims submitted to the Government.
Companies that incur significant costs for training and education of their workforce should have formal policies and procedures in place to ensure reimbursement on their government contracts and subcontracts. As with all types of costs, there are three major components to consider: allowability, allocability and reasonableness.
We often hear the following statement and question: “My proposal (the government solicitation) calls for a compliant accounting system (SF 1408) and I’ve never been audited. What do I do?”.
Sometimes, a company is so anxious to receive a government contract that it ignores warning signs in the solicitation and accepts a firm-fixed-price contract when the contract type is not appropriate for the circumstances. Often the warning signs are subtle and consist of vague specifications, but in other cases, the warning signs are written, literally in capital letters. One such contract resulted in the ASBCA issuing a decision on March 30, 2016, on case number 58243. This case upheld a termination for default issued April 23, 2012, against Highland Al Hujaz Co., Ltd. This case illustrates both the warning signs the contractor should have heeded and the consequences.
Topics: Cost and Pricing and Budgeting
Whenever there is a scope change on fixed price contract, there are several steps that take place. First, is preparing a proposal for the amount of the scope change and negotiating that change with the contracting officer. If the contracting officer issues a final decision (unilateral contract modification) that does not result in a satisfactory amount of recovery, the next step is to submit a request for equitable adjustment (REA). If again, the final decision does not provide adequate recompense, the next step is often appealing the decision to the Armed Services Board of Contract Appeals (ASBCA). This is not an option to be taken lightly, as a recent decision proved.
DCMA and DCAA have issued guidance on how to deal with the impact of the $487,000 rate cap that applies to contracts subject to FAR 31.2 and awarded on or after June 24, 2014. If you have not read this document, see DCAA’s MRD 16-PSP-005(R), dated February 19, 2016. It includes the DCMA guidance also. You have flexibly priced contracts that require an annual incurred cost submission. Now what, exactly, are you supposed to do with this guidance?
As a small (or potential) government contractor or subcontractor, one question you will frequently encounter is if you have a “Job Cost Accounting System.” This may sound like a specific type of software, but it is not. Many different accounting software systems can provide job cost accounting if properly configured. The questions on the SF 1408, Pre-award Survey of Prospective Contractor Accounting System, are designed to discover if you have a job cost accounting system. This still doesn’t tell the non-accounting person what a job cost accounting system is or why it is important (other than to get the right answers on the SF 1408 to qualify for a government cost-reimbursable contract).