PPP Loan Forgiveness – Impacted by Related Party Lease Cost

Apportioning the Costs of Buildings

The SBA and Treasury have made it clear that if you own or lease a building that you sublet to another company, the portion of the lease or mortgage expense that can be used as nonpayroll costs for PPP loan forgiveness is limited to the share of the expense applied to the business who’s PPP loan is being forgiven. The simple example is, you lease an office building for $10,000 per month and sublease part of the space to another company for $2,500 per month. Only $7,500 would be used toward your nonpayroll cost for loan forgiveness. This proration applies to utility and other shared costs of the tenants.

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Topics: Defense Contractors, DPAP, Accounting & Billing System, Government Regulations, DOD Contractors, COVID-19

CARES Act Section 3610, DPC DFARS Class Deviation and Guidance

On August 17, 2020; Acting Principal Director for Defense Pricing and Contracting issued two memos providing guidance in support of DFARS Class Deviation 2020-O0013 and 2020-O0021 – CARES Act Section 3610 Implementation. There is also a memo providing contracting officers with a template for a Memorandum for Record to document the file for the issuance of the Section 3610 related contract modification.

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Topics: Contracts Administration, Defense Contractors, Cost-Type Contracts, DCAA Audit Support, DPAP, Accounting & Billing System, DOD Contractors, Cost Accounting Standards (CAS), COVID-19

DCAA COVID-19 Guidance – Still in a Wait and See, Holding Pattern

We Lifted the Vail

A few months back we submitted a request to DCAA under Freedom of Information Act. Based on the DPC guidance referencing both DCAA and DCMA as playing a key role in support of the rest of the DoD Acquisition Community, we expected DCAA would have a significant number of documents disclosing this key role. Turns out, not so much. All we got was a single document listing 13 frequently asked questions (FAQs) DCAA has been fielding from their auditors, dated July 31, 2020.

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Topics: Cost and Pricing and Budgeting, Contracts Administration, Defense Contractors, Cost-Type Contracts, DCAA Audit Support, DPAP, DOD Contractors, Cost Accounting Standards (CAS), COVID-19

Preparing Your Workplace to Return to Work Safely

For the past 10+ weeks, we have focused on how to work remotely, compensate employees who are unable to work due to COVID-19 related reasons, and how to interpret and implement the new laws applicable to the pandemic, such as the Families First Coronavirus Response Act, the Paycheck Protection Program, and CARES. As many states begin to loosen the “shelter at home/social distancing” guidelines, it is time to consider – how do we return to work safely?

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Topics: COVID-19

UPDATE: New SBA FAQs on PPP Loans – Repay Date Extended to May 18

SBA Extends the Repayment Date Again – May 18, 2020

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Topics: DCAA Audit Support, COVID-19

DCAA Audits Won’t Stop During Coronavirus Restrictions

For those of you who may have thought there could be a silver lining to coronavirus restrictions from reduced audit effort, think again! Actual postponement of audits will be rare.

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Topics: DCAA Audit Support, COVID-19

UPDATE: The Rocky Road to COVID-19 Relief – Treasury Looking for Audits

UPDATE:  On May 5th, SBA added FAQ #43 extending the safe harbor to May 14, 2020 and stating “SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.

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Topics: DCAA Audit Support, COVID-19

GovCon COVID-19 Relief Accounting Implications – CARES Act Section 3610, DFARS Class Deviation

On April 8, 2020, Acting Principal Director for Defense Pricing and Contracting issued a memo providing guidance in support of DFARS Class Deviation 2020-O0013 – CARES Act Section 3610 Implementation.  The Class Deviation provides language for DFARS 231.205-79, CARES Act Section 3610 – Implementation.  The cost principle language makes costs of paid leave (including sick leave) allowable at the appropriate rates under the contract for up to an average of 40 hours per week and may be charged as direct to a contract.

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Topics: COVID-19

COVID-19 Update – Cashflow Increased by Change in Progress Payment Rates

On March 20, 2020, Acting Principal Director for Defense Pricing and Contracting issued a memo increasing the progress payment rate from 80% to 90% for large businesses and 90% to 95% for small businesses.  The intent to increase cash flow to contractors running low on cash due to the impact of COVID-19.  See DoD Class Deviation 2020-O0010 for details.  The Defense Contract Management Agency is working to modify contracts as efficiently as possible.  Clients may want to contact their respective ACO to assist by providing a complete listing of all impacted contracts.

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Topics: COVID-19

What Could Defense Production Act Mean?

The President has announced he has invoked the 1950 Defense Production Act (DPA).  This act provides the Government with the ability to direct businesses to accept contracts and increase the production of necessary goods and services.  The act has been used numerous times since 1950 to support emergencies, including natural disasters and the war on terrorism.  The current fight with COVID-19 has necessitated it once again.  A July 28, 2014, Congressional Research Service paper titled “The Defense Production Act of 1950: History, Authorities, and Reauthorization” summarized the current act to include:

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Topics: Contracts Administration, Government Regulations, COVID-19