The Changing Contract Audit Landscape

DCAA’s Auditing More than ICS & Proposals?

Over the last few years, we have often written on the changing landscape of contractor business system audits.  Specifically, the fact that the DCAA has invested considerable resources into the audit of incurred cost proposals and proposals for most of the past decade, which has led to an inability to routinely audit contractor business systems, conduct routine post-award (TINA) defective pricing audits and other audits that should be a routine part of doing business with the government in a flexibly-priced environment.  The change in audit focus has been apparent since the end of 2018, but we are just now starting to see the true impact of the Agency’s adaptation to an audit world without a large volume of incurred cost audits. 

Read More

Topics: DFARS Business Systems, DCAA Audit Support

Indirect Cost Basics for Government Contractors

FAR Subpart 2.1, Definitions, provides the meaning of two general groupings of cost not assignable directly to final cost objectives (i.e., not a direct contract cost):

Read More

Topics: Contracts Administration, DCAA Audit Support

Government Contractor Estimating System Requirements and Audits

The FAR establishes that when contracting by negotiation with the Government, the contractor should have an acceptable estimating system.  FAR 15.407-5 provides that due to the benefits to both the Government and the contractor in reducing the scope of individual proposal reviews at contractors with an acceptable estimating system, the auditor (likely DCAA) should survey the system and provide a report to all contracting offices and contract administration offices doing substantial pricing activity with the contractor.  This is a very open-ended requirement/expectation; therefore, DoD established a structure in the DFARS.

Read More

Topics: Contracts Administration, DCAA Audit Support

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

SBA Extends the Repayment Date Again – May 18, 2020

Read More

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.

Read More

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.

Read More

Topics: DCAA Audit Support, COVID-19

Who is my Government Official Over Cost Issues?

In days gone by, knowing which contract administration office you needed to work with was as easy as finding your local Defense Contract Management Agency (DCMA) Office.  DCMA used to accept and administrate pretty much all contracts, even other Federal Agencies with reimbursement of its services (e.g., NASA contracts).  This is no longer the case; Over the last few years, DCMA has made a significant effort to stay focused on what it refers to as its core business – basically research, development, engineering, test, production, and spares for major acquisition programs.  This leaves the administration of low value/low risk contracts, management and professional services contracts, architect-engineer services contracts, and many others to the buying command that issued them.

Read More

Topics: Contracts Administration, DCAA Audit Support

Limitation of Cost or Funds – The Burden Falls on You

When you accept a fully funded cost-reimbursable government contract, it comes along with the FAR contract clause 52.232-20, Limitation of Cost.  This clause places a requirement on you to notify the Government when:

Read More

Topics: Compliant Accounting Infrastructure, DCAA Audit Support

Control Environment – The Expectations are Huge

As we outlined in Applicability of DFARS Business System Rules to Small Businesses, small businesses are exempt from Cost Accounting Standards and therefore are not subject to the business system rules, based on the requirements for inclusion in the Business System Clauses as set out in DFARS.  DFARS Case 2009-D038 – Defense Federal Acquisition Regulation Supplement; Business Systems-Definition and Administration, final rule issue February 24, 2013 in the Federal Register specifically stated:

Read More

Topics: Compliant Accounting Infrastructure, DCAA Audit Support

Direct Costs in Government Contracts – Then and Now

In 1948 the Armed Services Procurement Regulations (ASPR) was issued as a result of the Armed Services Procurement Act, remaining in place until 1978.  ASPR defined direct cost as “any cost that is specifically identified with a particular final cost objective, but not necessarily limited to items that are incorporated in the end product as material or labor.”  This is a fairly broad definition and clearly establishes that direct cost includes more than direct material and direct labor.  The APSR also discussed Other Direct Costs (ODC), which were costs that were not material nor labor and provided examples, such as “travel and subsistence, consultants, telephone, computer costs and report reproduction.” 

Read More

Topics: Compliant Accounting Infrastructure, DCAA Audit Support