As we wrap up another hectic year of working with contractors to prepare, review and submit their Incurred Cost Proposals, it had us questioning…“Why do so many contractors wait until the last minute of their deadline to submit? Is there an advantage to submitting at the last minute or is submitting at the last minute actually a disadvantage?”
The incurred cost submission is required for all federal contractors holding cost-type or time and materials (T&M) contracts and is a universal requirement regardless of agency customer. All contracts requiring the incurred cost submission will include the Federal Acquisition Regulations "Allowable Cost & Payment Clause" (FAR 52.216-7) and/or the "T&M Payment Clause" (FAR 52.232-7). Following are answers to frequently asked questions and pointers to resources to help you.
This blog was first published on the Deltek Government Contracting Blog as a guest post by Asa J. Gilliland of Redstone Government Consulting.
The incurred cost submission is required for all federal contractors holding cost-type or time and materials (T&M) contracts and is a universal requirement regardless of agency customer. All contracts requiring the incurred cost submission will include the Federal Acquisition Regulations “Allowable Cost & Payment Clause” (FAR 52.216-7) and/or the “T&M Payment Clause” (FAR 52.232-7). Following are answers to frequently asked questions and pointers to resources to help you.
Topics: Incurred Cost Submission
It’s that time of year, books are closed, tax data has (maybe) been sent to the CPAs and you are ready to start a new year. However, as a government contractor with cost-reimbursable contracts, for the next 180 days a cloud called the incurred cost submission (due on June 30, 2015) is looming over head. Will this cloud looming become a thunder storm or beautiful clear skies? Well, my friend, that is up to you. Here are the top 5 things to know about the incurred cost submission that will make this year a success in submitting a timely and adequate incurred cost submission.
Government contractors having undergone DCAA incurred cost proposal audits during this past year have learned several important trends and lessons, some of which will likely continue into 2014, and produce added administrative hardships for most contractors. Some initiatives undertaken by DCAA in conjunction with the DCMA may mitigate the level and duration of audit effort and hasten contract close-outs for some contractors. For example, more contractors will most likely be subject to low-risk determination criteria and expand the number of companies who could escape those audits.
DCAA employees have now received their long-awaited letters proposing an 11 day furlough - one day a week from July through September of 2013. Since this furlough is cumulatively over 80 hours, employees will also lose an accrual of sick and vacation pay. In addition, according to Jessica Wright, acting undersecretary of Defense for Personnel and Readiness, furloughs may not end in September. She stated that looking at the FY 2014 budget numbers suggested by the White House and both sides in Congress, DoD may very well have to plan for another round of sequestration and furloughs. Under the federal process, once an employee receives a proposal for furlough, an individual can present a case to the deciding official on why they feel like they should be excepted from the furlough. Then the deciding official will make a final decision. Since this is a DoD initiative and exceptions apply to very few DCAA employees, the furloughs are expected to be upheld.
Loss of Memory or In-Denial?
As most contractors (subject to DCAA incurred cost audits) are aware, DCAA and DCMA were soundly “defeated” in terms of ASBCA rejections of DCAA FAR 31.205-6(b) compensation reasonableness challenges (Reference to J.F. Taylor, ASBCA Cases 56105, 56322 and Metron, ASBCA Cases 56624, 56751, 56752).
As one more indication that DCAA is the puppeteer and the DAR Council are the puppets, the DFARS Final Rule (DFARS Case 2011-D042) requiring a proposal checklist was issued on March 28, 2013. The proposed checklist and the substance of the final checklist were eerily similar to DCAA’s proposal checklist, which “was” an unconstrained embellishment of anything actually required in the regulations. The checklist is form over substance and just one more unnecessary document solely to make life easy for DCAA (although not quite as bad as FAR requirements for contractors to provide DCAA with SEC filings as if DCAA auditors are incapable of retrieving these from the readily accessible internet). The absurdity of the DFARS proposal adequacy checklist rule is self-evident in one public comment and the DAR Council response: