Lynne Nalley and John Shire

Lynne Nalley and John Shire

Recent Posts

The Final Rule on the Cybersecurity Maturity Model Certification (CMMC) Program is Here

On October 15, 2024, the Department of Defense (“DoD”) published the final rule of the Cybersecurity Maturity Model Certification (“CMMC”) requirements in Title 32 of the Code of Federal Regulations, effective December 16, 2024. The Final Rule updates DoD national security regulations to ensure contractors have implemented cyber security measures to safeguard Federal Contract Information (FCI) and Controlled Unclassified Information (CUI). CMMC will be contractually required when the Defense Federal Acquisition Regulation (“DFARS”) clause has not been finalized (see our article, “DoD Issues CMMC Proposed Rule – Submit your comments by October 15, 2024”). We will refer to this DFARS clause throughout this blog as the DFARS CMMC Clause Final Rule.

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Topics: Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR), Cybersecurity

Understanding Indirect Costs Under FAR and 2 CFR 200

Direct Costs

To understand indirect costs, it is always best to understand direct costs. Below is a comparison of the definition of direct cost in the Federal Acquisition Regulations (FAR) and 2 Code of Federal Regulation (CFR) 200. FAR Part 31 provides the cost principles for commercial for-profit organizations and 2 CFR 200 Subpart E provides the cost principles for all other organizations (e.g., non-profits and educational institutions).

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Topics: Compliant Accounting Infrastructure, Government Regulations, Federal Acquisition Regulation (FAR), Grants & Cooperative Agreements (2 CFR 200)

What are the Benefits of 2 CFR 200.405(d) Direct Allocations?

Title 2 Subtitle A Chapter II of the Code of Federal Regulations (CFR) includes Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (i.e., grants and cooperative agreements). 2 CFR 200.405, Allocable costs, falls under Subpart E–Cost Principles applicable to all organizations that are not commercial for-profit organizations. 2 CFR 200.405(d) states:

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Topics: Compliant Accounting Infrastructure, Government Regulations, Federal Acquisition Regulation (FAR), Grants & Cooperative Agreements (2 CFR 200)

Are For-Profit Organizations with Grants or Subawards Required to Obtain a "Single Audit"?

For-profit organizations that receive grants must establish a cost accounting system that complies with the Cost Principles in FAR part 31.2, read our article Which Cost Accounting Regulations Apply When You Have Grants and Federal Contracts. Additionally, a for-profit organization with a grant must also comply with the 2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and agency supplements for all other requirements under the grant, cooperative agreement, or subaward. While there are similarities between the FAR and 2 CFR 200 requirements – for example: written policies and procedures, accounting by project, and timekeeping practices, there are differences as well – the requirement for audit is one.

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Topics: Compliant Accounting Infrastructure, Government Regulations, Federal Acquisition Regulation (FAR), Grants & Cooperative Agreements (2 CFR 200)

DPC Issues Guidance to DoD for Lack of Verifying Contractor Compliance with Whistleblower Protection Requirements

The Office of the Under Secretary of Defense, Defense Pricing and Contracting (DPC) issued a guidance memorandum dated March 18, 2024 to Agencies based on the results of the Department of Defense (DoD) Inspector General (IG) Audit of DoD Compliance on Whistleblower Protection Requirements. While the DoD IG found in most cases, that Contracting Officers included the DFARS 252.203-7002 Requirement to Inform Employees of Whistleblower Rights clause in contracts, they did not verify whether contractors were complying with the clause.

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Topics: Contracts & Subcontracts Administration, Government Compliance Training, DFARS Business Systems, DCAA Audit Support, Human Resources, Government Regulations, Federal Acquisition Regulation (FAR)

Cost Accounting Standard (CAS) 420 – Accounting for IR&D Costs and Bid & Proposal B&P Costs

Cost Accounting Standard (CAS) 420 outlines accounting standards for Independent Research and Development (IR&D) and Bid & Proposal (B&P) costs incurred by government contractors, ensuring consistent and transparent reporting.

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Topics: Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)

DoD Creates Confusion Related to Commercial Subcontracts

In November of 2023, DoD issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to partially implement a section of the 2017 National Defense Authorization Act (NDAA) addressing the Federal Acquisition Regulations (FAR) and DFARS contract clauses impacting prime or higher-tier contractors issuing commercial subcontracts for commercial products, including commercially available off-the-shelf items, and commercial services.

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Topics: Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR), Service Contract Act, Commercial Item Determination

Is Construction for the Federal Government Commercial?

How does the Government define construction? We need to consider some of the definitions in FAR part 2:

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Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Commercial Item Determination, Federal Construction Contracting

Cost Accounting Standard (CAS) 403 - Allocation of Home Office Expenses to Segments

So, you have a contract with the clause FAR 52.230-2 Cost Accounting Standards, subject to full CAS coverage. If you receive allocations from a home office, the home office must comply with CAS 403, Allocation of home office expenses to segments. A home office has the responsibility for directing or managing two or more segments of an organization and includes intermediate home offices or a corporate office.

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Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)

Supply Chain Requirements on Covered Articles in Effect Now

The FAR Council issued an interim rule, effective December 4, 2023, which implements the requirements of the Federal Acquisition Supply Chain Security Act (FASCSA). This included three new FAR clauses which prohibit the delivery or use of “covered articles” subject to a FASCSA order in the performance of a government contract.

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Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Manufacturing Operations Consulting