Mike Steen is a Emeritus Advisor with Redstone Government Consulting, Inc. and a specialist in complex compliance issues to include major contractor cost accounting & business system regulations, financial compliance, resolution of DCAA audit issues, Cost Accounting Standards application, litigation support, and claims preparation. Prior to joining Redstone Government Consulting, Mike served in a number of capacities with DCAA for over thirty years, and upon his retirement, he was one of the top seven senior executives with DCAA. Mike Served as a Regional Director for two DCAA regions, and during that time was responsible for audits of approximately $25B and 800 employees. In October 2001, he was selected for the Senior Executive Service and in 2006 he received the Presidential Rank Award. During Mike’s tenure with DCAA, he was involved in conducting or managing a variety of compliance audits, to include cost proposals, billing systems, Cost Accounting Standards, claims, defective pricing, and then-evolving programs such as restructuring, financial capability and agreed-upon procedures. He directly supported the government litigation team on significant contract disputes and has prepared and presented various lectures and seminars to DCAA staff and business community leaders. Since joining Redstone Government Consulting in June 2007, Mike has developed and presented training and seminars on Government Contracts Compliance to NCMA, Federal Publications Seminars and various clients. Mike also is a prolific contributor of written articles to government contracting publications, as well as to our own Government Insights Newsletter. Mike also serves as the director of our training service offerings, with responsibilities for preparing and developing course content as well as instructing our seminars to clients and general audiences throughout the U.S. Mike also serves as a faculty instructor for the Federal Publications Seminars organization. Education Mike has a BS Degree in Business Administration from Wichita State University. He is also a graduate of the DCAA Director’s Fellowship Program in Management, and has a Masters Degree in Administration from Central Michigan University. Mr. Steen also completed a number of OPM’s management and executive development courses.
As we again approach Halloween and the night of tricks or treats, we’ve once again done some exhaustive research (more accurately searching blogs and other reliable sources) as to the trending costumes (favored by DCAA, DCMA or the Current Administration).
Topics: Redstone GCI
On September 22, 2016, approximately 150 professionals attended the first annual “Redstone Edge” conference. The all-day event, held at the Jackson Center in Huntsville, Alabama, is planned to be an annual event, potentially expanding to two days in September 2017 (starting on September 21, 2017).
The 2016 conference covered a broad range of topics with an impressive variety of presenters representing government agencies, government contractors, and related advisors, including attorneys and consultants/CPAs.
In a report issued on July 26, 2016, the DOD- IG (Department of Defense Inspector General) concluded that DFAS (Defense Finance and Accounting Service) and the Department of the Army (Army General Fund or AGF) failed to support $4.44 Trillion in JV (Journal Voucher) Adjustments.
Topics: Compliant Accounting Infrastructure, DFARS Business Systems
Provisional billing rates are established by either the ACO (Administrative Contracting Officer) or DCAA (Defense Contract Audit Agency). As described in a 2014 DCAA Audit Policy (MRD 14-PPS-012, dated July 22, 2014), per FAR 42.704, provisional billing rates should be established early within a contractor fiscal year for purposes of invoicing indirect costs (on cost-type contracts or any contract which ultimately requires final indirect cost rates per FAR 42.705). For anyone familiar with FAR, it is self-evident that provisional billing rates are based upon FAR Part 42, which details contract administration versus proposal contract pricing, (typically FAR Part 15, if cost or pricing data is required). Although there may be similarities, the proposal process involves solicitation clauses, whereas a contract award contains contractual clauses.
On July 6, 2016, the DOE (Department of Energy) quietly withdrew its April 1, 2014 proposed rule, “Contractor Business Systems—Definition and Administration. The April 2014 proposed rule which defined five business systems was modeled after similar business systems requirements imposed upon DOD Contractors (DFARS 252.242-7005 along with six interrelated regulations pertaining to each of the six business systems noting that the five DOE systems excluded MMAS). Also in common with DOD, the statement or mantra, that “Contractor business systems and internal controls are the first line in defense against fraud, waste and abuse. That statement was excessively used by the Commission on Wartime Contracting, a Bi-Partisan Commission whose August 2011 248-page report concluded that at least $31 billion and possibly as much as $60 billion was wasted in Iraq & Afghanistan from 2002-2008 ($4.4B to $8.6B annually; by comparison, Government agencies estimate annual improper payments exceeding $100 billion in each year 2009-2015). If one bothers to read the 248-page report, one would also surmise that most of the waste resulted from government failures which notably includes one singular failure, the lack of any accountability for $6.6B of a $9.1B cash shipment.
Topics: DFARS Business Systems
Cost-type contracts invoke FAR 52.216-7, Allowable Cost and Payment Clause, and that FAR clause requires the contractor to prepare, certify, and annually submit a final indirect cost rate proposal (ICPs). Although the majority of these ICPs are dispositioned without any DCAA audit (DCAA’s Low Risk Sampling Policy), for those unlucky enough to be audited by DCAA, there is the thrill of receiving a draft audit report with new and novel audit assertions. Translated, cost questioned for unexpected and sometimes incomplete and/or inaccurate interpretations of the underlying FAR cost principles (FAR Part 31).
Topics: DCAA Audit Support
In our blog “Blended Compensation Rate Guidance: Steps to Success”, posted on March 4, 2016, we provided the steps a contractor should take to determine if and how the compensation cap applies. The reference is FAR 31.205-6(p) which establishes a statutory cap on allowable compensation, notably the methodology for determining the cap was changed as was the cap (reduced to $487,000) effective on contracts executed on or after June 24, 2014. The reference to blended rates pertains to a contractor incurring costs in 2014 on contracts executed before June 24, 2014, as well as on contracts executed on or after June 24, 2014. The “old” contracts subject to the previous (more contractor-friendly) regulation with a 2014 cap of $1,144,888 and the “new” contracts subject to the artificially low (and highly political) cap of $487,000.
Topics: Compliant Accounting Infrastructure, DCAA Audit Support
Although the 2017 NDAA (National Defense Authorization Act) is a work in progress, as it stands, it includes Section 820 which would repeal subsections (a) and (d) of Section 893 of the 2016 NDAA (section 893 was discussed in a previous blog dated January 13, 2016). If portions of Section 893 are repealed, DCAA would have the renewed ability to perform audits for non-Defense Agencies without any reduction in DOD funding.
Topics: Contracts & Subcontracts Administration, DCAA Audit Support
On March 4, 2016, we posted a blog, “The Inherently Evil Cost-Type Contracts” which discussed the Government view of cost type contracts. More specifically, the risks to the Government when using a cost-type contract (typically cost-plus fixed-fee, but also including cost-plus incentive fee or CPIF). From a contractor risk perspective, the evil-twin of the CPIF contract is a Fixed-Price Incentive Firm Target (FPIF) contract because of the major difference in contractor obligations to perform as a function of costs incurred. Typically cost type contracts only require contractor performance up to the contract limitation of funds (LOF); as noted in FAR 16.307(d)(1), the completion form of a cost-type contract requires the contractor to complete and deliver the specified end product within the estimated cost (LOF). However, if the specified end product can’t be performed/delivered within the estimated cost, the government can require more effort provided the Government increases the estimated cost. A contractor is no longer required to perform once costs incurred equal the LOF; hence, the Government assumes the risk of cost overruns if the Government wants to compel delivery of the end-product.
As some may have seen, on March 10, 2016, the Department of Defense (DOD) issued its 2017 regulatory proposals. However, through marginally reliable resources, we’ve located one significant regulatory deviation being sought by DOD. We understand that DOD will make this public on April Fool’s Day, 2016. The following is what we know about this rumored (but could be factual) DOD action.
Topics: Redstone GCI