Redstone Government Consulting Blog | Redstone Team

The now infamous NIH Guidance (NOT-OD-25-068) and Executive Order 14222 started us thinking. Is the Department of Defense (DoD) possibly the next domino to fall? After all, the DoD has a very large contract spend of $431.4 billion based on the Defense Spending by State, FY 2023 — Executive Summary. We looked to see if we could find data on how much of that spend is going to indirect costs (i.e., overhead). Surprisingly, the only data we could find is very dated. The data comes from the DoD Indirect-Cost Management Guide from October 2001 posted on the Defense Acquisition University (DAU) website. The guide states, “estimates made by the Defense Contract Management Command (DCMA), in conjunction with discussions with defense contractor top management on their DCMA Overhead Initiative, indicate[s] that indirect costs constitute approximately $90 billion of the $170 billion total DoD work in process at all defense contractor[s].” While not clear, our assumption is that this represents the 2000 or 2001 timeframe. Based on this, DoD is spending 53% of its appropriated funding on indirect costs. This means the average defense contractor has an approximate 100% indirect cost rate, covering overhead and general & administrative (G&A) costs. Based on recent experiences with our clients, we believe this is still a reasonable estimate of indirect cost on DoD contracts, if not a little higher.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

As Kevin so aptly put it in Home Alone 2 – “Another Christmas in the trenches.”

Topics: Government Shutdown, Contracts & Subcontracts Administration

Training and employee development, in our opinion, must be looked at as a necessary investment in the future of a business as well as the business’ key resource - its employees. That said, those businesses in the government contracting industry are also facing an ever-expanding list of required or at least expected training that is necessary to maintain compliance with their growing list of contract clauses.

Contract Requirements and Expectations for Training

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources, Federal Acquisition Regulation (FAR), Organizational Change Management Consulting

In August of 2023, the Defense Contract Audit Agency (DCAA) changed what is used to refer to as Mandatory Annual Audit Requirements (MAARS) 13 audits to Real-Time Audits of Purchase Existence and Consumption. This change was to eliminate the mandatory part of the requirement and introduce greater flexibility based on the auditor’s risk assessment of the contractor.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

In August of 2023, the Defense Contract Audit Agency (DCAA) changed what it called Mandatory Annual Audit Requirements (MAARS) 6 audits to Real-Time Audits of Labor. This change was to eliminate the mandatory part of the requirement and introduce greater flexibility based on the auditor’s risk assessment of the contractor.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

You have done the difficult work of developing a product that meets the technical specifications, quality, and reliability your Government customer requires. As you move from design to manufacturing, Redstone Government Consulting can help you plan and prepare for your Manufacturing Readiness Review (MRR) or Production Readiness Review (PRR). These phase gates may be required by your contract as part of the project bringing your product from design into manufacturing. Manufacturing Readiness Review (MRR) is the phase gate that typically follows the Critical Design Review (CDR), where the design is frozen. It is very common for this to be the point in the project that the manufacturing team becomes involved in preparing to produce the product.

Topics: Manufacturing Operations Consulting

This article helps define Organizational Change Management (OCM) and Organizational Intelligence (OI) and addresses their practical relevance to healthy business operations.

Topics: Human Resources, Organizational Change Management Consulting

Basic Requirements

CAS 410 provides the criteria for allocating business unit general and administrative (G&A) expenses to final cost objectives based on their causal beneficial relationship. The standard requires that one of three cost input bases must be used unless there is a special allocation to a particular final cost objective. Contractors should select the cost input base which best represents the total activity of a typical cost accounting period for the production of goods and services for the business unit.

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

Basic Requirements

This standard vastly expands on the FAR requirements related to direct and indirect costs. FAR 31.202 and FAR 31.203 give a basic definition of each, but little else. CAS 418 provides guidance on accumulating indirect cost pools, including service centers and overhead costs. Furthermore, it requires the costs be allocated on the causal or beneficial relationship between the indirect cost pool and the related cost objective. In addition, CAS 418 requires each business unit to have written policies and practices for classifying costs as direct or indirect.

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

Being a government contractor, whether you’re a novice or a veteran, comes with its own unique set of challenges. One of the most significant is the constant need to optimize indirect rates. These rates can be the deciding factor between securing new contracts and expanding your business or remaining static and missing out on opportunities. As your business grows and evolves, your indirect rates should follow suit. Regularly evaluating your rates to ensure they align with your company’s strategic plan and maximize the recovery of your allowable costs is crucial to building a thriving company.

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DCAA Audit Support