Redstone Government Consulting Blog (16)

The Office of Federal Contract Compliance Programs (OFCCP) has been busy since the start of fiscal year 2023, which began on October 1, 2022. Since this time, they have completed over fifteen investigations that have resulted in large settlements totaling more than ten million dollars. Many of the investigations centered around discrimination in hiring and compensation.

The Unanet Champions conference was held this year in Denver, CO. Prior to the conference kick-off, Unanet now host a day of training for those want training in specific areas. Katie participated in Analytics and I was in the CRM: Administering the System. I will become a Certified Implementer for CRM this summer and I’m excited about the opportunity.

Comparison to FAR

Like CAS 401, CAS 402 is part of modified CAS coverage and is one of the first CAS standards a company encounters. It likely will not call for any changes to the company’s cost accounting system because Federal Acquisition Regulations (FAR) 31.202 (Direct costs) and 31.203 (Indirect costs) give us words very similar to the CAS words.

FAR 36.203, Government estimate of construction costs, and FAR 36.605, Government cost estimate for architect-engineer work, require the development of an independent Government estimate of the cost of construction costs and architect-engineer services when the value is expected to exceed the simplified acquisition threshold ($250,000). The estimate shall be prepared in as much detail as though the Government were competing for award or on the basis of a detailed analysis of the required work as though the Government were submitting a proposal. Access to the Government estimate is limited to Government personnel unless during negotiations the contracting officer identifies a specialized task and discloser is deemed necessary to arrive at a fair and reasonable price.

Organizations receiving Federal awards (i.e., grants or cooperative agreements) are required by 2 CFR 200.303(a) to “[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” This section goes on to provide that the internal controls should comply with the guidance in:

The purpose of a CPSR is to determine if a contractor’s purchasing system and related internal controls comply with applicable laws and regulations, are effective over compliance with applicable laws and regulations, and are adequate and operating effectively. Contractors should evaluate their purchasing system by using the following regulations and DCMA guidance:

Whether you call it “defective pricing” (DP) or Truth in Negotiations Act (TINA) or even the current labeling of Truthful Cost or Pricing Data Act (TCoPD - 41 USC Ch. 35) there is not much new about the impact to Federal Government contractors. The law supporting this goes back to 1962 in an environment where Congress believed contractors were overcharging the Government for negotiated goods or services. My how times have not changed. This could also describe our current Congress and may create worry among government prime and subcontractors.

DoD Issued a Final Rule amending the Defense Acquisition Regulation Supplement (DFARS) to require contracting officers to consider Supplier Performance Risk System (SPRS) risk assessments when evaluating a suppliers quote or offer. The final rule is effective March 22, 2023. The Supplier Performance Risk System (SPRS) is the authoritative source to retrieve supplier product and performance information assessments for the DoD acquisition community to use in identifying, assessing, and monitoring unclassified performance.

As the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) season ramps up we have noticed a trend when it comes to award of SBIRs and Small Business Technology Transfer (STTRs) to small businesses in regard to cost analysis as part of Phase 1 awards, as well as dealing with the administration associated with a Phase 2 cost-reimbursable awards. A significant part of the SBIR process is to educate small businesses on the process and controls required to do businesses with the U.S. Government. The cost-reimbursable nature of phase 2 awards inevitably means that small businesses will have the opportunity to undergo accounting system adequacy determination, develop provisional billing rates, and undergo incurred cost submission review or audit. These are key barriers to entry to many businesses seeking to work with the U.S. Government and the pursuit of SBIR/STTR work not only provided necessary funding for small business research and development (R&D), but also an avenue to clear necessary hurdles when it comes to the back-office compliance. At least that was the case historically.

DoD issued a Final Rule (DFARS Case 2021-D001) amending the DFARS to expand Contracts Eligible for Quick Closeout. The final rule is effective March 1, 2023. We believe there will be an increase in the number of DCMA requests to apply the quick closeout procedures to contracts with less than $2 million of unsettled direct and indirect cost, or if it is in the best interest of the government regardless of the dollar amount of the contract or unsettled costs. Seeing as DCAA questions less than 1% of the incurred cost it does get around to auditing. It would be in DoD’s best interest to close all completed contracts. One can only hope.