Redstone Government Consulting Blog (18)

So, the Defense Contract Agency Audit (DCAA) auditor comes into your office, performs an audit, and…they have findings. What do you do? Wait…is there something that I should not do?

All Time and Material (T&M) contracts with the Federal Government, even commercial ones under Federal Acquisition Regulations (FAR) part 12, have one big thing in common. That big thing is that all of the labor hours delivered must be performed by individuals meeting the labor qualifications specified in the contract. The Federal Government uses very strong language in its contract requirement related to this, stating the hours “will not be paid to the extent the work is performed by individuals that do not meet the qualifications.”

Starting back in 2021, DCAA issued updates to its audit programs supporting the audit of incurred cost. Here are a few interesting things we noted in the updates.

While it may be tempting to change the Project Account Group (PAG) in Deltek Costpoint, revenue and billing formulas, revenue and billing formula levels, or a combination of both, you must consider the risks and consequences accompanying this decision.

The Department of Defense has failed an audit - five in a row, to be exact. Federal law mandates audits for all federal agencies, and until 2017, the Department of Defense was never able to satisfy this requirement. It is a very tall task – auditing an agency that controls over half of the discretionary spending in the United States. But in 2017, DoD underwent a financial audit for the first time. They did not pass, but that was never expected. There have also been audits each year since, and while the Agency has not yet passed an audit, it has improved each time.

2 Code of Federal Regulations (CFR) 200 lays out the Procurement Standards (i.e., purchasing system requirements) in section 317 to 327. 2 CFR 200.317 (Procurement by States) requires State Governments making purchases under Federal awards to use the same policies and procedures it uses for placing purchases when it spends State funds. 2 CFR 200.318 (General Procurement Standards) relates to non-Federal entities[1] other than State Governments. This section requires the non-Federal entity to have and use documented procurement procedures, consistent with laws and regulations and conform to the procurement standards identified in §§ 200.317 through 200.327.

Unanet recently released multiple updates to the Contracts Module. Contract clauses were one of the updates that had everyone excited. This new functionality is great if you plan on using it to its full capability. There are multiple steps to this process, which can be time-consuming, so you’ll want to set aside time and plan ahead to complete this process.

On April 27, 2023, The Cybersecurity and Infrastructure Security Agency (CISA) of The Department of Homeland Security (DHS) published a draft Secure Software Development Attestation Form. Software producers that sell to the government will be required to complete the self-attestation form to attest that the software they produce was developed in conformity with specified secure development practices.

The National Defense Authorization Act (NDAA) 2023, Section 803 amended the data that contractors are required to supply for commercial products at the subsystem, component and spare-part levels for major weapons system. While a DFARS proposed rule is being drafted, we expect Contracting Officers and DCMA Commercial Item Group (CIG) to begin requiring this information for proposed commercial products in advance of the DFARS proposed rule.

Does a Government default due to the debt ceiling result in a Government shutdown? Well maybe. It all depends on how the Government reacts or directs its contracting officers to react. A default is different than the – shall we say it – normal – yes, we said it – Government shutdowns we have been dealing with for the past decade or so.