Redstone Government Consulting Blog (3)

DoD issued a proposed rule dated August 15, 2024 (DFARS Case 2019-D041) to amend DFARS to incorporate contractual requirements related to the Cybersecurity Maturity Module Certification (CMMC) Program. This implements a section of the National Defense Authorization Act for FY 2020 to enhance cybersecurity for the US defense industrial base. DoD is estimating that the final rule will be issued during Quarter 1 2025. Contractors should take heed and provide comments by the October 15, 2024, due date.

FAR 31.205-20 makes interest unallowable, however, cost of money is not interest based on the CAS Board and is allowable (see our article Interest is Unallowable – How is That Possible). Cost of money is an imputed cost that is provided to contractors to recover the time value of money invested in facilities and equipment that benefit government contracts. Contractors that do not have contracts subject to full CAS, follow FAR 31.205-10 Cost of money which incorporates CAS 414 (Cost of Money as an Element of the Cost of Facilities Capital) and CAS 417 (Cost of Money as an Element of the Cost of Capital Assets Under Construction) and allows cost of money as a cost as long as it is measured, assigned and allocated in accordance with the standard. Cost of money must be specifically identified and proposed in cost proposals to be claimed or billed. Let’s discuss the requirements of CAS 414 and 417.

The Court of Appeals decision came out on June 26, 2024, and I have been trying work it through my head how they got to their decision. I for sure do not have an answer but I have come up with some ideas and concerns. International Development Solutions, LLC v. Secretary of State, U.S. Court of Appeals, Federal Circuit, 68 CCF ¶82,658, (Jun. 26, 2024)

Grants are complex and the regulations in 2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards aren’t exactly straight forward and easy to understand. When you receive a grant, you are expected to have internal controls in place such as policies and procedures, segregation of duties, timekeeping, documentation requirements, etc. If you do not have internal controls, you will need to implement them as soon as possible after award. While anyone can make mistakes, you don’t want continuous errors, overbillings, billing of unallowable costs to become significant noncompliance issues requiring corrective action or even the appearance of alleged fraud.

QuickBooks Online, while not specifically designed for government contractors, is still considered a compliant software for government contractors. It can also handle the setup of any type of contract that you may be awarded. The process is straightforward, but there are some key considerations that need to be made before diving in headfirst into your project setup.

Investigations, internal or otherwise, are necessitated for a variety of reasons and take many different forms. Internal complaints of misconduct, harassment, discrimination or ethical violations must be addressed timely and thoroughly. Failure to do so can lead to legal exposure, whistleblower complaints and even poor morale among your employees. It is always preferable to address complaints internally before an investigation is initiated by the Department of Labor (DoL) after an employee (current or former) goes to them because they believe you failed to take their concerns seriously. Likewise, you hope that the first time you hear about a complaint of discrimination or harassment is not when you receive a Charge of Discrimination from the Equal Employment Opportunity Commission (EEOC). Establishing an internal reporting and investigation process that ensures prompt and fair action will provide the assurances your employees need so they feel comfortable raising their concerns internally and will position your company to defend any potential complaints made to outside agencies.

CAS 416 provides criteria for the measurement of insurance costs, the assignment of such costs to cost accounting periods, and the allocation to final cost.

It is no secret that money plays a significant role in attracting, motivating, and retaining employees; however, recent studies and our experience show that a holistic approach to total compensation is key to success in today’s market. A 2016 study by the Society for Human Resources Management (SHRM) found that pay was the second most important factor of job satisfaction. Many employers focus on the numbers behind the dollar sign, but total compensation goes beyond the paycheck. Total compensation, as defined by Indeed, refers to the total value an organization offers an employee in exchange for their work, including their salary and any benefits or incentives. In addition to these elements, intangible factors like company culture, engagement, wellness, development, and recognition should also be considered as features of total compensation.

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.

You are putting together a proposal in response to a Funding Opportunity Announcement (FOA) for a grant or cooperative agreement. It’s pretty simple. Just estimate direct labor, equipment, other direct costs, and my indirect rates. Correct? Well, maybe, but your indirect rates can be complex.