Redstone Government Consulting Blog (40)

For those of you who may have thought there could be a silver lining to coronavirus restrictions from reduced audit effort, think again! Actual postponement of audits will be rare.

The language in the 2017 NDAA Sec 831, stating “Performance-based payments shall not be conditioned upon costs incurred in contract performance but on the achievement of performance outcomes …” has finally been incorporated into the DFARS (DFARS Case 2019-D002) with an effective date of April 8, 2020.  The rule removes restrictions in DFARS 232.1001(a), DFARS 252.232-7012(b)(i), and DFARS 252.232-7013(b)(i) that limited performance-based payments to amounts not greater than costs incurred up to the time of payment.  However, the rule does not alter the requirement for subcontractors/vendors to report costs incurred when requesting performance-based payments.  The rule also removed the requirement of the subcontractor/vendor’s accounting system to comply with Generally Accepted Accounting Principles, as evidenced by audited financial statements.

UPDATE:  On May 5th, SBA added FAQ #43 extending the safe harbor to May 14, 2020 and stating “SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.”

In days gone by, knowing which contract administration office you needed to work with was as easy as finding your local Defense Contract Management Agency (DCMA) Office.  DCMA used to accept and administrate pretty much all contracts, even other Federal Agencies with reimbursement of its services (e.g., NASA contracts).  This is no longer the case; Over the last few years, DCMA has made a significant effort to stay focused on what it refers to as its core business – basically research, development, engineering, test, production, and spares for major acquisition programs.  This leaves the administration of low value/low risk contracts, management and professional services contracts, architect-engineer services contracts, and many others to the buying command that issued them.

Showing both a philanthropical and adventurous side, Redstone GCI Senior HR Consultant Linda Scalf and Senior Managing Consultant Jonas Clem slurped, licked, smelled, bit, and tasted a variety of foods in this lighthearted competition.

In our 3rd episode of The FAR Truth, Redstone GCI Director John Shire shares important information regarding two crucial clauses, Limitation of Funds and Limitation of Cost. 

On April 8, 2020, Acting Principal Director for Defense Pricing and Contracting issued a memo providing guidance in support of DFARS Class Deviation 2020-O0013 – CARES Act Section 3610 Implementation.  The Class Deviation provides language for DFARS 231.205-79, CARES Act Section 3610 – Implementation.  The cost principle language makes costs of paid leave (including sick leave) allowable at the appropriate rates under the contract for up to an average of 40 hours per week and may be charged as direct to a contract.

Although the COVID-19 Pandemic and its impact on everyone is absolutely serious business, the nature of this “special day” blog is not necessarily serious business.   At times like these we hope that an element of levity will be accepted for what it is and not be misinterpreted as diminishing the serious nature of the pandemic. We also hope that everyone reading this is safe, healthy and adhering to the federal guidelines to limit the spread of COVID-19.

On March 20, 2020, Acting Principal Director for Defense Pricing and Contracting issued a memo increasing the progress payment rate from 80% to 90% for large businesses and 90% to 95% for small businesses.  The intent to increase cash flow to contractors running low on cash due to the impact of COVID-19.  See DoD Class Deviation 2020-O0010 for details.  The Defense Contract Management Agency is working to modify contracts as efficiently as possible.  Clients may want to contact their respective ACO to assist by providing a complete listing of all impacted contracts.