Redstone Government Consulting Blog (68)

On June 30, 2015, the U.S. Department of Labor (DOL) increased the McNamara-O’Hara Service Contract Act (SCA) Health & Welfare benefits from $4.02 to $4.27. A notice is not sent directly to contractors and unfortunately for them the importance of this change lies with timing. For those contractors that are currently working diligently on preparing cost proposals, this increase will directly affect you. According to the DOL memorandum that put this change into effect, “all invitation for bids opened, or other service contracts awarded on or after June 30, 2015, must include an updated SCA WD issued in accordance with the regulatory health and welfare (H&W) fringe benefit determination methodology.” So if you have recently submitted a proposal subject to the SCA, we suggest that you ensure that your H&W meets the SCA H&W requirement of $4.27.

DCAA has had MMAS (Material Management and Accounting System) audit cognizance or review responsibility for DOD contractors since the advent of the DFARS Business Systems Rule in 2012. DCAA’s scope of audit is to determine if a contractor’s MMAS complies with the ten criteria or standards set forth in DFARS 252.242.7004.

In an Executive Orders (EO) issued on Labor Day, President Obama continued to display his willingness to manage the personnel policies of government contractors. This latest EO, one of many directed solely at Government contractors, will require contractors to provide up to seven days paid sick leave (annually) for employees. The EO comes with the typical unsupported rhetoric that “we’ve seen that many companies, including small businesses, support these policies because they understand it’s helpful with recruitment and retention” and a separate assertion “that paid sick leave will improve contractor performance”. Perhaps unintended, but it is noteworthy that the White House did not state that many companies support the notion that paid sick leave will “improve contractor performance”; by implication, the White House could not find any companies which were sufficiently naive to buy-in to that highly speculative and wholly unsupported assertion.

A common misconception occurs when the term “DCAA-compliant accounting system” is used to describe a particular brand of accounting software. Sure, some accounting software systems and its components are designed specifically to address compliance with government regulatory requirements. But just because you buy it and use it does not mean you automatically have a compliant accounting system. There are several requirements of the accounting system and its environment that must be in place to ensure DCAA compliance, and there are a multitude of ways to meet these requirements without a significant investment in the purchase, implementation, training, and maintenance of a really expensive accounting system. Small businesses looking forward to bidding on prime, cost-type contracts must maintain DCAA compliance while also being as cost effective as possible to keep indirect rates at a competitive level. There are many options to choose from, and business owners must determine the best fit for their company. Be sure to consider all of the options:

In 2014 DCAA quietly rolled out its new audit report format which generated some obvious questions:

In more than a few instances, government contractors receive a DCAA inquiry which is not directly related to any particular audit. In many cases, the request involves a Contractor Survey (or a Contractor Internal Control Questionnaire) which is requested annually to facilitate DCAA’s audit planning (at least for the moment given DCAA’s propensity to routinely change audit priorities).   For repetitive annual requests which are essentially the same set of questions received every October as DCAA begins its new fiscal year, the tendency is to complete the questionnaire without asking DCAA to explain what contractual clause requires this action (don’t ask, there is none).

The judgments rendered by the ASBCA in the Raytheon Co., Space & Airborne Sys, ASBCA Nos. 57801, 57803, 58068 resulted in the resolution of a number of issues concerning CAS (Cost Accounting Standards) cost impacts associated with unilateral changes in a contractor’s cost accounting practices. There were five basic issues; the Government prevailed on three, the contractor prevailed on one, and one was undecided (to be decided in the actual trial given that the current decisions were in reference to the parties’ cross-motions for summary judgment).

Over the past few months Redstone GCI has made several significant investments in our software services practice. For many years we have supported our clients with Deltek solutions, as well as many of our small business clients with QuickBooks assistance. In July, we added a new staff member to our ranks to better support our Deltek clients. Jimmy Baker will be leading our Costpoint and GCS support services, and we are excited to introduce him to our existing clients. Jimmy has been working with Costpoint for over 20 years decades, and has a great deal of experience working with larger system implementations, as well as new implementation and design for smaller companies utilizing Costpoint. He most recently assisted a very large government contractor with worldwide integration and conversion to Deltek Costpoint.

The Fair Labor Standards Act of 1938 (FLSA), which is administered and enforced by the Wage and Hour Division (WHD) of the Department of Labor (DOL) imposes, among other things, minimum wage and overtime pay requirements. It is certainly nothing new and has been a hot topic amongst Human Resources professionals over the past months as President Obama directed the Secretary of Labor to update the regulations. With much speculation and rumblings of possible changes, all have been anxious for the impending proposed rule to be revealed.  

In compliance with 41 U.S.C 1908, adjustments were made to statutory (and non-statutory) acquisition thresholds to accommodate inflation, using the Consumer Price Index. Government Contractors should take note of the threshold changes and be prepared to accommodate the revised thresholds beginning in October 2015 by make the appropriate adjustments to respective policies, procedures, and practices.