The National Defense Industrial Association’s (NDIA) September Procurement Division Committee meeting provided insights and information that we believe is of interest to our readers. These comments are our own interpretations and opinions based upon our presence at the meeting.
Topics: Compliant Accounting Infrastructure, Sequestration, Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration
Dealing with DCAA audits can be tricky at best - especially in today’s environment, if you do not take the necessary steps to ensure that you understand, manage and respond appropriately to audits. In this brief article, we will look at what steps can be taken by contractors prior to, during and after a DCAA audit.
Topics: Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support
On August 13, 2013, the Federal Register included a proposed rule to reduce the contractor response time (for comments on past performance ratings) from 30 to 14 days. The change is a required reform (i.e. Congressional expectation) to improve contractor past performance databases; per the rule writers, it will “improve communication with contractors, access to performance information within the government and procedures selecting high performing contractors” and “having this data available within 14 days will be to the advantage of most contractors”. Not that it matters, but this strikes us as a meaningless and inconsequential change (to placate Congress) which will do nothing to improve the timeliness of the acquisition process. Moreover, just one more example where contractual due dates are imposed on contractors (who are then held to these due dates) when few if any due dates are contractually imposed on government auditors or contracting officers. Notably when FAR 52.216-7 was revised in May 2011, public comments suggested that with respect to the annual indirect cost rate proposal (contractor due date for submission is six months after the end of the contractor fiscal year) it also include due dates for incurred cost audits to facilitate contract closeout—in their infinite (and biased) wisdom, the rule makers stated that government due dates would be inappropriate because such due dates might impact the quality of the contract audits. Which begs the question, how does one measure audit quality when DCAA completes so few incurred cost audits?
Topics: Incurred Cost Proposal Submission (ICP/ICE), Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support
One of the primary goals for a contractor notified of an impending Defense Contract Audit Agency (DCAA) audit should be to understand the audit process and, if possible, to develop a positive working relationship with auditors. In other words, to work with rather than against the auditor.
Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DCAA Audit Support
“My DCAA auditor is telling me I’m now subject to CAS. What does that mean? What do I do?” We get questions like this almost every day. Usually we then obtain as much information as we can to determine why DCAA has made this claim and advise our clients accordingly.
Topics: Contracts & Subcontracts Administration, DCAA Audit Support, Cost Accounting Standards (CAS)
Government contractors who are required to submit certified cost and pricing data as part of a bid proposal face increasingly greater risks of government rejection or award disqualification during pre-award review or even worse, defective pricing allegations after award causing government mandated downward negotiated price adjustments. In today’s government procurement environment where procurement commands and their auditors hold contractors to solicitation and cost analysis provisions with such rigidity, equating to a zero error tolerance during proposal evaluations, contractors must not fail to meet the “certified cost or pricing data” submission or disclosure expectations in the pre-award proposal preparation process as intended within the Truth-in-Negotiations Act (TINA).
All one has to do is read a recent article written by David Cox, President of the American Federation of Government Employees (AFGE), to derive the answer to this question, and the answer is that contractor employee compensation should be brought in line with the salaries that public sector employees (e.g., federal civilian personnel) are paid.
Topics: Proposal Cost Volume Development & Pricing, Employee & Contractor Compensation
The Department of Defense (DOD) June 28, 2013 “Performance of the Defense Acquisition System” annual report states that little difference exists between fixed price and cost-plus contracts when it comes to predicting or controlling costs.
Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, Government Compliance Training
DCAA employees have now received their long-awaited letters proposing an 11 day furlough - one day a week from July through September of 2013. Since this furlough is cumulatively over 80 hours, employees will also lose an accrual of sick and vacation pay. In addition, according to Jessica Wright, acting undersecretary of Defense for Personnel and Readiness, furloughs may not end in September. She stated that looking at the FY 2014 budget numbers suggested by the White House and both sides in Congress, DoD may very well have to plan for another round of sequestration and furloughs. Under the federal process, once an employee receives a proposal for furlough, an individual can present a case to the deciding official on why they feel like they should be excepted from the furlough. Then the deciding official will make a final decision. Since this is a DoD initiative and exceptions apply to very few DCAA employees, the furloughs are expected to be upheld.
Topics: Sequestration, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support
President Obama will purportedly send to Congress proposed legislation this week which will cap reimbursement of all government contractor employee annual salaries at $400,000, the President’s annual (base) salary. The proposed legislation is an expansion of the FY 2013 National Defense Authorization Act (NDAA) approved in early CY 2013, applicable only to Department of Defense Contracts, which would ostensibly apply to all government contracts awarded by civilian government agencies, and elevate the cap from the previously debated ceiling of $230,700 (Vice-President’s salary) to the $400,000 amount.
Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training