Are Adjusting Billings to Final Year-End Rates Really That Important?


Yes, they are! Did your company make it through its year-end and closing of last year’s books? If so, hooray! But is it really over for those that have Government cost-type contract billings? Not really. OK, as the Federal Acquisition Regulation (FAR) 42.704, Billing rates, allows interim payments through contract performance with the intent of making the contracting officer or contract auditor approved provisional billings rates as close as possible to the expected final indirect rates. This allows you to bill your costs throughout the year of your cost-type Government contract billings. Now that you know what the year-end indirect rates really are, there is one more thing to do: adjust the provisional indirect billing rates to actual rates in a Public Voucher (Standard Form 1034). Those year-end indirect rates should be net of any unallowable costs in FAR Part 31, Contract Cost Principles and Procedures. Sounds easy. It really should not be that difficult.

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Topics: Business Systems Review, Compliant Accounting Infrastructure, Contracts Administration, Defense Contractors, DFARS Business Systems, Cost-Type Contracts, DCAA Audit Support, Accounting & Billing System, Government Regulations, Federal Acquisition Regulation (FAR)

Bye-Bye Foreign, Buy American


The FAR Council published a final rule on March 7, 2022, implementing revisions to the Buy American Act. The final rule strengthens the impact of Federal procurement preferences for products and construction materials domestically manufactured from substantially all domestic content and is effective October 25, 2022.

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Topics: Business Systems Review, DFARS Business Systems, Contractor Purchasing System Review (CPSR)

It is Time for a CPSR Review – Is Your Universe Up-To-Date?


What is a CPSR Review?

A CPSR Review is a Contractor Purchasing System Review. This review is performed by the Government on a contractor, in order to:

  • assess the overall health of the purchasing organization,
  • evaluate the efficiency and effectiveness of the contractor’s practices in expending Government funds,
  • perform an independent review of the contractor’s system to optimize its effectiveness in compliance with Government policy, and
  • identify risk to provide the Administrative Contracting Officer (ACO) a basis for approving or disapproving the purchasing system.
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Topics: Business Systems Review, DFARS Business Systems, Contractor Purchasing System Review (CPSR)

Limitation on Pass-Through Charges in Government Contracts


Does the Total of All Proposed Subcontract Costs Exceed 70% of the Total Contract Costs?

Is your company submitting a proposal to the government/prime contractor that includes a total of all subcontract costs exceeding 70 percent of the total costs proposed? If so, you must identify “added value” in your proposal so the government/auditor does not classify the indirect cost applied to the total subcontract cost as “excessive pass-through charges.”  The government considers indirect costs and profit/fee that a contractor applies to subcontract costs that exceed 70 percent of the contract to be “pass through costs.” This applies to lower tier subcontract costs also. If there is no negligible value added by the contractor, the government or auditor will question the indirect costs and profit/fee applied to the subcontract costs as unallowable excessive pass through under FAR 31.203(i).

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Topics: Business Systems Review, Cost and Pricing and Budgeting, Incurred Cost Submission, DFARS Business Systems, Incurred Cost Proposals, Cost-Type Contracts, DCAA Audit Support, Accounting & Billing System, Contractor Purchasing System Review (CPSR), Government Regulations

DCAA Trying to Stretch FAR Yet Again


At the end of each of the DCAA audit programs for contractor business systems, DCAA discusses what it refers to as “Less Severe Significant Deficiencies.” These are clearly deficiencies which do not meet the DFARS definition of a “Significant deficiency.”[1] As a result, the withhold requirement provided for in DFARS 252.242-7005 cannot be applied.

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Topics: Business Systems Review, Compliant Accounting Infrastructure, Contracts Administration, Defense Contractors, DFARS Business Systems, Cost-Type Contracts, DCAA Audit Support, Accounting & Billing System, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR)

Intercompany Transaction Cost Restrictions and Allowability for Government Contractors


As more and more companies are acquiring companies or being acquired, a predominant question that arises is can I do work with my new or existing affiliates. The simple answer is yes, but there are specific requirements in the FAR on how transactions are performed between affiliates. The requirements of intercompany transactions are found in two primary cost principles FAR 31.205-26 – Materials Costs and FAR 31.205-36 Rental Costs.

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Topics: Business Systems Review, DCAA Audit Support, Accounting & Billing System, Government Regulations, Federal Acquisition Regulation (FAR)

Is Your Estimate at Completion on a Progress Payment Higher than the Contract Price?


This is the third blog in a three-part series on progress payments for Government contractors. In this blog we will discuss the estimate to complete, and the adjustments needed when there is a projected loss on a contract.

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Topics: Business Systems Review, Contracts Administration, DFARS Business Systems, Accounting & Billing System, Government Regulations, Federal Acquisition Regulation (FAR), Progress Payments

Aren’t All Incurred Cost on My Contract Eligible for Reimbursement on My Progress Payment?


This is the second blog in a three-part series on progress payments. This blog addresses Line 5, Contract Price and Line 11, Total eligible costs on the SF1443 Contractor’s Request for Progress Payment Form.

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Topics: Business Systems Review, Contracts Administration, DFARS Business Systems, Accounting & Billing System, Government Regulations, Federal Acquisition Regulation (FAR)

Department of Defense (DoD) Increases Progress Payment Rates


This is the first blog on a three-part series on progress payments and discusses progress payments and the applicable rates.

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Topics: Business Systems Review, Contracts Administration, DFARS Business Systems, Accounting & Billing System, Government Regulations, Federal Acquisition Regulation (FAR), Progress Payments

ASBCA No. 61709 – A Cautionary Tale for Subcontractors with Government Property

On June 24, 2021, the Armed Services Board of Contract Appeals (ASBCA) opinioned that Intellicheck, Inc., a subcontractor, did not have privity of contract or even an implied-in-fact contract with the Government to allow for the recovery of costs incurred by Intellicheck, Inc. to maintain and store Government property after the completion of a Task Order for the Navy. A tale as old as time, the Government lets years go by before taking action to dispose of its property being held by a subcontractor. Then finds a legal out for not paying the costs the Government caused to be incurred.

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Topics: Business Systems Review, Defense Contractors, DFARS Business Systems, Government Regulations, Government Property Management