On March 25, 2014, President Obama issued executive orders raising the minimum wage to $10.10/hour for contractor employees on government contracts. The logic, the hardworking cooks serving hamburgers to our troops should not be living in poverty (most likely a reference to the fast food chains which are located on military installations). Simultaneously, he also directed the Department of Labor to change the federal rules to make more “salary exempt” employees eligible for overtime pay. The current threshold of $455/week will likely be increased to a significantly higher amount noting that the last change (April 2004) increased the amount from $155/week to $455/week. The higher amount could be as much as $950/week in which case someone earning $949/week would be eligible for overtime pay (including overtime premium) for hours exceeding 40 hours per week. In one press release, the Department of Labor used one example of the severe inequity of the existing threshold $455/week), noting that two “hardworking” gas station managers in New Jersey were effectively making less than minimum wage.
Topics: Employee & Contractor Compensation, Contracts & Subcontracts Administration, Human Resources
Watch the video below for the FY15 Missile Defense Agency Budget Press Briefing by Vice Admiral James D. Syring.
Non-U.S. contractors have many misconceptions as to what rules and regulations they must comply with under U.S. Government contracts. The two most common misunderstandings non-U.S. entities have are (1) their country laws trump U.S. laws and regulations, and (2) Federal Acquisition Regulations (FAR) rules on cost collection and allocations are less strenuous for non-U.S. contractors. These two misconceptions could not be further from the truth.
Topics: Non-US Government Contractor, Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DFARS Business Systems
Coming as no surprise, President Obama signed the Bi-Partisan (2014) Budget Act on December 26, 2013 including an executive compensation cap of $487K (coincidentally one-half of the most recent statutory cap of $952,308 and significantly lower than an alternate bill with a cap of $625K). This maybe Obama’s “crowning achievement” over his two terms proving that if someone (The President) whines enough and ignores all of the regulatory history and the fundamental principle that commercial prices constitute a reasonable cost, he will achieve his goal of forcing large government contractors to absorb more and more of their executive’s compensation. It should be noted that the prior cap and the methodology was based upon compensation of publicly traded corporations with $50 million or more in revenues; hence, that cap was artificially low considering that a number of large government contractors have revenues in the billions and that executive compensation is correlated to company size/revenues.
Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration
The Affordable Care Act (ACA, also known as Obamacare) continues to be an embarrassment to the current administration and those in the Legislative Branch who voted to pass the Act (but apparently failed to read it before voting). In addition to the dysfunctional website, we now know that other means to “sign-up” were not exactly good alternatives because the other means (i.e. telephone or written application) ultimately depended upon HealthCare.gov, but if you talked to someone and they took your information, at least it felt like you were signing-up. Perhaps that’s what is meant by the over used term transparency.
On September 5th, DCMA issued a letter to the National Defense Industrial Association (NDIA) addressing industry concerns raised at a meeting with DCMA on April 25, 2013. We will highlight some key points in the letter that will help contractors deal with DCAA’s assertions which often times are not supported by regulations. The letter reinforces that it is DCMA that determines if a contractor’s business system is compliant or not and if a Corrective Action Request (CARs) is necessary.
Topics: Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR)
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