Redstone Government Consulting Blog | Contracts & Subcontracts Administration (4)

Being a government contractor, whether you’re a novice or a veteran, comes with its own unique set of challenges. One of the most significant is the constant need to optimize indirect rates. These rates can be the deciding factor between securing new contracts and expanding your business or remaining static and missing out on opportunities. As your business grows and evolves, your indirect rates should follow suit. Regularly evaluating your rates to ensure they align with your company’s strategic plan and maximize the recovery of your allowable costs is crucial to building a thriving company.

The National Defense Authorization Act (NDAA) for Fiscal Year 2022 and 2023 permanently authorized the Department of Defense (DoD) “to acquire innovative commercial products and commercial services through a competitive selection of proposals resulting from a general solicitation, known as a commercial solutions opening (CSO).” On August 17, 2023, the final rule was published in the Federal Register under DFARS Case 2022-D005 changing several parts of the DFARS – with most of the changes within DFARS part 212.

In the world of federal contracting, every detail matters. A recent ruling by the Court of Federal Claims (CFC) has highlighted the critical importance of maintaining an active registration in the SAM.GOV System. Based on the interpretation of FAR Clause 52.204-7, this ruling underscores the fact that even a minor lapse in a contractor's SAM registration status can lead to disqualification from a potential award.

So, why is it that the Federal Government has a list of cost it will not pay for on Government contracts? These rules related to what costs the Government will pay for and what costs it will not pay for (i.e., unallowable costs) were developed around the Government’s belief that most companies doing business with the Government are not operating in a competitive market. As a result of the Government developing these unallowable costs, companies doing business with the Government have to take the unallowable cost they do incur out of the fixed amount of profit or fee the Government has agreed to pay these companies.

In all types of industries, organizations of any size, located in any part of the world, contracts are the lifeblood that binds their operations. These legal documents delineate the relationship between the parties, becoming the backbone of any commercial transaction, thereby maintaining the health of the organization. But merely having contracts is not enough. How these contracts are managed, specifically how they are filed and stored, plays a crucial role in a company’s overall efficiency and effectiveness. In this blog, we delve into the significance of a contract filing system and its benefits.

The Department of Defense is proposing a change to the Defense Federal Acquisition Regulation Supplement (DFARS) that would consolidate four existing Government property clauses into a single clause. The requirements of the four clauses are not going away but are being simplified to help both contractors and Government personnel in dealing with the requirements of Government property, in particular Government-Furnished property (GFP).

Indefinite Delivery Indefinite Quantity (IDIQ) contracts often look like a big money opportunity for contractors – but looks can be deceiving. Many IDIQs are multi-awards, meaning you are just one of many contractors that may get task orders awarded under the contract. On top of that, the required minimum the Government must buy under the IDIQ is, in most cases, very low. So, it turns out that millions of dollars of anticipated business fizzles down to $2,500 – which may have a shocking impact to your return on investment.

Comparison to FAR

Like CAS 401, CAS 402, and CAS 405, CAS 406 is part of modified CAS coverage and is one of the first CAS standards a company encounters. It likely will not call for any changes to the company’s cost accounting system if you are compliant with FAR 31.203(g)(2) (Indirect costs). FAR states that for contracts not subject to CAS:

April 25, 2023; the Court of Appeals agreed with the Armed Services Board of Contract Appeals (ASBCA) that a contractor cannot take a unilaterally established Undefinitized Contract Action (UCA) to the Board without first submitting a certified claim request for a final decision by the contracting officer.

So, the Defense Contract Agency Audit (DCAA) auditor comes into your office, performs an audit, and…they have findings. What do you do? Wait…is there something that I should not do?