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)

Affirmative Action Plans: Key Recordkeeping Considerations


We hope that the previous blogs have provided a solid explanation as to what an Affirmative Program is and who the Office of Federal Contract Compliance Programs (OFCCP) is. The requirement to maintain a written plan/s and ensure all action items noted within the plan are being executed can be a daunting task. As we begin to steer away from the basics of what the various requirements and components of a written plan are, we will begin to dive into helpful tips and best practices. As shown in the diagram from a previous blog in this series, the establishment of Job Groups and Activity records are critical to establishing a valid Affirmative Action Plan and are therefore worth focusing on.

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Topics: Defense Contractors, Government Compliance Training, Human Resources, Office of Federal Contract Compliance Programs, Affirmative Action

Government Contractor Inflation Risk: What Have You Considered and Are You Prepared?

The recent memo from the Defense Pricing Center (DPC) has created quite the stir around the current economic uncertainties in the government contractor community tied to inflation. The unfortunate reality is that for many years, economically speaking, the risk of inflation has been a steady 2-3% and so both contractors and the acquisition professionals on the other side have not had to realistically consider this factor in pricing/negotiating contracts. History has shown us that the threat is all too real and can cause significant hurdles for contractors to weather an inflationary period like we saw in the 80s, early nineties and as recently as 2009. The question of is it transitory or are we headed toward a recession is best left to our friend the magic 8-ball, but I do think there are a few things that all contractors should be aware of during this time.

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Topics: Cost and Pricing and Budgeting, Defense Contractors, Paycheck Protection Program (PPP) Loans, Federal Acquisition Regulation (FAR)

The Future Does Not Look Good For COVID Related REAs

Recent Armed Services Board of Contract Appeals (ASBCA) cases have rejected contractor requests for equitable adjustments (REAs) related to the impact of COVID-19 on contract performance under firm fixed price (FFP) contracts. In both cases, discussed below, the ASBCA turned to the Connor Bros. Federal Circuit decision (550 F.3d 1368 (2008)). In that decision the Federal Circuit found the act of the Sovereign Government does not result in an act of the Government as a contracting party. Therefore, under the “Changes” clause (FAR 52.243-1, Changes-Fixed-Price) that was in Connor’s contract this did not give rise to an equitable adjustment in the contract price. The basis of the Connor Bros. decision and the two recent cases is the “Sovereign Acts Doctrine.”

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Topics: Defense Contractors, Government Regulations, COVID-19, Federal Acquisition Regulation (FAR)

Affirmative Action Requirements: AAP with Greater than 50 Employees


In the previous blog of this series, we focused on the requirements of federal government contractors (prime and subcontractors) who meet the basic threshold requirements (specific dollar thresholds and fewer than 50 employees). As we progress in this series on OFCCP and Affirmative Action Requirements, we begin to dive into OFCCP’s expectations of a contractor’s Affirmative Action Program (AAP). As a reminder, contractors are required to have an AAP when meeting the dollar thresholds mentioned above and have an employee count of 50 or more.

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Topics: Defense Contractors, Government Compliance Training, Human Resources, Office of Federal Contract Compliance Programs, Affirmative Action

Affirmative Action Requirements: Fewer than 50 Employees


The last blog in this series focused on who (what) OFCCP is, what they require of contractors of various sizes and why compliance is important. Now we want to provide a bit more clarity as to what these requirements are and later in the series, how those requirements impact your processes and policies.

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Topics: Defense Contractors, Government Compliance Training, Human Resources, Office of Federal Contract Compliance Programs, Affirmative Action

Does Micro-Purchase Threshold Apply to Government Contractors?


Government Contractor Purchases below the Micro-Purchase Threshold Require NO Documentation

This is a common misconception within the GOVCON community. While the expectations are clearly less documentation and effort are required than that of a larger dollar value purchase, there is not a magic threshold at which NO documentation of the fair and reasonable price is allowed.

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

The Government Plays Gingerbread Man - You Can't Catch Me


The Government runs away to fight another day and another day.

What is this Groundhog Day?

L3 Technologies, Inc. (L3) takes the Government to task[1] for “challenging both indirect and direct costs paid to L3 on several government contracts for certain years.” During the long-drawn-out process of the litigation, “the government apparently thought better of its claims and withdrew them in toto[2] and represented it would make no further claims on the contract years in question.” L3 opposed, the dismissal seeking either summary judgment in its favor or that the Board “keep the appeals live so that it can obtain a victory that, it believes, would preclude its suffering similar government claims in other contract years.” No such luck, the Board granted the government’s motion and dismissed the appeals.

All we can hope is that someday the fox will get the gingerbread man (aka the Government) and this Groundhog Day nightmare will stop.

[1] Armed Services Board of Contract Appeals (ASBCA) Case Nos. 61811, 61813, and 61814

[2] Fancy Latin word for completely.

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Topics: Incurred Cost Submission, Contracts Administration, Defense Contractors, Incurred Cost Proposals, Cost-Type Contracts, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

OFCCP and Affirmative Action - Laying the Groundwork


As mentioned in a previous blog, OFCCP’s Contractor Portal, we are kicking off a blog series related to OFCCP and Affirmative Action requirements for contractors of all sizes. We begin this series by laying the groundwork of who (or what) OFCCP is and what affirmative action is. This series will focus on supply and service contractors; however, construction contractors may also find it helpful. Regardless of the type of contractor, our HR Team is available to assist with all of your OFCCP compliance and Affirmative Action Program (AAP) needs.

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Topics: Defense Contractors, Government Compliance Training, Human Resources, Office of Federal Contract Compliance Programs, Affirmative Action

The Impact of Fly American Act


Lockheed Martin raised a great question to the ASBCA as to “whether the Fly America Act, 49 U.S.C. § 40118 (FAA) and Federal Acquisition Regulation (FAR) 52.247-63 only apply to direct personnel performing direct work on covered contracts, or also applies to indirect personnel or indirect travel.”[1] The Board declined to hear the case as there was no “live dispute” at hand.

[1] Armed Services Board of Contract Appeals Case No. 62377

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Topics: Incurred Cost Submission, Contracts Administration, Defense Contractors, Incurred Cost Proposals, Cost-Type Contracts, DCAA Audit Support, Accounting & Billing System, Government Regulations, Federal Acquisition Regulation (FAR)