DPC Issues Guidance to DoD for Lack of Verifying Contractor Compliance with Whistleblower Protection Requirements

The Office of the Under Secretary of Defense, Defense Pricing and Contracting (DPC) issued a guidance memorandum dated March 18, 2024 to Agencies based on the results of the Department of Defense (DoD) Inspector General (IG) Audit of DoD Compliance on Whistleblower Protection Requirements. While the DoD IG found in most cases, that Contracting Officers included the DFARS 252.203-7002 Requirement to Inform Employees of Whistleblower Rights clause in contracts, they did not verify whether contractors were complying with the clause.

Read More

Topics: Contracts & Subcontracts Administration, Government Compliance Training, DFARS Business Systems, DCAA Audit Support, Human Resources, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR)

Why is Timekeeping so Important and What do Auditors Expect?

Current and accurate timekeeping is one of the most important responsibilities of a contractor and its employees when they have Government cost reimbursement and time and material/labor hour contracts. Direct labor is one of the significant elements of cost incurred and billed on Government contracts. FAR 16.301-3(a)(3) requires contracting officers to ensure a contractor has an adequate accounting system, which includes a timekeeping system, before award of a cost reimbursable contract. While there is no specific reference to an adequate timekeeping system for T&M/Labor hour contracts, FAR 52.232-7 requires the contractor to be able to support the hours and labor qualifications of the employees charged to the contract. Auditors will request documentation to support employee qualifications and labor hours on T&M/Labor hour contracts. An adequate timekeeping system includes having a written timekeeping policy and procedure to ensure the accuracy and integrity of direct labor costs charged and billed to Government contracts.

Read More

Topics: Compliant Accounting Infrastructure, Government Compliance Training, DFARS Business Systems, DCAA Audit Support

DCAA Issues Real-Time (Labor & Material) Audit Guidance – Good News or Not so Good News?

On August 9, 2023, DCAA issued guidance to its auditors revising the real-time labor and material testing requirements. DCAA historically referred to these procedures as Mandatory Annual Audit Requirements (MAARs) 6 and 13. DCAA states in its guidance what its auditors need to know is that “[l]abor and material are two of the most significant cost elements billed under government contracts. As such, one of the primary reasons … [DCAA] audit[s] labor and material costs incurred is to determine the accuracy of the charges. The real-time verification of these costs as they are incurred provides valuable confirmation of the accuracy of the charges and can only be accomplished during the accounting period to which they apply.” I cannot really argue with this statement.

Read More

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

What Government Contractors Can Expect in a Purchase Existence and Consumption Audit

In August of 2023, the Defense Contract Audit Agency (DCAA) changed what is used to refer to as Mandatory Annual Audit Requirements (MAARS) 13 audits to Real-Time Audits of Purchase Existence and Consumption. This change was to eliminate the mandatory part of the requirement and introduce greater flexibility based on the auditor’s risk assessment of the contractor.

Read More

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

What Government Contractors Can Expect in a Real-Time Labor Audit

In August of 2023, the Defense Contract Audit Agency (DCAA) changed what it called Mandatory Annual Audit Requirements (MAARS) 6 audits to Real-Time Audits of Labor. This change was to eliminate the mandatory part of the requirement and introduce greater flexibility based on the auditor’s risk assessment of the contractor.

Read More

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

Revision to DCAA’s Mandatory Annual Audit Requirements (MAARs)

Mandatory Annual Audit Requirements (MAARs) 6 (labor) and 13 (material purchases) are two of DCAA’s mandatory annual audit requirements performed for incurred cost audits. These MAARs, established decades ago, have customarily been performed on a “real-time” basis within the year in which the costs were incurred. However, DCAA has recently revised their audit guidance in a Memorandum for Regional Directors (MRD) titled “Revised Procedures for Real-Time Audits of Labor and Purchase Existence and Consumption.”

Read More

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Government Compliance Training, DCAA Audit Support, Government Regulations

What are the FAR Requirements for a Code of Business Ethics and Conduct Program?

In late 2008, the Final Rule on Contractor Code of Business Ethics and Conduct (“CoBEC”) was added to FAR Part 3 (Improper Business Practices and Personal Conflicts of Interest) in response to the heightened focus on increased lapses in corporate ethical behavior. FAR Subpart 3.10 sets forth guidance for all contractors with regard to enhanced ethical and compliance standards and requires the insertion of the clause at FAR 52.203-13 in solicitations and contracts if the value of such contract is expected to exceed $6 million, and the performance of which is 120 days or longer. DCAA focuses on compliance with FAR 52.203-13 when conducting accounting system audits.

Read More

Topics: Government Compliance Training, Human Resources, Federal Acquisition Regulation (FAR)

Affirmative Action Plans: Identification of Problem Areas

Throughout this series, we’ve explored the fundamentals of compliance with the regulations administered by the Office of Federal Contractor Compliance Programs (OFCCP) and many of the components of a written Affirmative Action Plan. In this final blog of the series, we will answer a question frequently asked of us…What do you do with all this information?

Read More

Topics: Government Compliance Training, Human Resources, Office of Federal Contract Compliance Programs

Common Deficiencies That DCAA Reports in an Accounting System Audit

If your company has an accounting system audit in the near future, now is the time to get prepared, before DCAA starts knocking at your door. So, what are the common deficiencies? We are going to address the typical post award accounting system audit and deficiencies that DCAA frequently identifies during an audit.

Read More

Topics: Compliant Accounting Infrastructure, Government Compliance Training, DCAA Audit Support

Affirmative Action Plans: Flaws and Fixes to your Applicant Flow

As mentioned throughout this series on Office of Federal Contract Compliance Programs (OFCCP) and Affirmative Action (AA), recordkeeping is essential. A particularly important component when developing your AAP , as shown in a previous blog, is Applicant Flow (i.e., records pertaining to each “applicant”). When working with clients, we find that this tends to be the most complex and often confusing information requested. Following are answers to some of the most common questions we are regularly asked:

Read More

Topics: Government Compliance Training, Human Resources, Office of Federal Contract Compliance Programs