Schedule K is one of the most important parts of the Incurred Cost Submission and is an area of great interest for the Government and its auditors. This VLOG will briefly explain the Incurred Cost Submission, how to complete Schedule K, and the importance of Schedule K.
Schedule I is the most important part of the Incurred Cost Submission and is the single area of great interest for the Government and its auditors. This VLOG will briefly explain the Incurred Cost Submission, the importance of Schedule I, and how to resolve potential issues.
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).
Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Incurred Cost Proposal Submission (ICP/ICE), DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations
Now that year-end and quarter 1 is behind us, what is next? If you guessed Incurred Cost Submissions (ICS), you are correct. June 1st is fast approaching and there are a few housekeeping items you can do to ensure that your accounting team has an efficient and painless process ahead of them.
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Deltek Costpoint
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.
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Estimating System Compliance
The Government runs away to fight another day and another 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.
Topics: Incurred Cost Proposal Submission (ICP/ICE), Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)
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
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)
DCAA issued some guidance on PPP forgiveness treatment in the form of frequently asked questions (FAQs) to its auditors. The FAQs were not front and center on DCAA’s website but search on “PPP” did find them at: COVID FAQ for PWS 07142021 (dcaa.mil).
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Small Business Compliance, Contracts & Subcontracts Administration, DCAA Audit Support, Defense Procurement & Acquisition Policy (DPAP), Government Regulations, COVID-19, Paycheck Protection Program (PPP) Loans, Federal Acquisition Regulation (FAR)
In 2017 Congress directed through the National Defense Authorization Act (NDAA) that changes be made to the treatment of independent research and development (IR&D) costs and required the Defense Contract Audit Agency to provide as part of its annual report to Congress both independent research and development and bid and proposal (B&P) costs expended by DoD contractors. Congress intended this change to apply to indirect costs incurred on or after October 1, 2017. The Defense Acquisition Regulation (DAR) Council must have read over that part.
Topics: Incurred Cost Proposal Submission (ICP/ICE), Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations
ASC 606, Revenue from Contracts with Customers, had an impact on the way many contractors recognized revenue related to contracts with the Federal Government. Redstone has covered this topic a couple of times (January 26, 2021 Government Contractor Challenges in 2021 Webinar and May 6, 2021 MossAdam/Redstone Webinar Compliance Changes for Government Contractors). ASC 606 also impacts the recognition of sales commissions. The overarching GAAP matching principle requires that the expense of sales be matched to the recognition of the related revenue.
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)