On May 8, 2025, Department of Energy (DOE) issued three new policy flashes limiting the indirect costs on DOE grants to state and local government, for non-profit organizations and for-profit companies. DOE previously limited indirect costs for colleges and universities (i.e., Institutes of Higher Education) in its April 11, 2025 policy action.
Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Government Regulations, Grants & Cooperative Agreements (2 CFR 200)
President Trump issued several executive orders addressing tariffs. American First Trade Policy dated January 20, 2025 and Modifying Reciprocal Tariff Rates to Reflect Trading Partner Retaliation and Alignment dated April 9, 2025. In addition, he has also issued a 90-day pause to some countries and is planning to reduce tariffs on certain industries such as US auto tariffs (see Amendments to Adjusting Imports of Automobiles and Automobile Parts into the United States dated April 29, 2025). It is clear that tariffs are impacting the supply chain and government contractors.
Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Government Regulations, Export & Import, Federal Acquisition Regulation (FAR), Manufacturing Operations Consulting
Well one of the endless numbers of administratively burdensome requirements the Federal Government places on your contracts may just be the silver bullet you need. Review your contracts and look for FAR 52.225-8, Duty-Free Entry, and DFARS 252.225-7013, Duty-Free Entry.
Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Government Regulations, Export & Import, Federal Acquisition Regulation (FAR)
President Trump has signed several Executive Orders (EO) addressing ways to improve the acquisition process through simplifying the regulations, utilizing competitive marketplace and commercially available products and services, consolidating procurements at General Services Administration (GSA), and now overhauling the Department of Defense acquisition processes.
Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination
On April 9, 2025, President Trump signed the Executive Order (EO), Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base. The EO indicated that the factory floor is as significant as the battlefield, and the current defense acquisition system must have a comprehensive overhaul to deliver state-of-the-art capabilities at speed and scale.
Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination
The now infamous NIH Guidance (NOT-OD-25-068) and Executive Order 14222 started us thinking. Is the Department of Defense (DoD) possibly the next domino to fall? After all, the DoD has a very large contract spend of $431.4 billion based on the Defense Spending by State, FY 2023 — Executive Summary. We looked to see if we could find data on how much of that spend is going to indirect costs (i.e., overhead). Surprisingly, the only data we could find is very dated. The data comes from the DoD Indirect-Cost Management Guide from October 2001 posted on the Defense Acquisition University (DAU) website. The guide states, “estimates made by the Defense Contract Management Command (DCMA), in conjunction with discussions with defense contractor top management on their DCMA Overhead Initiative, indicate[s] that indirect costs constitute approximately $90 billion of the $170 billion total DoD work in process at all defense contractor[s].” While not clear, our assumption is that this represents the 2000 or 2001 timeframe. Based on this, DoD is spending 53% of its appropriated funding on indirect costs. This means the average defense contractor has an approximate 100% indirect cost rate, covering overhead and general & administrative (G&A) costs. Based on recent experiences with our clients, we believe this is still a reasonable estimate of indirect cost on DoD contracts, if not a little higher.
Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)
Why do contractors have to do market research? Simply put, you signed a contract with the US Government or a subcontract with a prime contractor that expects it – yes, it is contractually required. Plus, it is one of the most often reported contractor purchasing system review (CPSR) findings.
Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination
Let’s start with the basics. When is a commercial determination required in the Federal Acquisition Regulations (FAR)? The common belief is that only when the award of a subcontract exceeds the cost or pricing data threshold. This common belief is what we refer to as a too-often believed myth. The truth is that FAR 52.244-6, Subcontracts for Commercial Products and Commercial Services, specifically requires that “to the maximum extent practicable, the Contractor shall incorporate, and require its subcontractors at all tiers to incorporate, commercial products, commercial services, or non-developmental items as components of items to be supplied” to the Government. To comply with this requirement, as many as possible of your purchase orders issued under your U.S. Government contracts and subcontracts should have commercial determination regardless of the dollar value.
Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination
The FAR Council issued a proposed rule on November 29, 2024 to amend the FAR to increase acquisition related thresholds for inflation.
Topics: Proposal Cost Volume Development & Pricing, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Estimating System Compliance
Again, this year our friendly DCAA auditors have taken up the government requirement to calculate and publish annually the new compensation cap as provided for in Section 702 of the Bipartisan Budget Act of 2013 (BBA; Pub. L. 113-67), dated December 26, 2013. The 2025 compensation cap amount is $671,000. Below we have provided the compensation caps going back to 2019.
Topics: Proposal Cost Volume Development & Pricing, Employee & Contractor Compensation, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)