Redstone Government Consulting Blog | Small Business Compliance (3)

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.”

The accounting function for a government contractor can be a tedious job at times. Be sure to utilize QuickBooks Online Workflows to its full potential to help simplify the process.

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.

The DCAA imposes strict requirements on government contractors when it comes to timekeeping. Make sure to utilize some of the key features in QuickBooks Time to help your business remain DCAA compliant.

As the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) season ramps up we have noticed a trend when it comes to award of SBIRs and Small Business Technology Transfer (STTRs) to small businesses in regard to cost analysis as part of Phase 1 awards, as well as dealing with the administration associated with a Phase 2 cost-reimbursable awards. A significant part of the SBIR process is to educate small businesses on the process and controls required to do businesses with the U.S. Government. The cost-reimbursable nature of phase 2 awards inevitably means that small businesses will have the opportunity to undergo accounting system adequacy determination, develop provisional billing rates, and undergo incurred cost submission review or audit. These are key barriers to entry to many businesses seeking to work with the U.S. Government and the pursuit of SBIR/STTR work not only provided necessary funding for small business research and development (R&D), but also an avenue to clear necessary hurdles when it comes to the back-office compliance. At least that was the case historically.

The Small Business Administration issued a final rule effective August 22, 2022 (Federal Register: Past Performance Ratings for Small Business Joint Venture Members and Small Business First-Tier Subcontractors), which provides two new methods for small business government contractors to obtain/receive credit for past performance ratings. Prior to this rule, small businesses did not always receive credit for past performance for much of their efforts supporting the Federal Government. A small business can now get credit for past performance under a joint venture or use a past performance rating for work performed as a first-tier subcontractor to compete for their own prime contracts. See Redstone’s blog “Small Businesses Have More Opportunities to Obtain Past Performance Ratings under SBA Final Rule”. It is unclear whether the FAR 52.219-9 Small Business Subcontracting Plan clause will be updated.

The Small Business Administration issued a final rule effective August 22, 2022 (Federal Register: Past Performance Ratings for Small Business Joint Venture Members and Small Business First-Tier Subcontractors), which provides two new methods for small business government contractors to obtain/receive credit for past performance ratings. Prior to this rule, small businesses did not always receive credit for past performance for much of their efforts supporting the Federal Government. A small business can now get credit for past performance under a joint venture or use a past performance ratings for work performed as a first-tier subcontractor to compete for their own prime contracts. It is unclear whether the FAR 52.219-9 Small Business Subcontracting Plan clause will be updated.

Oftentimes when supporting the production of cost volumes and pricing exercises for clients, we’re given a basis of estimate (BOE) that has been written by someone on the technical team. Even being a group of accounting and compliance professionals who know little in areas such as cyber, engineering, or other technical areas of the scope of work, we’re left scratching our heads. This usually leads to several back-and-forth discussions centered around gleaning enough information from the technical team to pass the proverbial government “sniff test”.

On January 5, 2023, the Federal Trade Commission (FTC) voted 3-1 on proposed regulations that, if upheld, would ban employers from imposing non-competition agreements on their employees. Relying on Section 5 of the FTC Act, the FTC concluded that “non-compete clauses reduce competition in labor markets, suppressing earnings and opportunity even for workers who are not directly subject to a non-compete.” Commissioner Wilson dissented, stating that the FTC lacks the authority to engage in rulemaking, particularly with consequences of this significance. 

DoD issued a final rule on April 26, 2022, amending the FAR to support the Small Business Administration regulation of including overseas contracts in agency small business contracting goals. The final rule is effective May 26, 2022.