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PNWC’s Government Contracting Update - page 3

Offerors’ Failure to Furnish Data Requested by the Contracting Officer

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PNWC's Government Contracting Update

Before awarding any contract, contracting officers must make an affirmative statement that the contract price is fair and reasonable. When competition exists, price reasonableness can usually be established without requiring any additional supporting data. However, for sole source acquisitions, contracting officers must obtain the data necessary to establish price reasonableness. For contracting actions subject to TINA (Truth in Negotiations Act), the requirement to furnish certified cost or pricing data serves this purpose. However, for actions not subject to TINA, contractors may be requested to prepare and submit additional data to support their proposed prices.

SOURCE: Offerors’ Failure to Furnish Data Requested by the Contracting Officer

Full Disclosure of Disciplinary Actions Required by CPA Firms Engaged in Government Auditing

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PNWC's Government Contracting Update

Last month, the Defense Department issued a “Class Deviation” that affects contractors performing contract audits for the Department. Contracting officers are now required to use a new clause (described later) when contracting with accounting firms providing financial statement auditing or audit remediation services to the Defense Department in support of audits. Or, in other words, incurred cost audits that were once the sole bailiwick of DCAA (Defense Contract Audit Agency).

Source: PNWC’s Government Contracting Update: Full Disclosure of Disciplinary Actions Required by CPA Firms Engaged in Government Auditing

Be Prepared to Justify Your Capital Expenditures

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PNWC's Government Contracting Update

Government contractors, like any business, have a responsibility to maintain their competitiveness and increase productivity by making capital investments. There might be a few contractors out there without significant capital investments in facilities, machinery, and equipment – like companies providing staff augmentation services – but most companies need to invest or they quickly find themselves at a competitive disadvantage.

Source: PNWC’s Government Contracting Update: Be Prepared to Justify Your Capital Expenditures

Illegally Obtained Contracts Results in Prison Time for Company Executive

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PNWC's Government Contracting Update

This guy didn’t just “rent-a-vet” to illegally win construction contracts set aside for disabled veterans. He also “rented” a minority and “rented” a woman to obtain contracts set aside for minority-owned and women-owned business respectively. Over a ten year period, Tomas Brock (and his company, Boykin Contracting), won more than $160 million in Government contracts to which he was not entitled. Programs set aside for minorities, women, and service veterans are intended to provide small businesses with an opportunity for growth and experience.

Source: PNWC’s Government Contracting Update: Illegally Obtained Contracts Results in Prison Time for Company Executive

Perhaps Its Time to Examine Your Contract Portfolio Mix

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PNWC's Government Contracting Update

The California Assembly has introduced legislation that would restrict the State and localities from entering into contracts with companies that work with Federal immigration agencies. The Bill, known as AB 1332, would specifically prohibit a state or local agency from entering into a new, amended, or extended contract or agreement with any person or entity that provides a federal immigration agency with any data broker, extreme vetting, or detention facilities services.

Source: PNWC’s Government Contracting Update: Perhaps Its Time to Examine Your Contract Portfolio Mix

Audited Financial Statements Do Not Provide Assurance that Cost Accounting System is Adequate for Government Contracting

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PNWC's Government Contracting Update

Back in 2016, the National Institute of Health (NIH) issued a solicitation for “IT (Information Technology) Solutions and Services”. Bidders were advised that proposals would be evaluated in two phases. In Phase 1, the Government would evaluate the proposals based on four go/no-go requirements, one of which was a verification of an adequate accounting system. The solicitation advised that proposals found to be unacceptable in any of the four Phase I requirements would be ineligible for further consideration for award.

Source: PNWC’s Government Contracting Update: Audited Financial Statements Do Not Provide Assurance that Cost Accounting System is Adequate for Government Contracting

Contract Funds Withheld for Non-Conforming Deliveries

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PNWC's Government Contracting Update

There’s a contract clause included in all firm-fixed price research and development contracts that allows the Government to reject non-conforming work and make an equitable price reduction if its not fixed. FAR 52.246-7, Inspection of Research and Development – Fixed Price requires, among other things, that contractors implement and maintain an inspection system acceptable to the Government and maintain complete records of such inspections and make those records available to the Government during contract performance and for as long afterwards as the contract requires. This clause also give the Government the right to perform its own inspections.

Source: PNWC’s Government Contracting Update: Contract Funds Withheld for Non-Conforming Deliveries

DoD Contracting Officers Cannot Withhold Consent to Subcontract where Purchasing System has been Approved

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PNWC's Government Contracting Update

DoD issued a final rule amending its FAR Supplement (DFARS) that for Defense contractors with approved accounting system, contracting officers are not permitted to withhold “consent to subcontract” unless it has written approval from a program manager.

Source: PNWC’s Government Contracting Update: DoD Contracting Officers Cannot Withhold Consent to Subcontract where Purchasing System has been Approved

DoD Removes a Definition from its Procurement Regulations

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PNWC's Government Contracting Update

Did you notice that the number of definitions listed in the Defense FAR Supplement (DFARS) is now shorter? The Defense Department just eliminated the definition of “General public and non-Governmental entities”. The removed definition stated that “General public” and “non-governmental entities” as used in the definition of commercial item” at FAR 2.101, do not include the Federal Government or a State, local or foreign government.

Source: PNWC’s Government Contracting Update: DoD Removes a Definition from its Procurement Regulations

The Importance of Flowing Down Required Contract Clauses to Subcontractors

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PNWC's Government Contracting Update

Tishman Interiors was the prime contractor on a renovation project at the Federal Reserve Bank in New York. It subcontracted electrical and cable installation work to three different subcontractors. In came the auditors – auditors from the Labor Department’s Wage and Hour Division (WHD). You know this story isn’t going to go well for the contractor. We don’t know what instigated WHD’s investigation. It could have been random or it could have been based on a call to WHD’s hotline. WHD’s press release did not say.

Source: PNWC’s Government Contracting Update: The Importance of Flowing Down Required Contract Clauses to Subcontractors

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