Most contractors doing business with the Federal Government are subject to the FAR Part 31 cost principles among which FAR 31.201-6 requires contractors to identify and exclude unallowable costs from any billing, claim, or proposal applicable to a Government contract. How contractors go about doing this varies widely. The most efficient way to identify and exclude unallowable costs is to make a determination at the time the expense is first recorded and drop it in the appropriate “bucket”; allowable or unallowable. That method assumes that (i) contractors have someone reasonably familiar with FAR Part 31 in their accounting departments to make those determinations and (ii) that their accounting systems are set up to record and segregate unallowable costs. More common among small contractors is the ritual of “scrubbing” records for potentially unallowable costs at the time a submission is made. So, for example, contractors submitting annual incurred cost submission will follow due diligence to identify and exclude unallowable costs from its indirect cost expense pools.

Source: PNWC’s Government Contracting Update: Costs Related to Extraordinary Reviews of Incurred Costs

In 2015, GSA (General Services Administration) issued a solicitation for “customized training and development services, customized human capital strategy services, and customized organizational performance improvement services”. The solicitation contemplated multiple awards under an ID/IQ (indefinite-delivery, indefinite-quantity) arrangement where individual task orders would be issued.

Source: PNWC’s Government Contracting Update: Failure to Follow Solicitation Instructions Leads to Lost Opportunity

Yesterday we discussed a contractor’s lack of robust internal controls that allowed an employee to embezzle $1.3 million over a four year period. If you missed that post, you can read it here. Every company needs internal controls but small companies sometimes cannot afford to have comprehensive systems to guard against fraud, waste, and abuse. But there are things even the smallest company can afford.

Source: PNWC’s Government Contracting Update: Internal Control Questionnaire for Small Contractors