PNWC’s Government Contracting Update - page 30

Here’s an update to a post from last July where we wrote that the Senate version of the 2018 NDAA (National Defense Authorization Act) would require large defense contractors to reimburse the Defense Department for failed bid protests (see Large Contractors May Need to Reimburse the Defense Department for the Cost of Bid Protests). That provision has been greatly watered down in the newest version of the NDAA.

SOURCE: A Few Contractors May Have to Reimburse DoD for Bid Protest Costs if Protest Denied

Sec 804 of the 2018 NDAA (National Defense Authorization Act) repeals a provision that became law under the 2017 NDAA. 10 USC 190 was a new section that requires the creation of a Defense Cost Accounting Standards Board (DCASB). But appended to DCASB coverage was a new requirement that concerned the use of commercial auditors to perform audits of Defense contractors. Specifically, section (f) reads (paraphrased):

SOURCE: Law Allowing Contractors to Procure Their Own Incurred Cost Audits Rescinded

Of all the things that DCAA (Defense Contract Audit Agency) can be criticized for, the educational qualifications of its staff is not one. Virtually all auditors have Bachelor’s Degrees and a 40 percent of them have advanced degrees. On top of that, a quarter of them (more than 25 percent) are CPAs (Certified Public Accountants). The Agency actively encourages its auditors to pursue advance degrees and CPA status. The Agency has a robust training program as well. In their first year, auditors can expect four or more weeks of intensive training and because the Agency is engaged in Yellow Book audits (i.e. GAGAS or Generally Accepted Government Auditing Standards), auditors are expected (and required) to meet minimum CPE (Continuing Professional Education) requirements at Government expense. Consider the following table that comes from DCAA’s annual report to Congress.

SOURCE: DCAA Must Report to Congress on the Education, Qualifications, and Certifications of its Staff

The Treasury Department has issued an interim rule to its Acquisition Regulations (DTARs) to permit contracting officials to obtain taxpayer tax return information as part of their responsibility determination – to determine whether prospective contractors are in compliance with tax laws or have unpaid liabilities. While this pertains only Treasury Department right now, these requirements could spread to other Executive Agencies. In fact, there are probably a bunch of regulators asking themselves right now, “why didn’t we think of that?”

SOURCE: Treasury Department To Pull Your Tax Returns Prior to Awarding a Contract

The Competition in Contracting Act of 1984 requires that the Comptroller General (i.e. the GAO or Government Accountability Office) report to Congress each instance in which a federal agency did not fully implement one of its recommendations in connection with a bid protest decided in the prior fiscal year and each instances in which a final decision in a protest was not rendered within 100 days after the protest was filed.

SOURCE: GAO Publishes Fiscal Year 2017 Bid Protest Statistics

This is an update to our posting of November 9 discussing the contract awarded to Whitefish Energy by PREPA (Puerto Rico Electric Power Authority) to help restore electricity on the island (see Whitefish Energy Contract to Restore Puerto Rico Electricity). PREPA awarded a $300 million sole-source contract to Whitefish Energy which, when it was exposed, became immediately controversial for several reasons. At the time of award, Whitefish had only two employees. The contract prices for linemen seemed exorbitant. The contract was was awarded without competition and contained unusual clauses such as the one preventing PREPA (or the Government) access to cost data.

SOURCE: Whitefish Contract to Restore Puerto Rico Electricity – Update

This is the third part in our series on Section 803 of the 2018 NDAA (National Defense Authorization Act) which will require the Defense Department to begin utilizing private audit firms to augment the ability of DCAA (Defense Contract Audit Agency) to complete incurred cost audits in a timely manner. Though some may see it differently, this provision is not a rebuke of DCAA’s performance in completing incurred cost audits in a timely manner. It is more a recognition that DCAA is not sufficiently staffed to conduct the full range of audits that the are required by procurement regulations.

SOURCE: DCAA to Share Audit Function With Commercial Firms – Part 3

Family Entertainment Services (FEI) was awarded a grounds maintenance contract for nearly 4,000 acres at Fort Campbell, Kentucky. One of the contract line items required the contractor to mow grass on a 21 day schedule. From the beginning of the contract, FEI fell behind in the mowing schedule and despite several cure notices from the Army, was unable to catch up. Ultimately, the Army deducted $82 thousand from the contract price because FEI did not meet the terms of the contract.

Source: PNWC’s Government Contracting Update: Calendar Days vs Work Days

Yesterday we introduced the Section 803 provision in the 2018 NDAA (National Defense Authorization Act) that will require the Defense Department to begin farming out some of its incurred cost audit functions to commercial firms. Though the probable soon-to-be law does not specify a particular percentage or dollar value of audits to be shaved off of DCAA’s (Defense Contract Audit Agency’s) current workload, the general tenor of the provision sounds like the sharing will be substantial and on-going.

Source: PNWC’s Government Contracting Update: DCAA to Share Audit Function With Commercial Firms – Part 2

The 2018 NDAA (National Defense Authorization Act) Conference Report has been published. The Conference Report refers to the final version of a bill that is negotiated between the House and the Senate via conference committee. It will still need to be submitted to each Chamber for its consideration for approval or disapproval but in the past, NDAA conference reports are routinely passed by both the House and Senate. So, assuming the President signs the bill, it will become law.

Source: PNWC’s Government Contracting Update: DCAA To Share Audit Function With Commercial Firms – Part 1