PNWC’s Government Contracting Update - page 55

Last February, DoD published a proposed regulation for its FAR Supplement (DFARS) that would require “major contractors” to engage in technical interchanges with DoD before IR&D costs (Independent Research and Development Costs) are generated. Major contractors in this context are defined as those that allocate more than $11 million in IR&D and B&P (Bid and Proposal) costs per year to DoD prime contracts (see Enhancing the Effectiveness of Independent Research and Development). The effective date of this new requirement is today, November 4, 2016.

Source: PNWC’s Government Contracting Update: Contractors Must Now Engage in Technical Exchanges with DoD Prior to Incurring IR&D Costs

When determining the allowability of costs under Government contracts, one needs to have a very good grasp of the FAR (Federal Acquisition Regulations) cost principles (Part 31), a copy of the tome close by and good reference material to consult when costs don’t fit nicely into FAR classifications. Often it is necessary to consult several cost principles to determine whether a cost is allowable or unallowable. Sometimes, after exhausting all available resources, you just don’t know and you would like some guidance from the Government before including the costs in a proposal or an incurred cost submission. Good luck on that. Contracting officers are not inclined to give “private letter rulings” like the IRS and contract auditors will certainly not go out on a limb and offer their opinions. And even if they did, it wouldn’t be binding on the Government anyway. Only the contracting officer has that authority. When the cost is immaterial, especially when the inclusion or exclusion has no impact on an indirect expense rate, many contractors simply forgo the costs.

Source: PNWC’s Government Contracting Update: Know the Purpose for Which Costs were Expended – Then Make Your Allowability Determination

DCAA (Defense Contract Audit Agency) recently implemented a program to systematically review paid interim vouchers. DCAA, of course, has always had that authority and would sometimes endeavor to perform such reviews as part of a larger billing system audit. But now, the program is much more structured. If you haven’t yet been subjected to one, you will.

Source: PNWC’s Government Contracting Update: Audits of Paid Vouchers

Most companies at some point interact with independent public accountants (i.e. Certified Public Accountants or CPAs). CPAs perform audits, reviews, and compilations of financial statements, perform routine bookkeeping services, and consult on various financial matters. One thing that many companies are unaware of when engaging a CPA firm to perform an audit or review of its financial statements is that those auditors are required by professional standards to assess the likelihood of fraud that could materially misstate financial representations. Just to be sure these auditors are well-trained to detect fraud, most states require that they receive specific fraud training as a prerequisite to licencing renewals every two or three years. Bet many of you didn’t know that your CPA doubles as a gumshoe.

Source: PNWC’s Government Contracting Update: Federal Conspiracy Statutes

The Bureau of Indian Affairs (BIA) issued a solicitation, using simplified acquisition procedures, to supply diesel fuel to a Navajo District school (Mariano Lake Community School). The procurement was set aside for Indian small business economic enterprises (ISBEE). When the Government uses simplified acquisition procedures, it is not required to use full and open competition to conduct the procurement. Instead, the Government is required to promote competition to the maximum extent practicable. Typically, this means posting the notice in a public place at the contracting office for at least 10 days. Beyond that, the Government must also conduct the procurement consistent with a concern for fair and equitable competition. So, for example, a contracting officer cannot solicit one source and fail to properly post a notification.

Source: PNWC’s Government Contracting Update: Government Solicitation Did Not Meet Minimum Standards

ALERT: The U.S. Department of Labor’s (DOL) new overtime rules become effective in just over a month from now; December 1, 2016. These new rules will make 4.2 million employees previously exempt from overtime, eligible for overtime pay.

Source: PNWC’s Government Contracting Update: New Overtime Rules Will Become Effective in a Month

Yesterday, we wrote about the federal judge in Texas that issued a temporary injunction halting the implementation of the new Fair Pay and Safe Workplaces (FPSW) regulations (see Federal Court Issues Preliminary Injunction Blocking Most of Fair Pay and Safe Workplace Provisions). Indeed this was a great victory for Government contractors but already, contractors (and prospective contractors) are being cautioned that its too early to take a victory lap. There is a strong potential for an appeal or perhaps amended regulations that address the Judge’s concerns. A Justice Department spokesperson was quoted as saying that lawyers are studying the decision and “considering their options”. Additionally, a spokesperson from the Labor Department defended the rules and said that the administration is confident they will be upheld in the courts.

Source: PNWC’s Government Contracting Update: Fair Pay and Safe Workplaces Regulations Injunction – Part 2

Just before the provisions of the Fair Pay and Safe Workplaces Executive Order were scheduled to become effective, a U.S. District Court (Eastern Texas) issued a preliminary injunction blocking most of the provisions implementing the President’s Executive Order (EO) on Fair Pay and Safe Workplaces (FPSW). Most notably, the provision imposing new reporting requirements regarding labor law violations by Government contractors and subcontractors has been suspended.

Source: PNWC’s Government Contracting Update: Federal Court Issues Preliminary Injunction Blocking Most of Fair Pay and Safe Workplace Provisons

A blog for government contractors to help them understand FAR and CAS, and to survive audits by DCAA and DCMA.

Source: PNWC’s Government Contracting Update: Reducing Fines for Contract Fraud

The rules on billing or claiming reimbursements under Government contracts are not always straight-forward and certainly not consistent from one contract type to another. Government contractors must, in every case, consult their contracts to determine billing terms and conditions. Generally, the Government is not in the business of financing a contractor’s operations. Contractors need to spend their own money before seeking reimbursement under their Government contracts. Whether reimbursed by progress payments, milestone payments, or public vouchers, contractors should anticipate a two to three month float from the time they pay their workers or suppliers until they receive reimbursement from the Government. Some contractors try to jump the gun by submitting for reimbursement for costs not yet paid. For small businesses, that might be okay if exemptions are granted but for most Government contractors, that would be prohibited and could result in big trouble. Take Persaud Companies, Inc, for example.

Source: PNWC’s Government Contracting Update: Claiming Reimbursement for Costs Not Paid Lands a Contractor in Prison