PNWC’s Government Contracting Update - page 59

Back in 2010, the White House noted in a memorandum to Executive Agencies that Government contracts were being awarded to “thousands of companies” with serious tax delinquencies. The total amount of unpaid taxes owed by these companies was estimated to be more than $5 billion at the time.

Source: PNWC’s Government Contracting Update: Screening Contractors with Unpaid Federal Tax Liabilities

A proposal that takes exception to a solicitation’s material terms and conditions should be considered unacceptable and may not form the basis for an award. This is a fundamental contracting principle that the Comptroller General (GAO) has affirmed in many decisions. Material terms of a solicitation are those which affect the price, quantity, quality, or delivery of the goods or services being provided.

Source: PNWC’s Government Contracting Update: Proposal that Takes Exception to Solicitation Terms and Conditions is Unacceptable

When contract auditors perform a review of an accounting system, it is absolutely necessary for them to understand the system before they plan and perform the audit, They will ask you to demonstrate your accounting system in order to understand the internal control structure related to compliance with the 18 accounting system attributes listed in DFARS (DoD FAR Supplement) 252.242-7006, Accounting System Administration.

Source: PNWC’s Government Contracting Update: Documenting the Accounting System

The FAR cost principles contain a very brief and straight-forward statement concerning the payment of overtime to training and education. FAR 31.205-44 states that the cost of training and education that are related to the field in which the employee is working or may reasonable be expected to work are allowable except that overtime compensation for training and education is unallowable. There are also a few other exceptions that fall outside of this discussion.

Source: PNWC’s Government Contracting Update: Overtime Compensation for Employees Being Trained

There are many ways to estimate costs. The most common method is the discrete estimate method where, for example, a bill of material is created and vendor quotations are obtained to determine costs. Another method used – especially by large firms with ample historical data and a significant volume of proposals – is “parametrics”.

Source: PNWC’s Government Contracting Update: Parametric Cost Estimating Techniques

The Air Force issued a solicitation for the purchase of $1.4 million worth of electronic door locks to be used on Air Force facilities in Afghanistan. This fellow from Dubai wanted the contract so badly that he attempted to bribe the Air Force contracting officer for $90 thousand in order to secure the contract.

Source: PNWC’s Government Contracting Update: Attempted Bribe of Contracting Officer

While perusing the Justice Department’s press releases related to fraud, we were struck by the sheer numbers of reported fraud cases. Just this week, the was a company president pleading guilty to bribery at Tinker AFB, a woman sent to prison for trying to illegally export our latest fighter jet engines to China, Navy and contractor employees pleading guilty to taking and giving kickbacks, another Navy employee sentenced to 18 months in prison for accepting illegal gratuities, another contractor executive sentenced to prison for illegally exporting weapons parts, and a company using “front-companies” to obtain small-business set aside contracts.

Source: PNWC’s Government Contracting Update: Contract Fraud, the Fraud Triangle, and Internal Controls

There are a high number of GAO bid protests involving late submissions of proposals. Bidders who have been disqualified because their proposals were not received in the time and manner specified in the solicitation often protest the Government’s actions – usually on the grounds that they tried to comply with the submission instructions but the bid got stuck in the Government’s email system or the guard at the gate wouldn’t let them in to hand-deliver a proposal. It is very rare that the Comptroller General (CG) will sustain such protests. The CG pretty much takes the position that its the bidders responsibility to figure things out. One recent exception involved an email glitch that quarantined several bidders on the same solicitation. That time, according to the CG, it was the Government’s fault.

Source: PNWC’s Government Contracting Update: GAO Is Not Sympathetic towards Contractors Submitting Late Proposals

The GAO (General Accountability Office) has suspended a firm from filing bid protests for a year. This action comes after the company submitted 150 protests in this fiscal year alone and nearly 300 more protests in the four years preceding. None of the appeals were ever sustained, usually because the protester was not an “interested party” – a prerequisite to filing a bid protest. By anyone’s measure, the company was abusing the system. GAO finally had enough and took the unprecedented action of suspending the company from filing bid protests for a year.

Source: PNWC’s Government Contracting Update: GAO Suspends Firm From Filing Bid Protests for a Year

We have discussed on these pages several times about the importance of compiling and maintaining documentation to support professional and consultant service costs. This is one of the FAR cost principles where auditors often find “low hanging fruit” because the principle requires three forms of documentation; an agreement, an invoice, and evidence of work performed. Although auditors have been told recently to lighten up a bit with respect to “evidence of work performed”, consulting costs continue to be a “high risk” area for potential audit findings and cost recoveries.

Source: PNWC’s Government Contracting Update: Fraud Indicators Related to Professional and Consulting Services