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Common Sense, Policies & Procedures, Hand Grenades, and a Corvette

Most of what we address in policies and procedures are common sense. What little that is not is government “sense”. I bet you wondered why I included hand grenades and a corvette. Let me tell you a tale from my youth.

DRF1

I served in the 82nd Airborne division as an infantry soldier during the cold war. One of the primary responsibilities of the 82nd (along with the 101st  and the 24th) was the ability to send a battalion size force anywhere in the world within two hours. Since the 82nd was burdened with parachutes and not helicopters (101st was not airborne when I served) or armored vehicles (24th), the primary burden fell on the 82nd.

The division was divided into 9 units of readiness status called “DRF” for Defense Readiness Force”. The highest status was DRF 1 which meant that the battalion needed to be able to assemble within two hours. For us, it meant no leave and we had to be within a half hour of the base at any time, ready to gear up and deploy.

Of course, Deployments happened for real and deployments happened for training, and God Bless the US Army, someone was always trying to figure out a way to improve the deployment process.

One of the slowdowns was issuing out ammo to the DRF 1 force. For example, as a grenadier, I carried seven 30 round magazines of 5.56 for my M203, about twenty 40mm grenades for the launcher, a belt of 7.62 for one of the platoon’s M60 machine guns, a couple of hand grenades, and other odds and ends in addition to food, water and my regular gear. I also carried half of a M47 anti-tank missile.

Multiple this load by 800 other guys with similar loads then add odds and ends such as mortar rounds, .50 caliber rounds, TOW rounds, etc.… and it adds up to several tons for us to carry and deploy. In addition, the force must deploy with adequate reserves, at least two or three times the amount we carried. two or three times that amount in reserve.

Half of a Brilliant Idea

This bottleneck led to half of a brilliant idea by someone in the chain of command. Why not pre-issue the ammo to the DRF 1 force? The immediate challenge this presented was how to secure the tons of deadly material. There really was not a warehouse within a DRF 1 unit for this purpose.

Well, all the units were across the street from a small area of woods fondly referred to as “Area J”. The battalions utilized Area J for quick training, physical training, and harassing new members of the division. “Smith, would you go and ask Top for the keys to Area J?”.

The idea some unknown person came up with was to issue the ammo and take the ammo out to Area J. Security? Put three strands of concertina wire around it and let put a squad to guard it. This is what they did the next time my battalion went on DRF 1.

I do not remember being told that we were going to have guard duty on top of everything else associated with DRF 1 status, but my squad came up on rotation and we got in a deuce and a half and deployed into area J and the ammo dump.

We were a tight squad and worked well together, my squad leader was busy with something else when we arrived and asked me to talk to the sergeant of the squad we were reliving.

Looking at the large number of crates around us, I asked the sergeant for the inventory form. He replied, “What inventory form?”

“What Inventory Form?”

Apparently, no one else shared my shock and I am sure the rest of the squad got tired of my complaining about this for the rest of the night. Yes, they agreed with me that it was a stupid idea, but bureaucracies, and the Army was often a bureaucracy with weapons, was full of stupid ideas.

We finished our guard duty, turned the ammo over to the next squad, and went back to the barracks. We heard nothing more about inventory for several months.

The Art of the Deal

The story we heard later was that a guy from one of the other companies in our battalion attempted to buy a car from a local dealership and failed to close the deal. He later decided to express his anger by returning to the dealership at night and chucking a hand grenade into it. The only injury, as we heard about was to a corvette.

What our young soldier did not realize, is the spoon of a hand grenade contains identifying numbers that allowed law enforcement to track the hand grenade back to one of the boxes issued to our battalion during the DRF 1 readiness period.

Consequences

The Army immediately locked our battalion down, bringing in all the guys who lived off post and putting them on the floors of our barracks. All the cars were searched, including mine, and no one was going anywhere until the hand grenades were located or at least accounted for.

It took several days for the culprits to confess (sometimes peer pressure is a wonderful thing), and the story was that they stole at least one CRATE of hand grenades.

I assume they were courtmartialed, or if the Army wanted to keep it quiet – an Article 15. I was just happy to return to a normal life.

Common Sense

Maybe it was asking too much for infantry grunts to think about inventory, although in my young mind it was the word “accountability”.  I often wondered how the ammo got checked back in without an inventory, or just who the hell signed for it.

Accountability is a critical concept is government and business and this is one of the stories that led to my development of Single Point of Responsibility (SPR) as an essential management tool.

Government personnel and contractors should always think in terms of accountability and responsibility in their actions. It does not matter if it is hand grenades, dollars, or even human beings you are responsible for. Developing systems of accountability is simply common sense.

 

 

 

 

 

 

 

 

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Accounting System, Cost And Accounting, Department of Defense News, Running Your Business

A World Without DCAA hits SBIR Phase One

Here are some of the requirements from the Department of Homeland Security’s latest SBIR  RFPs

 

“Additional deliverables in this phase include the following (templates to be provided later by the federal Program Manager):

  • Monthly Status Reports, including master schedule for Phase II activities, quad chart, table showing each task description, percentage completed, targeted completion date, revised dates (if applies), etc.
  • Monthly Financial Status Report showing reporting month, cumulative costs, allocated financial data for direct labor categories, labor hours, labor rates, consultants/subcontractors cost, travel, materials purchased, etc.
  • Monthly status calls “

Section A-5

https://www.fbo.gov/index?s=opportunity&mode=form&id=41268594cdfdef40295cae324d0b2abe&tab=core&_cview=1

I recently participated in a Navy SBIR conference where one of the other panelists encouraged contractors not to worry about the budgets on their SBIR Phase One. It appears that may no longer be the case.

I had a dim memory of the DOD program staff asking for similar reports years ago. I went to look and found one form so old that I cringed at the title: “Fund Man Hours Expenditures”. I imagine an updated version of this is in many small business contractor’s futures.

All of this underlines the importance of doing it right from the start. Contractors starting out should start out with a cost accounting system that will meet their needs and the government requirements.

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DFARS Cyber Security for Small Business Contractors

In 1998, I listened to an IT staff member from a large contractor proceed to chew out the contractor’s accounting staff for ‘losing’ a folder stored on the company’s servers containing all of the year-end closing work. He proceeds to call the staff “idiots” and ignorant while glossing over the fact that the IT department’s backup of the critical data had failed the night before.

He noticed my smile and could not decide if I was agreeing with him or laughing at him, so he asked me what the F**K I was smiling about. I replied,

“I want to thank you. For years people have criticized accountants as being unresponsive to the company’s needs, speaking a language no one else understands, and not really caring about the success of the company. People now say this about IT people instead”.

A few weeks later a software consultant, with full access to all of the IT systems, destroyed the company’s general ledger by using direct access to the database to create new balances in 146 general ledger accounts. The consultant then spent months trying to fix the error while hiding it from the company. Nine months later, one of the company’s employees printed out a general ledger report that showed a WIP balance of a little over two million dollars while the subsidiary ledger showed an amount several times larger.

What saved us was the trial balance that I had printed out the day before the consultant screwed up the general ledger. I took the printout with me as a resource for my work for them with DCAA.

As a result of this lesson, and too many others, I started asking myself twenty years ago about the relationship between accounting and IT.  Part of my thinking can be seen in the name I chose for my later technology company: “Accountable Technologies”. I would love to say that Edward Snowden was the final nail in the coffin, but there are thousands of accidental and deliberate Snowdens scattered across American businesses, large and small.

I personally believe that IT personnel should have episodic access to the accounting system; not at will. Perhaps you do not agree with this, fine.

But, you should take advantage of the new cyber security requirements adopted by the Department of Defense to think about the issue, to develop your own policies and procedures.

DARPA put up an excellent guide for small business with links to expanded materials. Take a look and think about it.

https://www.darpa.mil/work-with-us/for-small-businesses/cybersecurity

By, the way, if you were wondering what happened to the missing folder, an employee visiting from another location to document procedures, had moved the folder to her personal files for future reference thinking she had copied it. We discovered this a couple of hours later when she wandered in to the office.

More at www.dcaacompliance.com

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DCAA Relations, Department of Defense News

The Good News — DCAA Gets A New External Peer Review Opinion. The Bad News — Qualified with Deficiencies (Again). DOD OIG identified 25 Deficiencies

DCAA receives it overdue external peer review from DOD OIG. Unfortunately, it is not the stellar report we hoped for.

https://media.defense.gov/2017/Nov/22/2001847672/-1/-1/1/DODIG-2018-028.PDF

 

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DCAA Relations, Department of Defense News, Incurred Cost Proposals

Bales Testifies Before House, Industry refers to DCAA as a “Collection Agency”

DCAA Director Bales testified yesterday before the House Armed Services Subcommittee On Oversight and Investigations. Here is a link to her written testimony: http://docs.house.gov/meetings/AS/AS06/20170406/105777/HHRG-115-AS06-Wstate-BalesA-20170406.pdf

My Highlights:

  1. The Risk Assessment program for incurred cost proposal audits will continue.
  2. Outside CPA firms doing audits of incurred cost proposals are a bad idea because they are not qualified and lack governmental authority.
  3. She opposes proposed legislation requiring GS-14 managers to be CPAs because CPA skills do not translate to government contracting work (Yes, we are going to have fun with that one).
  4. She opposes proposed legislation requiring incurred costs proposal audits to be completed within one year of adequate submission because this would eliminate the efficiency of doing multiyear audits.

What is not clear is if DCAA is actually caught up. In the era of parsing words within the beltway, she states that there still is a backlog and the hiring freeze makes it impossible for them to catch up.

Best line from the industry testimony so far:

David Berteau, Professional Services Council

“As one of our member companies characterized it, DCAA should focus on being an auditing agency, not a collection agency”

 

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DCMA Criticized for not Following DCAA Recommendations on Incurred Cost Proposal Audits.

One again proving that the contractor should defend costs BEFORE DCAA makes its findings official.

 

http://www.dodig.mil/pubs/report_summary.cfm?id=7287&utm_source=DoD+IG+Email+Update+-+Reports+and+Testimonies&utm_campaign=e02c5e6e40-DoD_IG_Reports&utm_medium=email&utm_term=0_3a17f8681e-e02c5e6e40-277174597

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Accounting System, Cost And Accounting, DCAA Relations, Department of Defense News, Running Your Business

GAO Ruling Supports GSA Decision that Favors DCAA Accounting System Audits Over Private Firm Audits

A recent GSA RFP awarded 9.15%  (7,600 out of 83,100 points) of possible RFP scoring points for approved accounting and purchasing systems, systems approved by DCAA or another government agency. The approval of the critical systems by private accounting firms did not receive any points.

Evolver and AFSC challenge the agency’s basis for assigning certain points.  Specifically, both Evolver and AFSC challenge the RFP provision that, in order to be awarded 5,500 points for an “audited/adequate cost accounting system,” an offeror’s proposal must include proof of a federally audited and approved accounting system.  The firms maintain that this requirement is overly restrictive of competition, as there are independent public accounting firms that can verify the adequacy of an offeror’s accounting system for federal contracts.  The firms further argue that proof of an acceptable system should not be required with proposal submission; rather, proof should be provided only at the time the government actually requires the service for which the certification is necessary.”

Here is GAO ruling:

“Under these circumstances, where the agency can reasonably anticipate that DOD will be the prime user of the Alliant 2 GWAC, and where DOD does not accept third party certification of a contractor’s cost accounting system, we find nothing improper about the solicitation’s provision that gives an evaluation preference to firms that have a federally audited and approved accounting system.”

Now here is the troubling part of the ruling:

 “In this regard, the agency explains that allowing firms to accrue points in this manner helps to provide a GWAC where successful offerors have experience in government contracting.  In addition, successful offerors will be able to perform cost-reimbursement task orders for DOD from the first day the GWAC is awarded, and procuring agencies issuing task orders under the GWAC will not have to waste time and resources while vendors subsequently obtain an audited and approved system.  Id.  Given this explanation by the agency, we find nothing improper about the solicitation’s approach of awarding points to offerors that have proof of an audited system at the time of contract award.” (emphasis added).

Gee, wouldn’t it be wonderful if a contractor could just call DCAA and schedule an accounting system audit?

http://www.gao.gov/products/B-413559.2,B-413559.8#mt=e-report

 

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