Cost And Accounting, DCAA Relations, Department of Defense News, Incurred Cost Proposals

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

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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

Visit us at www.dcaacompliance.com

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Cost And Accounting, DCAA Relations, Department of Defense News

DOD OIG Critical of DCMA Followup on CAS Violations

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http://www.dodig.mil/pubs/report_summary.cfm?id=7232&utm_source=DoD+IG+Email+Update+-+Reports+and+Testimonies&utm_campaign=1028bc1344-DoD_IG_Reports&utm_medium=email&utm_term=0_3a17f8681e-1028bc1344-277174597

 

“For the 27 DCAA CAS reports we selected, we identified several instances in which contracting officers did not comply with FAR, DoD Instruction 7640.02, or agency instructions. We found:

    • 12 instances in which contracting officers did not issue a Notice of Potential Noncompliance within 15 days, as FAR 30.605(b)(1) requires;     • 16 instances when contracting officers failed to complete all actions on the reported noncompliances within 12 months, as DoD Instruction 7640.02    requires;     • 3 instances in which contracting officers did not have adequate documentation or rationale for determining that the DCAA-reported noncompliance    was immaterial, contrary to FAR 30.602; and     • 8 instances in which contracting officers did not obtain a legal review of their CAS determination, as Defense Contract Management Agency (DCMA),   Instruction 108 requires.

As a result, correction of the reported CAS noncompliances was delayed. In addition, contractors may have been inappropriately reimbursed contractors additional costs resulting from the noncompliance.”

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Available at DCAA Compliance or Amazon

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Accounting System, DCAA Relations, Running Your Business

The Birth, Life, and Death of a Small Business Contractor

 

 

Part One – The Illegitimate Birth

 

One of my clients is a small government contractor in the South with only a few employees. They are developing a technology that anyone could easily identify as critical in both military and civilian applications. The development is at a ‘job phase’ where units are built individually in the attempt to improve the process and the technology. Each one of these individual units are functional and critical.

Almost all of the national labs, many foreign countries, and others in industry have purchased these units and employed them immediately, even as the technology continues to be developed. I should say that the technology saves lives and is not a weapon.

Of course the military wanted the technology; but instead of going out and buying a unit, the military issued a contract, a cost type contract.  In 2010 the United States Air Force issued the contractor a cost type contract.

The Federal Acquisition Regulations (FAR) restricts the government from issuing cost type contracts to contractors unless “The contractor’s accounting system is adequate for determining costs applicable to the contract or order…” (FAR 16.301-3(a)(3)). During this time, standing orders required the Air Force to wait on an opinion from DCAA about the contractor’s accounting system and for DCMA to issue an approval of the accounting system.  This was during a period where local contracting officers could not always know when and if DCAA would show up and the Air Force really wanted the technology and issued the contract without an approved or audited accounting system.

Why the Air Force did not simply follow the example of the National Labs and issue a fixed price contract or a purchase order, we will never know. Instead, the Air Force issued a cost type contract to a contractor without an approved or even audited accounting system.

The contractor did not realize that the Air Force actions transferred almost all of the risk concerning the contract to the contractor, the opposite of what a cost type contract is ‘designed’ to do.

The fact that the FAR prohibited the Air Force from issuing the contract is not a defense the contractor may raise as one contractor found out when they complained to the Armed Services Board of Contract Appeals. In this case, the contractor claimed the government owed them hundreds of thousands of dollars. The government successfully argued that the contractor’s inadequate accounting system made any such claim impossible to support. An adequate accounting system protects the contractor and the government.

Of course, the Air Force or DCMA did order an audit and the contractor hired and consultant (not us) to help them with DCAA. This did not turn out well.

But a government contractor was born, arguably illegitimately, but born none the less.

Next, “How DCAA, Contractor, and Consultant Can Ruin an Audit”.

Both Books graphic

Available on Amazon or www.dcaacompliance.com

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Department of Defense News

Supervisors Fail to Act Properly to DOD Employee ‘Misuse’ of government funds for Casinos and Adult Entertainement

Excerpt from a recent Department of Defense OIG audit followup to previous audit:

 

Finding

We determined that DoD management (cardholder’s commander or supervisor) and travel card officials did not take appropriate action when notified by the DoD OIG, during the previous audit, that cardholders had potentially misused their travel card. In this follow-up audit, we reviewed management’s actions for 30 nonstatistically selected cardholders with the highest dollar amount of high-risk transactions that had been referred to management in the prior audit. During this audit, we found that:

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Department of Defense News

Do as I Say, Not as I Do

Seriously, 7% of DOD travel payments are “improper”?

“DoD Component actions were not adequate to reduce estimated improper payments in the DoD Travel Pay program. The Under Secretary of Defense (Comptroller)/Chief Financial Officer reported that estimated improper payment rates for the DoD Travel Pay program increased from 5.0 percent for FY 2012 to 6.5 percent for FY 2013 and 7.0 percent for 2014. The estimated rates missed the improper payment reduction goals for each of those years.”

http://www.dodig.mil/pubs/report_summary.cfm?id=6833&utm_source=DoD+IG+Email+Update+-+Reports+and+Testimonies&utm_campaign=24114820f8-DoD_IG_Reports&utm_medium=email&utm_term=0_3a17f8681e-24114820f8-277174597

 

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DCAA Relations

Meet the New DCAA director — NEON Testimony

Here is link to testimony before the House. At the end of the document is a biography of the new DCAA director.

The testimony is interesting. They state they cleared over 11,000 contractor incurred cost proposal “years” in FY 14. This might be more interesting if we knew what the backlog was not matter the method of measurement.

I actually agree that much of the attack on DCAA reference NEON is unfounded and displays a complete ignorance of government cost accounting compliance. From a government contracting perspective, fee exists only to fund unallowable costs such as interest expense and of course Holiday parties. To beat up DCAA for actually following the laws and the regulations is silly.

This is especially true as there is so much better material out there to work with…..

http://docs.house.gov/meetings/SY/SY00/20141203/102771/HHRG-113-SY00-Wstate-BalesA-20141203.pdf

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DCAA Relations, Incurred Cost Proposals

Statute of Limitations Does Mean SOL

I guess we need to start sending the general ledger detail in with the Incurred Cost Proposal….

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of– Coherent Logix, Inc. ASBCA No. 59725

The government argues that its claim could not have accrued before 1 August 2013, when CLX provided the General Ledger detail showing the patent legal costs to the DCAA (gov’t br. at 4). Diane Chang, a DCAA auditor, provided an affidavit in which she states that DCAA requested the General Ledger detail from CLX on 24 July 2013 and received it on 1 August 2013 (Chang aff. ~~ 4-5). Ms. Chang also states that she has searched the DCAA files and did not find General Ledger detail anywhere in CLX’s 13 August 2008 submission. She further states that the only information CLX provided on legal costs prior to 1 August 2013 was the single line item identifying only generic “legal services” in the amount of $89, 196. (Id., ~~ 6-7)

Based on the foregoing, we cannot conclude that the government had any reason to anticipate that CLX would claim reimbursement for patent legal costs in 2007. CLX has not met its burden of proving that the government’s claim accrued on 13 August 2008 or at any other time before DCAA received the underlying General Ledger detail on 1 August 2013. Cf Combat Support Associates, ASBCA Nos. 58945, 58946, 14-1 BCA ~ 35,782, vacated on other grounds on recon., slip op., 16 March 2015 (government claim did not arrive at time of initial incurred cost submission, but only after supporting data was submitted from which it could conclude that certain claimed costs were unallowable). We hold that the government’s claim is not barred.

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