Accounting System, Cost And Accounting, DCAA Relations, Incurred Cost Proposals

You will note I employ use of the terms ‘claimed’ and ‘unclaimed’  as opposed to the terms ‘allowable’ and ‘unallowable’. Several years ago I began pushing for this characterization due to the negativity of the term ‘unallowable’.  Congress and regulators, in their infinite wisdom, may decide not to support a normal business cost such as interest but auditors, as normal human beings, tend to begin to think of unallowable costs as bordering on evil. 

Further, by moving to the term ‘claimed’ as opposed to ‘allowed’, the ownership of the decision of how to identify the costs is associated properly with the contractor.  The tone changes to the contractor ‘claiming’ the costs as opposed to the government ‘allowing’ the costs. 

It is All in the Language

DCAA Relations, Running Your Business

August 30, 2012

I ran across this recent addition to the FAR in an Army contract. Everything else aside, I find the section (d), the requirement to include it in your subcontracts a little annoying.

 52.223-18  Encouraging Contractor Policies to Ban Text Messaging While Driving.

As prescribed in 23.1105, insert the following clause:

Encouraging Contractor Policies to Ban Text Messaging While Driving (Aug 2011)

(a) Definitions. As used in this clause—


(1) Means operating a motor vehicle on an active roadway with the motor running, including while temporarily stationary because of traffic, a traffic light, stop sign, or otherwise.

(2) Does not include operating a motor vehicle with or without the motor running when one has pulled over to the side of, or off, an active roadway and has halted in a location where one can safely remain stationary.

“Text messaging” means reading from or entering data into any handheld or other electronic device, including for the purpose of short message service texting, e-mailing, instant messaging, obtaining navigational information, or engaging in any other form of electronic data retrieval or electronic data communication. The term does not include glancing at or listening to a navigational device that is secured in a commercially designed holder affixed to the vehicle, provided that the destination and route are programmed into the device either before driving or while stopped in a location off the roadway where it is safe and legal to park.

(b) This clause implements Executive Order 13513, Federal Leadership on Reducing Text Messaging While Driving, dated October 1, 2009.

(c) The Contractor is encouraged to—

(1) Adopt and enforce policies that ban text messaging while driving—

(i) Company-owned or -rented vehicles or Government-owned vehicles; or

(ii) Privately-owned vehicles when on official Government business or when performing any work for or on behalf of the Government.

(2) Conduct initiatives in a manner commensurate with the size of the business, such as—

(i) Establishment of new rules and programs or re-evaluation of existing programs to prohibit text messaging while driving; and

(ii) Education, awareness, and other outreach to employees about the safety risks associated with texting while driving.

(d) Subcontracts. The Contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts that exceed the micro-purchase threshold.

(End of clause)

Do Not Forget to Flow this Clause Down

DCAA Relations, Department of Defense News, Incurred Cost Proposals

 Stephen A. Avery is a Principal with DCAA Compliance, LLC and the author of  Accounting Policies and Procedures for Small Government Contractors working with DCAA and Other Government Agencies.

Just got a hold of Loeb’s article on DCAA, “DCAA – Is Anyone Home?” and it continues to add fuel to the fire as the crisis within government contracting grows.

Mr. Loeb is a professor of Law at the University of Baltimore School of Law and spent five years as the Executive Secretary and General Counsel to the Cost Accounting Standards Board (1991-2005) and also spent a couple of years as acting deputy administrator of the Office of Federal Procurement Policy. Thus, I will qualify him as one of the Lords of CAS and FAR.

Mr. Loeb’s extensive analysis reaches two main conclusions:

1)      There has been a 400 percent reduction in completed audits since 2008 despite the number of DCAA employees increasing during this timeframe.

2)      The Current backlog of DCAA audits exceeds One Trillion dollar (Not a huge surprise as DCAA admitted to 558 billion back in August).

Mr. Loeb places a great deal of blame on what he calls the “Clericalization” of DCAA as documentation of the process appears to be more important than actually completing the process.

I will add a couple of thoughts from my vantage point of working with several DCAA locations across the country:

1)      After the devastating GAO reports criticizing DCAA’s lack of ability to successfully manage the audits of accounting systems, I heard from DCAA supervisors in 2010 that DCAA would not do any incurred cost proposal audits and only do accounting system audits. I inferred this was a dedication of resources to refute the GAO findings.

2)      Skip ahead to 2012 as word of this backlog begins to circulate, and DCAA schedules an entrance interview with a client on the East Coast for an accounting system audit only to tell us during the first few moments of the audit that DCAA has suspended all work on accounting system audits and now will be focusing only on cost audits. The Army working with DCMA is doing the accounting system audit on this client.

As the DCAA Crisis Continues to Grow