On February 17, 2012, the Director of Defense Pricing (DDP), Shay Assad, issued a memorandum for the directors of the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA), Subject: Unallowable Costs for Ineligible Dependent Health Care Benefits. “The Department of Defense (DoD) will continue to disallow ineligible dependent health care benefit costs,” the memorandum stated. The memorandum goes on to state that defense contractor costs estimated or claimed for dependents that were ineligible for those benefits are unallowable pursuant to FAR 31.205-6(m), Fringe Benefits, and FAR 31.201-3, Reasonableness. The memorandum encourages voluntary refunds for increased prices. Read More.

In today’s economic climate of budget-consciousness and cash-strapped balance sheets, all companies must be wary of sources and stability of working capital levels. Adequate working capital levels are paramount to ensuring a company’s recurring operations are not disrupted. However, over-investment in working capital can also be detrimental to a company, as it may not be the most efficient use of capital. To combat this problem, companies should develop sufficiently detailed working capital budgets that allow companies to plan for future resource requirements. Once a plan has been implemented, the task of meeting working capital needs becomes the focus. Ideally, operating. Read More.

The Federal Register, issued March 20, 2013 (Volume 78, No. 54), contains a proposed amendment to the Federal Acquisition Regulation (“FAR”), clarifying contractor and subcontractor responsibilities to obtain workers’ compensation insurance or qualify as a self-insurer under terms stipulated in the Longshore Harbor Workers’ Compensation Act (the “Act”), as extended by the Defense Base Act. The DOD, GSA, and NASA (the “Agencies”) are responsible for the proposed amendment. Under the Defense Base Act of 1941, federal workers’ compensation benefits provided by the Act were extended to certain employment outside of the United States. The Act is intended to provide medical benefits. Read More.

Section 1651 of the National Defense Authorization Act (NDAA), P.L. 112-239 amended the criteria for complying with the 50% rule for set aside contracts. Under the previous version of the rule, a contractor receiving a set aside contract was limited in the amount of work it could subcontract. If the contract was for services, the prime contractor had to incur no less than 50% of the cost expended on labor using its own employees. On the other hand, if the contract was for supplies, other than from a regular dealer, the prime contractor had to incur no less than 50%. Read More.

Taxpayers with operations in certain “boycotting” countries should be aware of the filing requirements of IRS Form 5713 International Boycott Report (Form 5713) to ensure compliance and avoid penalties. Background United States (U.S.) law generally prohibits U.S. persons from participating or agreeing to participate in foreign boycotts which are not sanctioned by the U.S. government.  Internal Revenue Code (IRC) Section 999 provides that a taxpayer cooperates with an international boycott if the taxpayer agrees to refrain from doing business with a boycotted nation or with anyone who does business with a boycotted nation; refrains from doing business with any company. Read More.