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Government Contractors

The Auditor Strikes Back: Always a Bonus of Contention

As we reported in October, the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”) was recently updated. One of the 13 areas of cost updated related to bonus and incentive compensation costs. This topic is covered in Chapter 7 of both the previous version and new version of the CAM. Bonuses and incentive compensation can mean many things including cash, stock, stock options, stock appreciation rights, phantom stock plans, and/or a combination of the aforementioned forms. Bonus and incentive compensation can also be paid in the short/current term or in the future/long term. These plans can differ greatly between contractors and. Read More.

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How Many Contractors Does It Take to Run the Government?

By: John Ford , Senior Consultant, Government Contractor Services Group For many years, there has been a debate as to how many contractors are performing work for the government. This issue has two components: (1) the number of entities holding contracts; and (2) the number of individuals who are actually performing those contracts. While the former is fairly easy to determine, the latter is more problematic. This article will discuss two of the tools available to the government to make this determination. These tools also help the government to know how much these employees are costing the government. The first tool, required. Read More.

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If the Government Claims a Refund, When did the “Claims Clock” Start Running?

By: David Lundsten , Partner, Government Contractor Services Group and John Ford , Senior Consultant, Government Contractor Services Group The Contract Disputes Act (“CDA”) requires a contract claim by either party (the government or the contractor) to be submitted within six years after accrual of the claim. This six-year “claims clock” is otherwise known as the CDA Statute of Limitations (“SOL”). The CDA does not state the test for determining when a claim accrues. However, the Federal Acquisition Regulation (“FAR”) has filled this gap at FAR 33.201, which states that a claim accrues when “all events, that fix the alleged liability . . .. Read More.

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Auditor Strikes Back: Appreciating Depreciation

The Selected Areas of Cost guidebook replaces Chapter 7 of the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”). One of the 13 sections that have been rewritten and updated covers depreciation. Below we will take a deep dive into some of the new updates. When a contractor typically owns tangible personal property which provides services for a number of years, that cost is recorded as an asset (rather than expense) in the year the asset is acquired. According to the matching principle, a portion of the asset should be reported as an expense during each period of the. Read More.

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Required Documentation in Support of Consultant Costs

By: Curt Smith, Manager, Government Contractor Services Group The allowability of consultant costs is sometimes a point of contention between contractors and Defense Contract Audit Agency (“DCAA”) auditors, and often the issue is insufficient documentation. What evidence is required by the Federal Acquisition Regulation (“FAR”) to document consultant costs sufficiently and how do auditors determine allowability given this requirement? A quick review of FAR and guidance for DCAA auditors concerning consultant costs will greatly help answer these questions. The general parameters of allowability for consultant costs are described in FAR 31.205-33 — Professional and Consultant Service Costs. However, other cost. Read More.

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Auditor Strikes Back: Never an Idle Moment for Idle Facilities

As we reported in October, the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”) was recently updated . One of the 13 areas of cost updated related to idle facilities. This topic is covered in Chapter 32 of the new Selected Areas of Cost Guidebook. The guidance related to idle facilities is mostly unchanged with respect to Federal Acquisition Regulation 31.2015-17(a); however, a few points were called out in the DCAA guidance. Indicators of when facilities may be considered idle are: The facility is completely unused. No current need is foreseen or can be demonstrated for the completely unused facility. The facility and/or equipment have been excluded from regularly scheduled maintenance. Read More.

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