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.
ASBCA Holds that Leases are not Necessarily Subject to CAS 404
In Exelis, Inc., ASBCA No. 60131 (29 Aug. 2016), the Armed Services Board of Contract Appeals (“ASBCA”) held that a concern whether a building lease was a capital lease or an operating lease is not subject to Cost Accounting Standards (“CAS”) 404. In 2007, the Defense Contract Audit Agency (“DCAA”) released its audit of Exelis’ 2004 final indirect cost rates. DCAA questioned Exelis’ lease costs, finding that the building lease was a capital lease instead of an operating lease as claimed by Exelis and that Exelis could only include building depreciation in its indirect cost pool rather than the entire. Read More.
Topics: Armed Services Board of Contract Appeals "ASBCA", Cost Accounting Standards "CAS", Defense Contract Audit Agency "DCAA", Defense Contract Management Agency "DCMA", Federal Acquisition Regulation "FAR", GAAP, Indirect Cost Rates, leases
GAO Denies Bid Protest
The Government Accountability Office (“GAO”) has denied a bid protest challenging the agency’s evaluation of the protester’s proposal as unacceptable because the protester did not demonstrate that it had an accounting system that had been approved by the Defense Contract Audit Agency (“DCAA”). The National Security Agency (“NSA”) issued a small business set aside Request for Proposal for business, engineering, information technology, operations, and training support services. One of the evaluation subfactors was that offerors have an accounting system “that has been deemed acceptable for award by a [Defense Contract Audit Agency (DCAA)] audit at the time of proposal submission. Read More.
Episode 1: Manufacturing and Production Engineering Costs vs. Independent Research & Development Costs
For companies that incur manufacturing, production line, engineering or product development costs, determining the true nature of the cost can be difficult. The Federal Acquisition Regulation (“FAR”) points us to FAR 31.205-25 — Manufacturing and Production Engineering Cost, to help companies determine if the cost incurred should be considered a manufacturing and production engineering cost. However, the issue companies have is where one draws the line if the costs should actually be considered independent research & development (“IR&D”). Determining if the costs falls under FAR 31.205-25 or meets the definition of FAR 31.205-18 and is considered IR&D doesn’t just impact. Read More.
Topics: DCAA Contract Audit Manual, Defense Acquisition Regulations System, Defense Contract Audit Agency "DCAA", Federal Acquisition Regulation "FAR", Independent Research and Development "IR&D", Manufacturing and Production Engineering Costs
The Auditor Strikes Back: Updated Cost Allowability Guidance Published by DCAA
During late summer, the Defense Contract Audit Agency (“DCAA”) published a “Selected Areas of Cost” guidebook to replace Chapter 7 of the DCAA Contract Audit Manual (“CAM”). The newly refreshed guidebook provides further direction for auditors and contractors on how to properly treat certain types of costs listed in Federal Acquisition Regulation (“FAR”) 31.2 regarding allowability. Specifically, an unlucky 13 areas of costs have been updated with additional guidance. Those costs include: Bonus and Incentive Compensation Joint Ventures and Teaming Arrangements Depreciation Insurance IR&D/B&P Idle Facilities and Idle Capacity Legal Patents Royalties Consultants Pensions Alcoholic Beverages Manufacturing and Production Engineering. Read More.
Q&A: Lost in Time – The Statute of Limitation and Time Limits on Government Contracts
Approximately a year ago, we included an article in our newsletter concerning the six-year statute of limitations (“SOL”) on the assertion of claims under the Contract Disputes Act (“CDA”). This is an area of continuing confusion because it is still developing. In addition to the CDA six-year period, there are other time limits on government contractor actions in regard to government contracts. In a question-and-answer format, this blog will attempt to clarify some of the questions regarding the CDA six-year SOL and other timeliness issues. Q: Does a claim have to be for money? A: No. A claim can be. Read More.