CPAs and Advisors with Your Growth in Mind

Audit Alert Issued for DCMA Implementation Guidance on Blended Compensation Caps

On February 19, 2016, the Defense Contract Audit Agency (“DCAA”) issued Memorandum for Regional Directors (“MRD”) 16-PSP-005(R), Audit Alert on DCMA Implementation Guidance on Blended Compensation Caps. The Alert provides auditors with official guidance when dealing with blended compensation caps with contractors, and in tandem with the Defense Contract Management Agency (“DCMA”). What does this mean? Let’s take a few steps back to October 2014, when Shay Assad, the Director of Defense Pricing Acquisition Technology, and Logistics OUSD (“AT&L”), issued a memo stating that use of a blended rate is deemed “practical and cost efficient.” This was in reaction to. Read More.

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The Clock is Ticking: Getting an Edge on Your Annual ICS

It’s that time of year. Your personal tax returns are complete. Your company completed its taxes on time. The auditors wrapped up the financial statement audit. Is there time to breathe? Certainly not…It’s finally time to prepare your annual Incurred Cost Submission (ICS)! For companies with fiscal year ending December 31, 2015, the 2015 ICS will be due by June 30, 2016, six months after the close of your fiscal year. Throughout the years, we have seen a variety of different hiccups and struggles for companies as they shift out of “busy season.” Here are a few things to consider. Read More.

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New Guidance–Limited Role for DCAA Audit of Non-DoD Contracts

The 2016 National Defense Authorization Act (NDAA, S.1356) (“the Act”) includes a number of sections related to Acquisition Policy or Acquisition Management. In particular, the Act discusses the subject of the Defense Contract Audit Agency (“DCAA”) contract audits and the requirements for improved auditing on the incurred cost backlog (“Indirect Cost Rate Proposals”; “ICPs”) are explicitly mentioned. Section 893 prohibits DCAA from performing any audits for non-defense agencies (e.g., National Aeronautics and Space Administration (“NASA”)), unless the Department of Defense (“DoD”) certifies that DCAA is current on the ICP backlog or less. This restriction could cause some disruption for contractors. Read More.

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Department of Defense Continues to Tinker with the Allowability of IR&D

Beginning in 2011, the Department of Defense (“DoD”) began making changes to the supplemental cost principle on Independent Research and Development (IR&D) found at the Defense Federal Acquisition Supplement (DFARS) 231.205-18. These changes have not affected the definition of IR&D found at Federal Acquisition Regulation 31.205-18. Instead, they have addressed what certain contractors must do in order for their IR&D costs to be allowable on government contracts. The latest proposed change in the allowability requirements set forth in the DFARS was published in the Federal Register on February 16, 2016 . The proposed change reformats the existing DFARS 231.205-18(c)(iii)(C) and adds a new requirement that reads: For IR&D projects. Read More.

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Payment of Interim Vouchers under Cost Reimbursement Contracts

In the mid-1990’s, the Department of Defense (“DoD”) instituted a new policy of permitting contractors who met certain criteria to submit interim vouchers under cost reimbursement contracts directly to the Defense Finance and Accounting Service (DFAS) payment office. Under this policy, known as direct billing, the Defense Contract Audit Agency (“DCAA”) did not review these vouchers before they were sent to DFAS. By eliminating the DCAA review, contractors were able to be reimbursed much quicker for costs they had incurred in performing these contracts. However, in 2012, DoD changed this policy and eliminated the direct billing procedure. As currently written,. Read More.

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DCAA and Executive Compensation after Taylor/Metron

By: John Ford , Senior Consultant, Government Contractor Services Group Within a period of approximately six months at the beginning of 2012, the Armed Services Board of Contract Appeals (“ASBCA”; “the Board”) issued two significant decisions concerning the process for determining reasonable compensation under Federal Acquisition Regulation (FAR) 31.205-6(b)(2). These decisions were J.F. Taylor, Inc., ASBCA Nos. 56105 and 56322 (Jan. 18, 2012) and Metron, Inc., ASBCA Nos. 56624, 56751 and 56752 (June 4, 2012). In both cases, the Defense Contract Audit Agency (“DCAA”) had questioned substantial amounts of compensation as being unreasonable. This conclusion was reached by following the standard procedure. Read More.

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