ESOPs Gain in Popularity
By: John Carpenter , Principal Many private company business owners are taking a closer look at Employee Stock Option Plans (“ESOPs”) as a tool for either an exit strategy or a way to “take money off the table” through a sale of a portion of their company stock holdings. ESOPs were a less popular diversification strategy during the 2000s when government spending was on the rise, especially within the Department of Defense (“DoD”) and many companies could sell for attractive multiples with large, upfront cash components. The combination of flat to declining DoD budgets leading to less attractive market multiples, and capital. Read More.
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.
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.
Topics: Allowability, Defense Contract Audit Agency "DCAA", Defense Federal Acquisition Regulation Supplement "DFARS", Defense Technical Information Center "DTIC", Department of Defense "DoD", Federal Register, Independent Research and Development "IR&D"
Proposed FAR Amendment Would Change Confidentiality Agreements
The Department of Defense, General Services Administration, and National Aeronautics & Space Administration have proposed a rule to amend the Federal Acquisition Regulation (FAR) to implement a section of the Consolidated and Further Continuing Appropriations Act of 2015, which would prohibit the use of funds, appropriated or otherwise made available, for a contract with an entity that requires employees or subcontractors to sign an internal confidentiality agreement that restricts such employees or subcontractors from lawfully reporting waste, fraud, or abuse to a designated government representative authorized to receive such information. The proposed rule would add a new FAR section at. Read More.
Topics: Consolidated and Further Continuing Appropriations Act, Department of Defense "DoD", Federal Acquisition Regulation "FAR", General Services Administration "GSA", National Aeronautics & Space Administration "NASA"
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.
Topics: Cost Reimbursement Contracts, Defense Contract Audit Agency "DCAA", Defense Federal Acquisition Regulation Supplement "DFARS", Defense Finance and Accounting Service "DFAS", Department of Defense "DoD", Memoranda for Regional Directors "MRDs"
Cybersecurity Requirements: Another Challenge for Government Contractors
With all the recent data security breaches, it is not surprising that the U.S. Government is starting to crack down on cybersecurity for their government contractors. Approaches the U.S. Government are taking include issuing laws, regulations and standards that require contractors to take security measures for safeguarding their data. On July 7, 2014, President Obama signed into law the Intelligence Authorization Act for Fiscal Year 2014 (Public Law 113-126). This law requires intelligence contractors with security clearances to promptly report network and information system breaches, and provide government investigators access to the contractors’ systems that have been comprised. Additionally, the. Read More.