CPAs and Advisors with Your Growth in Mind

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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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.

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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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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.

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DoD Inspector General Issues Two Reports on DCAA Quality Control

On August 27, 2014, the Defense Contract Audit Agency (“DCAA”) issued Memorandum for Regional Directors (MRD) 14-PAS-014(R) , captioned ”Audit Guidance on Removal of Modified GAGAS Statement in Audit Reports”. As background for this MRD, Generally Accepted Government Auditing Standards (GAGAS) require audit organizations to obtain an external peer review at least once every three years. For DCAA, the external reviews are performed by the Department of Defense’s (“DoD”) Inspector General. In August 2009, the Inspector General revoked its previous approval of DCAA’s quality control program. As a consequence, since August 2009, DCAA has been unable to state that it performed its audits in accordance with. Read More.

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Significant Proposed Changes to DFARS Business System Monitoring Requirements

On July 15, 2014, the Department of Defense (“DoD”) issued a proposed rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) on government contractor business system requirements. The comment period for the proposed change ended on September 15, 2014. The proposed rule requires that contractors begin annual self-evaluations and reporting on their accounting system, material management and accounting system (MMAS), and estimating system, for those contractors required to maintain approved systems in accordance with the DFARS business system requirements. In addition, a Certified Public Accountant (CPA) audit is required to be performed by an independent firm of the contractor’s. Read More.

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