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DCAA Issues Guidance on Dealing with Delinquent Final Indirect Cost Rate Proposals

On February 3, 2014, the Defense Contract Audit Agency (“DCAA”) issued Memorandum for Regional Directors (MRD) 14-PPD-002(R), entitled, Treatment of Delinquent Final Indirect Rate Proposals. As indicated by the title, the guidance addresses steps DCAA and the Defense Contract Management Agency (“DCMA”) will take when a contractor does not submit its final indirect cost rate proposal on time. Before discussing the MRD, some background information on submission of final indirect cost rate proposals is in order. Contrary to the belief of some DCAA auditors, contractors do not have an inherent duty to establish final indirect cost rates. Instead, contractors are. Read More.

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DCAA Issues new Guidance on Establishment of Provisional Billing Rates

On June 27, 2014, the Defense Contract Audit Agency (“DCAA”) issued Memorandum for Regional Directors (“MRD”) 14-PPS-012(R) Guidance on Establishing Provisional Billing Rates . The new guidance is effective October 1, 2014, but early implementation is encouraged. This new guidance should help to ease issues that have arisen between DCAA and contractors regarding a contractor’s obligation to submit a proposal to establish billing rates. In the past, some of our clients have had DCAA auditors cite them for having deficient accounting systems because the contractor did not submit a “timely” proposal to establish billing rates. This was inappropriate because there is no specific requirement in the FAR for a contractor to submit. Read More.

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Changes to ALL Compensation for Government Contractors

As part of the 2013 Bipartisan Budget Act, Congress reduced the contractor and subcontractor compensation cap from $952,308 to $487,000, a 49 percent reduction. The cap will be adjusted annually to reflect the change in the Employment Cost Index for all workers as calculated by the Bureau of Labor Statistics. As always, contractors can pay whatever amounts they deem appropriate, but the government will only reimburse (at the most) to the cap. Previously, Congress, in the 2012 National Defense Authorization Act, applied the ceiling on reimbursable pay to all Department of Defense (“DoD”), Coast Guard, and National Aeronautics and Space. Read More.

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New DoD Requirement to Perform its own Price Reasonableness Determination

On March 13th of this year, the Office of the Under Secretary of Defense for Acquisition Technology and Logistics issued a memorandum directing contracting officers to comply with a deviation from the Federal Acquisition Regulation (“FAR”) 8.404(d). The class deviation is applicable to Department of Defense (“DoD”) entities buying off Schedule contracts and remains in effect until the language is incorporated into the Defense Federal Acquisition Regulation Supplement. This deviation provides that “GSA has determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, to be fair and reasonable for the purpose of establishing. Read More.

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Defense Contract Audit Agency Issues Guidance on Professional and Consulting Costs

The Defense Contract Audit Agency (“DCAA”) recently released a Memorandum for Regional Directors entitled, “ Audit Alert on Professional and Consultant Service Costs (FAR 31.205-33) and Purchased Labor ”. The intent of the memorandum is to ensure that auditors are testing the transaction based on the nature of the claimed cost, and not on the account nomenclature in which the contractor recorded the cost. Federal Acquisition Regulation (“FAR”) 31.205-33(a) defines professional and consulting services costs as services rendered by persons who are members of a particular profession, or possess a special skill, and who are not officers or employees of the contractor. Examples include those services acquired by contractors to enhance their legal,. Read More.

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The Implied Covenant of Good Faith and Fair Dealing

In this era of sequestration, some government contracting offices are engaging in practices regarding contractors that the contractors believe are unfair or inconsistent with the terms of their contracts. Contractors need to know what the rules are in regard to the government’s duty to treat them fairly, and what recourse contractors have if the government does not meet that duty. However, keep in mind that the following discussion is not intended to and does not constitute legal advice. Instead, this is intended to provide you with general knowledge concerning the rules of federal contracting. The government’s obligation to treat contractors. Read More.

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