FAQs on Revised Treatment of Incomplete or Inadequate Prime Contractor Cost
By: Eric Poppe , Senior Manager On January 15, 2019, we posted a blog titled “ Revised Treatment of Incomplete or Inadequate Prime Contractor Cost ”. The blog discussed the new guidance detailed in the Memorandum for Regional Directors (“MRD”) issued on November 27, 2018. Effective immediately, Defense Contract Audit Agency (“DCAA”) auditors must perform ‘alternative procedures’ on subcontractor costs included in proposals when the cost or pricing analysis completed by the prime contractor has not been completed or deemed inadequate. As we outlined in the blog, those alternative procedures could include: Creating a decrement based on purchase order history; Creating a decrement based on other relevant information (e.g., comparisons of. Read More.
2019 NDAA Further Restricts Usage of LPTA Procurements
Almost all companies doing business with the government have been impacted at one time or another by the usage of the often-maligned “lowest price technically acceptable” (“LPTA”) procurement process. LPTA procurements were implemented during a period of constrained federal budgets and were designed to allow procurement officials to award on low price among those bidders who were all deemed technically acceptable. Many contractors have complained, and often filed protests, about the improper usage of LPTA in programs where technical innovation is important and where contractors have sacrificed program quality by hiring the lowest priced talent available. Congress ordered changes in. Read More.
DCAA Revises Guidance on Incurred Subcontract Cost Audits
By: Curt Smith , Manager In Memorandum for Regional Directors (“MRD”) 19-PIC-001(R), dated January 11, 2019, the Defense Contract Audit Agency (“DCAA”) published audit guidance revising its policies and procedures for audits of incurred subcontract costs. In summary, prime contractor auditors will no longer request subcontract assist audits for the life of the subcontract. Rather, such auditors will evaluate risk every year and request subcontract assist audits as needed. DCAA is revising Section 6-802.5 of the Contract Audit Manual (“CAM”) and the 10100 Post Year-End Incurred Cost Audit Program to reflect the new guidance. As an initial matter, contractors and subcontractors need. Read More.
DCAA & Other Agency Hot Buttons 2019
By: Curt Smith , Manager and John Ford , Senior Consultant Many contractors deal only with the Defense Contract Audit Agency (“DCAA”) on audit matters. For several years, we have presented a webinar on the latest developments concerning DCAA. 2018 was a slow year for DCAA with few new matters arising. However, a substantial number of contractors do business with other agencies who conduct contract audits. Further, many contractors also receive grants or cooperative agreements from various agencies that have audit requirements in them. In January 2019, Cherry Bekaert presented our annual “Hot Buttons” webinar where we addressed issues with audits by other agencies. Read More.
Update to Limitations on Subcontracting
By: John Ford , Senior Consultant For many years, small business contractors performing on set aside contracts were limited in the amount of work that could be subcontracted. This limitation was generally, and misleadingly, referred to as the 50 percent rule. Under this rule, the amount contractors could subcontract was measured in terms of a percentage of the costs incurred for contract performance usually tied to labor costs. Moreover, the measurement of the amount of work that could be subcontracted depended on whether the contract called for services, supplies, construction by general contractors or construction by special trades. Further, the subcontracts to which. Read More.
Small Business Administration Threshold Update
On December 19, 2018, we posted a blog regarding the Small Business Runway Extension Act of 2018 and the impact on the revenue test established by 13 CFR §121.104. As a refresher, the Small Business Runway Extension Act amended the method to calculate the average annual gross receipts from three years to a five-year average when determining a contractor’s small business status. Subsequently, on December 20, 2018, the Small Business Administration (“SBA”) offered some clarifying guidance on the effective date of the new amendment to section 3(a)(2)(C)(ii)(II) of the Small Business Act, based on inquiries if the Small Business Runway Extension Act is effective. Read More.