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Renewed focus on contractor business system reviews

April 17, 2019 By Andrew Smith

According to a recent U.S. Government Accountability Office (GAO) report, the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) have taken certain steps to improve the contractor business system (CBS) review process and are forecasting that CBS reviews will increase significantly over the next four years. Contractor business systems include a contractor’s accounting, earned value management, estimating, purchasing, material management, and property management systems.

These systems require contractors to maintain internal controls that, as GAO noted, “act as the first line of defense against fraud, waste and abuse of federal funding.” Given their importance, the renewed focus on ensuring CBS reviews are conducted in a timely and consistent manner is not surprising, and contractors should prepare for a new wave of audit activity.

Past Challenges to Completing CBS Reviews

In its report, GAO identified persistent challenges that have prevented DCAA and DCMA from performing consistent and timely CBS reviews. One key factor for DCAA is its focus on eliminating the backlog of incurred cost audits, which determine whether contractor costs are allowable prior to closing out the contract. GAO found that as a result of prioritizing incurred cost audits, Contracting Officers maintained CBS determinations as adequate even though the systems had not been audited in many years. GAO further found that lacking a mechanism to track CBS audits, DCMA and DCAA did not always comply with requirements to report CBS deficiencies or did not report the deficiencies within required timeframes.

Keep reading this article at: https://governmentcontractsnavigator.com/2019/03/21/renewed-focus-on-contractor-business-system-reviews/

Filed Under: Contracting Tips Tagged With: abuse, accounting, CBS, contractor business system, cost estimating, DCAA, DCMA, earned value, fraud, GAO, internal controls, property management, purchasing system, waste

Pentagon auditors advised to better monitor contractor business systems

February 27, 2019 By Andrew Smith

The Defense Department’s management and auditing sub-agencies need to clarify their roles and improve the timeliness of their examinations of contractor accounting, estimating and purchasing systems, a watchdog found.

“DoD currently lacks a mechanism based on relevant and reliable information, such as the number of [contractor business system] reviews that are outstanding, the risk level assigned to those systems, and the resources available to conduct such reviews,” the Government Accountability Office wrote in a report released on February 8th.

Citing directives from Congress over the past decade, GAO reviewed data from the Defense Contract Management Agency and the Defense Contract Audit Agency and found that the DCAA, for example, conducted few business system audits in the past six years, due, in part, to the need for it to reduce its backlog on completing incurred cost audits.

Keep reading this article at: https://www.govexec.com/defense/2019/02/pentagon-auditors-advised-better-monitor-contractor-business-systems/154758/

Filed Under: Contracting News Tagged With: accounting, auditors, business systems, cost estimating, DCAA, DoD, federal contracting, federal contractors, federal contracts, GAO, Pentagon, purchasing system

GSA seeks industry feedback on Civilian Contract Audit Services Ordering Guide

October 13, 2017 By Andrew Smith

The federal government’s Civilian Contract Audit Services Working Group, made up of representatives from more than 13 federal agencies and co-led by the General Services Administration (GSA) and the Federal Aviation Administration, is seeking industry feedback on a Civilian Contract Audit Services Ordering Guide. The Ordering Guide is the result of a cross-agency collaboration to explore options to help agencies efficiently and effectively meet their contract audit requirements.

The Ordering Guide sets forth best practices for issuing task orders against the GSA Multiple Award Schedules for professional services to fill agencies’ contract audit requirements and  includes guidance on:

  • Contract direct costs,
  • Incurred Cost Proposal for Final Overhead and/or Billing Rates,
  • Accounting System Reviews,
  • Cost Accounting Standards,
  • Forward Pricing Rate Agreements,
  • Invoice/voucher review, and
  • Others, as necessary

The guide supports the Professional Services Category initiative identified as a critical component to meeting current and future contract audit requirements, and ultimately reducing the opportunity for contract duplication.

It is important to note that the DCAA heretofore has been, and in many cases continues to be, the primary source for the conduct of contract audits for cost reimbursable contracts. However, there are circumstances (i.e., work stoppages, capacity, cognizance, etc.) that may require agencies to procure these services from commercial sources. GSA’s Professional Services Schedule addresses that need.

The draft Ordering Guide is available on FedBizOpps (FBO) under Request for Information (RFI) number 1246131. Please provide comments as instructed on FBO.  Responses in Portable Document Format (PDF) compatible format are due no later than ​5:00 PM PST, October 27, 2017.  Responses must be submitted via e-mail to ccas@gsa.gov. Proprietary information, if any, should be minimized and MUST BE CLEARLY MARKED. Please be advised that all submissions become Government property and will not be returned.

The information provided will be utilized for preliminary planning purposes by the Government to facilitate the decision making process and will not be disclosed outside of the Government. All data received that is marked or designated as corporate or proprietary information will be fully protected from release outside the Government.

For more information contact: ccas@gsa.gov

Filed Under: Contracting News Tagged With: accounting, best practices, civilian contract audits, contract audit, cost accounting standards, DCAA, GSA, GSA Schedule, MAS, multiple award schedule, ordering guide, Professional Services Schedule

Defense Contract Audit Agency training seminar to be held in Warner Robins on Sept. 16

September 2, 2015 By Andrew Smith

DCAA_EmblemAll clients of the Georgia Tech Procurement Assistance Center (GTPAC) are invited to attend a free training seminar being conducted by the Defense Contract Audit Agency (DCAA).

This training event is being held at Central Georgia Technical College, Warner Robins Campus, Auditorium, Building A, 80 Cohen Walker Drive, Warner Robins, GA 31088.

The training will be conducted from 8:30 a.m. to 12:30 p.m. and is sponsored by the Georgia Tech Procurement Assistance Center (GTPAC).

Cost:  There is no fee to attend. but you must register in advance to reserve a seat.

Registration: Please visit http://gtpac.ecenterdirect.com/ConferenceDetail.action?ID=8034 and click on the SIGN UP button to register for this event.

Agenda
8:30 to 9:00 a.m.
Training Part 1 – Introduction & DCAA Overview (30 Mins)  This training presentation will provide an overview of the Defense Contract Audit Agency including its responsibilities and duties.  The types of DCAA audits that can be performed throughout the various phases of a contract will be discussed.  Finally, participants will learn about DCAA Internet resources and available presentations.
9:00 to 11:00 a.m.
Training Part 2 – Accounting System Requirements (2 Hrs)  This training presentation will provide an overview of the pre-award accounting system design review process.  Participants will learn what occurs prior to the award of a cost-type contract, what is contained in the SF 1408, and what the applicable DFARS regulations say with regard to what comprises an acceptable accounting system.  Total contract costs, including direct costs and indirect costs will be discussed.  Examples of typically seen indirect rates will be provided along with a discussion of selecting a proper allocation base.  Participants will learn about the FAR Part 31 clauses that cover allowability, allocability, and reasonableness as well as concepts such as Contract Terms, Accounting for Contract Costs, Labor System, Timekeeping, Unallowable Costs, Cost by Contract Line Item, Billings, Cost Accounting Information, and Management Reviews/Internal Audits along with the applicable DFARS clauses.  Finally, some common deficiencies will be discussed
11:00 to 11:15 a.m.
Break (15 minutes)
11:15 to 11:45 a.m.
Training Part 3 – Provisional Billing (30 minutes)  This training presentation will provide an overview of provisional billing rates (PBR).  The purpose of PBR’s will be discussed along with the procedures for establishing the rates.  Participants will learn when PBR’s should be submitted and the types of information that should be included in the PBR proposal.  The importance of billing rate monitoring will be emphasized along with common deficiencies that can occur when utilizing provisional rates.  The presentation will also cover example procedures that DCAA may perform when reviewing the rates.
11:45 a.m. to 12:15 p.m.
Training Part 4- Public Vouchers (30 minutes)  This training presentation will provide an overview of Public Vouchers.  Contractor responsibilities for voucher preparation will be discussed along with the criteria for an adequate billing system.  Participants will learn about the Department of Defense’s Wide Area Workflow (WAWF) electronic payment system and resources that are available to assist with utilizing the system.  Additionally, common deficiencies found during DCAA voucher reviews will be discussed.
12:15 to 12:30 p.m.
Closing, Q & A (15 minutes)

Speakers include Ms. Jonnette Porter, DCAA Financial Liaison Advisor, Mr. David Van Dingenen, DCAA Supervisory Auditor.

  • Ms. Jonnette Porter is a Financial Liaison Advisor (FLA) under the Audit Liaison Division (OAL) with the Defense Contract Audit Agency (DCAA) and is located at Robins Air Force Base in Warner Robins, GA. She is one of six FLAs on the Air Force Team.  Ms. Porter advises Robins’ procurement personnel on accounting and financial matters in areas of DCAA responsibility.  This includes advising procurement personnel on types of DCAA audit services and facilitating audit services with cognizant Field Audit Offices (FAOs).
  • Mr. David Van Dingenen is a FAO Supervisory Auditor under the DCAA Atlanta Branch Office, located in Smyrna, Georgia.  In this capacity, he serves as the supervisory auditor responsible for the supervision of a team of professional auditors and the audit cognizance of multiple contractors in the State of Georgia in order to meet agency mission requirements.

 

 

Filed Under: GTPAC News Tagged With: accounting, allocability, allowability, allowable costs, audit, DCAA, government contract training, unallowable costs

How to work with government contract consultants

November 17, 2010 By ei2admin

In tough economic times, competition for government contracts heats up. Here’s how working with a consultant can give you an advantage to land a huge deal.

What makes a good client? A firm that’s established, has deep pockets, and will be around for a long time, right?

Right. So it’s hard to argue—regardless of your personal politics—that the federal government isn’t one of the biggest (and best) potential clients for your business. For many, the federal government isn’t just a source for political debate or theoretical discourse—it’s a significant source of income.

“As you know, federal government is one of the few potential clients that are spending money,” says Bill Lennett, the CEO of Government Contract Associates, a government-contract consulting firm based in California. “So as you can imagine, everybody wants to do business with the government.”

Dig Deeper: Two Ways to Win More Federal Contracts

Working With Government Contract Consultants: Why Work With a Consultant?

Unfortunately, working for the federal government is not always that simple. With an aggressive audit system, many small businesses seek out government contract consultants to aid in the federal procurement process. These consultants assist in registering a small business as a contractor, help it write the proposal, and most of all, assist with the accounting processes that are vital to winning bids. While this guide is meant to give you some insight into what government contract consultants can offer, you should know that there are alternatives, too.

If you’re not interested in working with a consultant or you don’t have the cash on hand, you can visit a Procurement Technical Assistance Center (PTAC), which are located throughout the country. The centers help businesses market their services or products to the government, by matching a firm’s strengths and offers with procurement opportunities.

The first step to obtaining a federal contract, according to Dean Koppel, the Assistant Director for Policy and Research at the U.S. Small Business Administration, is to consult the local chapter of the Small Business Administrator.  “Any small business that wants to do business with the federal government either as a prime or subcontractor should look at the SBA contracting offices,” he says. The office will supply a business with information to get you started, as well as give  more information about current solicitations for contracts.  

Dig Deeper: 4 Tips for Bidding on Your First Government Contract

Working With Government Contract Consultants: Starting Out

Last year, the federal government purchased nearly $100 billion worth of goods and services from small businesses through prime contracting procurements, according to the Small Business Administration. That’s nearly 25 percent of the $400 billion overall federal marketplace. Thousands of small businesses across the country have been winning contracts for years. 

It’s especially a great time to be a technology or service company. “The trends [of federal procurement] have been towards services rather than hardware,” says Mike Steen, a senior managing consultant at Beason & Nalley, a consulting group in Huntsville, Alabama, that specializes in government contract consulting. “The federal government has really flip-flopped in terms of what they’re buying. They’re not buying airplanes as much as they’re buying services, and IT fits into that very heavily.”

Before you hire a consultant, though, to become a federal contractor, you’ll need to register your firm in the Central Contractor Registration (CCR) database. While the government contract consultant can assist you in this process, it’s easy enough to do on your own. The CCR is a portal that gives businesses a chance to market their goods and services to the federal government.

Then, you must renew your registration every 12 months from the date you initially registered. An invalid registration will diminish your chances to receive contract awards or payments, so it’s important to stay up to date.

Dig Deeper: How to Become a Government Contractor

Working With Government Contract Consultants: Accounting, Costs, Proposals

  • Accounting:

When you’re doing business with the federal government you have to submit proposals and invoice the government using adequate accounting practices, says Linnett: “My area of specialty is a knowledge of specific accounting requirements, and helping contractors prepare proposals and make sure their accountings proposals are consistent with those requirements.”

Having what the government calls ‘adequate accounting’ practices is essential. Many small businesses have accounting methods that are outdated or non-existent. This won’t fly with the federal government. “A company needs to have an accounting system that’s operational,” Steen says. “It can’t be sitting in a box somewhere on a shelf that’ll be implemented if they get the contract.” In other words, you have to be able to prove to the government that your accounting practices are consistent with general ledger accounting.

“It becomes very difficult to get government contracts where billing and proposals are based on costs,” says Linnett. “So if they can show the government that ‘hey our accounting practices are adequate rather than inadequate, that gives them a significant competitive advantage over most companies that don’t. That’s when they contact somebody like me to say ‘Hey, help us make sure that our accounting practices are considered adequate.'”

In general, a consultant will review your practices and recommend certain changes to make sure you get positive feedback from your audit.

  • Costs:

What can you charge to the government? What can’t you charge? These are the questions you’ll be working with a consultant to determine. The government puts forth certain requirements that distinguish between “allowable” and “unallowable” costs in your proposal. If you try to get reimbursed for unallowable costs, it could cost you the job, or you could face penalty charges or interest.

Categorically, they’re called ‘cost principles,’ says Steen. “Those cost principles take selected elements of cost such as advertising and interest expense, etc., and tells the government contractor which is allowed,” Steen says. Essentially, it’s a government regulation that defines unallowable costs.

So for example, a consultant will help a business distinguish between direct and indirect costs, remove any unallowable costs, implement processes for compensation and labor charges, and analyze even the small details on a financial statements, like uncompensated overtime.

You’re allowed to charge the government both direct and indirect costs, says Linnet, but there are rules to follow. This is where a consultant like Linnnett might be able to give your company a competitive advantage. “My ability is to be able to structure the way they charge indirect costs to be consistent with their pricing strategy,” he says. “If they’re a sole source and there’s not a lot of competition for their services, they may want to maximize the amount of costs. More often, they’re in a competitive market and so they want to minimize costs charged to the government but still be consistent with the rules.”

  • Proposals:

First, you have to determine the style or the format, says Robert Horejsh, a government contract consultant and owner of Federal Contract Consultants, LLC, which is based in Wisconsin. “Just about every contract officer has a little different style. Sometimes they tell you exactly what they want and you have to follow their outline.” Other times, there are no guidelines at all.

The government uses the proposals to filter out a lot of potential contractors, Horejsh notes. “If they get something that doesn’t look quite right, they might throw it away. I have heard stories of contract officers throwing away proposals because of an unwritten rule that proposals are not supposed to be stapled.”

Dig Deeper: Winning a Government Contract

How to Work with Government Contract Consultants: The value of patience

Government contracting is not going to happen over night, says Jorejsh. “I tell my clients that I’m not sure if it will take three weeks, three months, or three years,” he says. But the value of consultant is clear: They are working on your behalf to ensure you have the best opportunity to grab a lucrative federal contract. “A consultant hangs in there and looks at what your chances are of actually getting the contract,” he says.

Dig Deeper: Big Corp’s Snatch Small-Business Contracts

— By Eric Markowitz | Nov 12, 2010 – Inc. magazine – Copyright © 2010 Mansueto Ventures LLC. All rights reserved. Inc.com, 7 World Trade Center, New York, NY 10007-2195.

Filed Under: Contracting Tips Tagged With: accounting, allowable costs, CCR, cost principles, direct and indirect costs, government contracting, pricing, PTAC, SBA, unallowable costs

Pentagon audit: Boeing violates federal account rules, may lose $271 million in government payments

August 17, 2010 By ei2admin

Boeing should lose as much as $271 million in government payments for satellite launch services because the defense contractor violated federal accounting rules, the Pentagon’s audit agency said.

The Defense Contract Audit Agency, in a July 23 report, said the Pentagon should require Boeing to reimburse $72 million that was previously paid, agency director Patrick Fitzgerald said in an e-mail statement. Fitzgerald said the Defense Contract Management Agency, which monitors contractor performance, also should notify the joint Boeing-Lockheed Martin United Launch Alliance that the government won’t pay another $199 million in “unallowable” pending support costs.

United Launch Alliance builds Atlas and Delta rockets in Decatur for defense and commercial customers. Boeing’s Delta IV and Lockheed Martin’s Atlas V rockets are the primary methods for launching U.S. military satellites.

Boeing was notified of the finding on July 28 and doesn’t agree, a company spokesman said. The auditors reviewed whether Chicago-based Boeing improperly billed the Air Force in a 2006-2008 contract for labor, management, quality control and support costs that had been incurred between 1998 and 2006 in the Delta IV rocket program.

Boeing was “in non-compliance” with federal accounting standards that require billings to take place during the year when the costs were incurred, Fitzgerald said.

Boeing spokesman Joseph Tedino, in an e-mail statement, said “the costs at issue were legitimate costs of the Delta program,” which the government acknowledged by agreeing in 2006 to pay for those items. “Boeing believes its 2006 agreement was appropriate, and that the United Launch Alliance’s recovery of the costs is fully compliant” with government accounting standards, Tedino said.

Debra Bingham, a spokeswoman for the Defense Contract Management Agency, which is reviewing the audit recommendations, said that the agency’s Boeing manager in Huntington Beach, Calif., plans to render a final decision in November.

The official will review the audit agency’s analysis and recommendation, as well as Boeing’s rebuttal, she said. Boeing and Bethesda, Md.-based Lockheed Martin, the largest defense contractor, established the United Launch Alliance in December 2006 to consolidate the military launch business.

The audit was undertaken after the Government Accountability Office and the Pentagon’s inspector general last year uncovered problems with 14 audits of various programs and 62 pricing agreements at government locations in California. In Boeing’s case, a regional manager for the audit agency approved “a flawed audit that could have allowed Boeing to recover” the $271 million, Inspector General Gordon Heddell said in Sept. 23 testimony to Congress.

The regional manager, who wasn’t identified by the inspector general, overturned a draft audit conclusion that Boeing shouldn’t be paid anything because the company was in “potential violation of accounting standards,” Heddell said.

— by Tony Capaccio, Bloomberg News, Aug. 4, 2010

Filed Under: Contracting News Tagged With: accounting, Air Force, DCMA, DoD, federal contracting, GAO

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