Georgia Tech Procurement Assistance Center

Who pays for CMMC certification?

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Last week, DOD announced the release of CMMC Version 1.0.  CMMC Version 1.0 is a comprehensive certification process featuring 171 cybersecurity best practices to ensure that contractors secure their information systems.  The question on everyone’s mind is who is going to pay for the certification and all of the work necessary to comply.

DOD has been less than clear on how contractors are expected to pay for CMMC certification. But what is clear is that the costs associated with obtaining CMMC certification will be significant.  It is unclear whether contractors can seek reimbursement for these costs.  They may be able to claim costs as an allowable indirect cost.  We suspect that the cost of certification itself will be covered, but that the greater costs associated with becoming compliant will not be covered as a reimbursable direct cost.

Continue reading at:  Fox Rothschild

The cost to comply with DoD’s new cybersecurity requirements to be reimbursable on cost contracts

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Law360 published an article recently with the title, “DoD Official Says Cyber is an Allowable Contractor Cost.”  The article states that the U.S. Department of Defense (DoD) will allow defense contractors to treat the costs of bringing their cybersecurity programs in line with DoD requirements as an allowable cost and, therefore, reimbursable.  Specifically, at the June 14, 2019 Professional Services Council’s Federal Acquisition Conference, DoD special assistant for cybersecurity Katie Arrington said, “security is an allowable cost.”

Further, Law360 reported that in May, DoD said it was developing a “Cybersecurity Maturity Model Certification” (CMMC) program to build on the Defense Federal Acquisition Regulation Supplement regulation (DFARS § 252.204-7012(b)(2)) that requires defense contractors to implement the security controls in the National Institute of Standards and Technology’s Special Publication (NIST SP) 800-171.  The security controls are intended to protect covered defense information on nonfederal systems.  DoD said the CMMC will require defense contractors to get third-party audits of their compliance with the NIST SP 800-171 controls, down through their supply chains.

Arrington told the conference attendees that the CMMC will be developed by DoD working in conjunction with the Johns Hopkins University Applied Physics Lab and Carnegie Mellon University Software Engineering Institute.  The goal is to develop one unified standard for cybersecurity.  This standard will include five different levels of required cybersecurity protections, from a level one of “basic hygiene,” which will be cheap and straightforward enough that a small business could meet it, to level five for “state-of-the-art” protections.  Arrington said that DoD has planned 12 related industry days across the United States in July and August to work in a collaborative manner with defense contractors to improve cybersecurity practices in the CMMC plan.  Acknowledgments to Daniel Wilson and Law360 for reporting these developments.

Continue reading at:  Taft Stettinius & Hollister LLP

Federal contractors may be able to recover costs caused by the government shutdown

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The current government shutdown is now the longest in U.S. history, and many federal contractors are incurring costs as a result of shutdown-related work stoppages and delays. Luckily, many federal contracts contain clauses that provide a potential avenue for recovery of such costs. Further, there are practical steps that contractors can take to increase their chances of recovering shutdown-related costs from the government.

What contract clauses might apply?

Several Federal Acquisition Regulation (FAR) clauses, including the following ones, could provide contractors with an avenue to recover costs incurred as a result of shutdown-related delays or work stoppages:

  • FAR 52.242-14 (Suspension of Work)
  • FAR 52.242-15 (Stop Work Order)
  • FAR 52.242-17 (Government Delay of Work)
  • FAR 52.243-2 (Changes – Cost-Reimbursement)
  • FAR 52.243-3 (Changes – Time-and-Materials or Labor-Hours)

It is very important to note that these clauses generally impose very short timeframes in which a contractor must provide the government with notice and/or assert its right to an adjustment.

Keep reading this article at: https://www.jdsupra.com/legalnews/federal-contractors-may-be-able-to-53396/

Waiting for the final government audit may be too late

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In a case of first impression, a Court of Appeals has held that a government subcontractor’s claim for reimbursement of its actual indirect costs was time-barred.

Fluor Fed’l Solns. LLC v. PAE Applied Techs, LLC, No. 17-1468, 2018 WL 1768233 (4th Cir. Apr. 12, 2018) (per curiam) (unpublished).  It is the first case to directly address the interplay between the Allowable Cost and Payment Clause of the Federal Acquisition Regulation (FAR), 48 C.F.R. § 52.216-7, and a statute of limitations.  It highlights the risks government subcontractors face when they choose to wait for a Government audit rather than litigate promptly after a payment dispute arises.

This case involved a long-term subcontract and a long-delayed government audit.  In 2002, Fluor and PAE entered into a federal government subcontract that ultimately spanned a 15-year performance period. The subcontract incorporated, with minor changes, the FAR Allowable Cost and Payment Clause, 48 C.F.R. § 52.216-7, found in most cost-reimbursable federal government contracts and subcontracts. That clause requires the Government (or, in this case, the prime contractor, PAE), to pay Fluor’s “anticipated final” indirect rates in accordance with the contract terms, subject to retroactive adjustments once a government audit establishes the subcontractor’s final indirect rates applicable to the contract. 48 C.F.R. § 52.216-7(e)–7(g).

Keep reading this article at: https://www.insidegovernmentcontracts.com/2018/07/waiting-final-government-audit-may-late/

Contractor’s lackadaisical proposal preparation sinks its claim for costs

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To federal construction contractors, the true legwork may seem to begin only after the government has accepted a proposal and performance has begun. However, a recent Armed Services Board of Contract Appeals (ASBCA) decision reinforces that federal construction contractors’ work often should begin long before contract award.

In Zafer Construction Company, ASBCA No. 56769 (2017), the ASBCA rejected a construction contractor’s allegations of unilateral mistake, unconscionability, and differing site conditions (among other claims for additional costs). The problem? The contractor did not attend a government scheduled site visit, conduct an independent site visit, review technical drawings, submit any inquiries during the proposal stage, or otherwise take reasonable steps necessary to better ascertain the nature of the work prior to submitting a multimillion dollar proposal on a complex project.

By way of background, the contract in Zafer involved the U.S. Army Corps of Engineers’ procurement of renovation work at the Afghanistan National Military Hospital in Kabul, Afghanistan. In 2004, the buildings at this site had fallen into varying states of disrepair. In preparation for issuing the solicitation, the government employed an assessment team (called the Baker team) to survey the site, assess the condition of the buildings and infrastructure, and prepare a report for the government’s use in budgeting and defining the scope of work.

Keep reading this article at: http://smallgovcon.com/claims-and-appeals/contractors-lackadaisical-proposal-preparation-sinks-its-claim-for-costs/

U.S. files False Claims Act complaint against two Energy Dept. contractors performing work at Savannah River Nuclear Site

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The Justice Department (DOJ) announced on Friday (Mar. 18, 2016) that it has filed a complaint under the False Claims Act in the U.S. District Court for the District of South Carolina against two companies for allegedly overcharging the Department of Energy under a management and operations contract at the Savannah River Nuclear Site in Aiken, South Carolina.

The contractors in question are Savannah River Nuclear Solutions, LLC (SRNS) and Fluor Federal Services, Inc. (FFSI).  SRNS is a joint venture of FFSI, Newport News Nuclear Inc. and Honeywell International.

Justice Dept. seal - CopyThe Dept. of Justice (DOJ) brief alleges that the contractors, since August 2008, “knowingly included unallowable costs in inflated claims to the United States Department of Energy (DOE), while falsely representing that such costs had not been claimed under the contract.”  The costs in question include unallowable home office and bid and proposal costs as well as inflated claims.

The False Claims Act bars any person from knowingly presenting to the Government a false or fraudulent claim for payment or approval.

DOE’s Savannah River Site is a 310-square-mile site located in Aiken, Barnwell and Allendale counties, South Carolina. The Savannah River Site was constructed in the early 1950s to produce weapons-grade plutonium and tritium for use in the United States’ nuclear weapons arsenal. The Savannah River Site is managed by the DOE-Savannah River Operations Office, located in Aiken, South Carolina, whose mission is to serve the national interest by ensuring the safe, open, and cost effective clean-up and maintenance of the Site and its nuclear materials.  SRNS holds a contract with DOE to manage Site facilities.

The case is captioned United States v. Savannah River Nuclear Solutions and Fluor Federal Services, Inc., 1:16-825-JMC (D.S.C).  The claims asserted in the United States’ complaint are allegations only, and there has been no determination of liability.

A copy of the DOJ brief can be downloaded here: https://www.justice.gov/opa/file/833651/download

Source: https://www.justice.gov/opa/pr/united-states-files-suit-against-savannah-river-nuclear-solutions-llc-and-fluor-federal

 

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

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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.

 

 

Air Force wants contractors to rein in supply chain costs

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The Air Force thinks it’s paying more for its goods and services than it should and wants to put pressure on its contractors to reduce costs in their supply chain.

Previously, when the Air Force negotiated contracts, much of it went to prime contractors, but now 60 to 70 percent of that is subcontracted, said the Air Force’s Deputy Assistant Secretary for Contracting Wendy Masiello.

“So we’re spending a lot more time understanding those supplier partnerships,” said Masiello at an April 16 Air Force Association breakfast. “It’s an area of expertise that you would hope the primes are starting to develop in order to manage those costs, but there’s often less motivation to be as stringent in those relationships. It’s often more about maintaining those suppliers as long-term partners.”

Keep reading this article at: http://www.fiercegovernment.com/story/air-force-wants-contractors-rein-supply-chain-costs/2014-04-20 

How to reduce the growing number of bid protests

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With bid protests increasing by almost 50 percent since 2008, many industry observers and policymakers may be tempted to place the blame for procurement slowdown — particularly in the defense industry — squarely on the contractors. Yet to do so to the exclusion of the other key player in this equation — the Defense Department — ignores that bid protests have proliferated largely as a result of the way government does business.

It may be the case that some government contractors file frivolous protests in order to hang onto a contract they once held but subsequently lost, or in an effort to extract concessions from the government, such as the opportunity to start or continue work while the protest is resolved. However, bid protests are a game of high-stakes poker for most contractors. Protests are expensive, and protestors are prohibited from billing their protest costs against their contracts.

Even if the Government Accountability Office (GAO) sustains a protest (and awards the successful protestor its protest costs), a contractor may still need to go through the bidding process all over again, and there is no guarantee that it will win the second time around. In addition, the GAO retains the power to summarily dismiss a protest it deems frivolous, ultimately rendering any effort put into filing a protest a waste of resources. In other words, bid protests do not just slow down the government; they also slow down business for contractors.

Keep reading this article at: http://www.defenseone.com/management/2013/08/how-reduce-growing-number-bid-protests/68582/ 

How to work with government contract consultants

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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

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