Georgia Tech Procurement Assistance Center

All is not forgiven: PPP forgiveness and credits

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On March 23, 2021, The House Small Business, Subcommittee on Contracting and Infrastructure held a remote hearing titled:  “The Interaction Between the Paycheck Protection Program and Federal Acquisition Regulations:  What It Means for Government Contractors.”  The hearing focused specifically on the interplay between Paycheck Protection Program (PPP) loan forgiveness and Federal Acquisition Regulation (FAR) 31.201-5 “Credits,” and how that interplay impacts federal contractors that perform cost-type contracts.  This meeting highlights an area where contractors have, at best, incomplete guidance.  We will continue tracking these issues as new guidance is issued.

Continue reading at:  Government Contracts Insights

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

COFC issues decision on Cost Accounting Standards and ‘offsetting’

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The Boeing Company v. United States, Civil No. 17-1969C (May 29, 2019) reveals the Court of Federal Claims’ (COFC) interpretation of the Cost Accounting Standards (CAS) statute as primarily benefiting the government, and directs contractors challenging the Federal Acquisition Regulation (FAR) 30.606(a)(3)(ii) prohibition on offsetting the impact of simultaneous cost accounting practice changes to raise those challenges in a pre-award protest or risk waiver.  Importantly, the court’s decision could have broad implications, requiring contractors to protest the applicability and interpretation of any extra-contractual FAR provisions—not just those involving the CAS statute—that expound upon a FAR Part 52 contract clause.

Adopting a novel theory rooted in the US Constitution, The Boeing Company (Boeing) filed an action under the Contract Disputes Act (CDA) alleging that the FAR 30.606 offset prohibition is an “illegal exaction” in violation of the CAS statute, which specifically prohibits windfalls to the government resulting from changes to a contractor’s cost accounting practices.  Boeing also claimed that FAR 30.606 was “extra-contractual” and therefore, should not preclude Boeing from offsetting changes that increase costs to the government from those that decrease costs.  The COFC dismissed Boeing’s constitutional claim for lack of subject matter jurisdiction and concluded that Boeing had effectively waived its contract claims upon failing to raise them in a pre-award protest or during negotiations with the government.

Continue reading at:  Arnold & Porter

Defense contractors to face new cost accounting oversight with creation of Defense Cost Accounting Standards Board

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Section 820 of the National Defense Authorization Act for Fiscal Year 2017 (NDAA) establishes a new Defense Cost Accounting Standards Board (D-CASB) to oversee the application of the cost accounting standards (CAS) to defense contracts.

The amendments made by Section 820 shall take effect on October 1, 2018.

Originally issued between 1970 and 1980 by the Cost Accounting Standards Board (CASB), the CAS are a series of accounting standards “designed to achieve uniformity and consistency” in the measurement of costs, the assignment of costs to cost accounting periods, and the allocation of costs to government contracts. 48 C.F.R. § 9901.302(b).

When first proposing what is now Section 820 of the NDAA, the Senate Armed Services Committee expressed its concern that the current CAS “favor incumbent defense contractors and limit competition by serving as a barrier to participation by non-traditional, small business, and commercial contractors.”

The Committee also viewed the CASB with disapproval, noting how the CASB does not currently have a quorum and has not met in over three years. Thus, the Committee doubted that “any credible reform will emanate out of [the CASB] in the future,” and opted to favor instead a new D-CASB that “will be better suited to meet national security needs.”

Keep reading this article at: https://www.governmentcontractslawblog.com/2017/04/articles/department-of-defense/cost-accounting-standards-board/

GSA seeks industry feedback on Civilian Contract Audit Services Ordering Guide

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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

NDAA makes significant changes to cost accounting standards

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Section 820 of the National Defense Authorization Act for Fiscal Year 2017, Pub. L. No. 114-238, 130 Stat. 2000 (NDAA), makes three significant changes to the federal government’s future use of cost accounting standards (CAS).

  • First, it empowers contractors to avoid Defense Contract Audit Agency (DCAA) audits by employing private auditors to audit their rates.
  • Next, it creates a new and independent Defense Cost Accounting Standards (DCAS) Board to oversee cost accounting standards across the Department of Defense (DoD).
  • Finally, it provides direction to the federal government’s existing CAS Board.

For details, keep reading this article at: https://www.insidegovernmentcontracts.com/2017/03/2017-ndaas-impact-on-audits-and-cost-accounting-standards/

 

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