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

September 11, 2018 By Andrew Smith

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/

Filed Under: Contracting News Tagged With: CAS, CASB, cost accounting standards, cost and price analysis, cost principles, D-CASB, DoD, NDAA

Georgia Tech launches course on cost-price analysis for government contracts in May

February 13, 2013 By ei2admin

Starting in May 2013, The Contracting Education Academy at Georgia Tech will offer a new course focusing on the Fundamentals of Cost & Price Analysis in government contracting.

This comprehensive, two-week course begins with an in-depth review of the market research process, and provides instruction to help students understand and analyze contractor pricing strategies.

Attendees will learn to accomplish cost-volume-profit analysis, calculate contribution margin estimates, and develop cost estimating relationships in order to accomplish an effective price analysis pursuant to FAR Subpart 15.4.

After learning the basic elements of price and cost analysis, students will build and defend a pre-negotiation objective, including a minimum and maximum pricing objective with a weighted guidelines assessment. After successfully defending their pricing objectives, the students will practice face-to-face negotiations.

This course is targeted toward new hires to the contracting career field.   For government contractors, this course also provides valuable insights into the government contracting decision-making process.

Student performance is assessed by graded exams on math fundamentals and applied course material as well as an exercise for student participation and completion of negotiations.

CON 170 – Fundamentals of Cost & Price Analyis is Defense Acquisition University-equivalent training that satisfies the FAC-C and DAWIA certification programs.

For more information or to register, please visit: http://www.pe.gatech.edu/courses/con-170-fundamentals-cost-and-price-analysis

Filed Under: Georgia Tech News Tagged With: cost principles, DAU, FAR, government contract training, price analysis

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

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