Georgia Tech Procurement Assistance Center

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 LLC v. PAE Applied Techs, LLC, No. 17-1468, 2018 WL 1768233 (4th Cir. Apr. 12, 2018) (per curiam) (unpublished).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 agrees to pay half-million dollars to settle False Claims Act allegations relating to unallowable costs on Army contract

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Integral Consulting Services, Inc. has agreed to pay the United States $505,838 to settle False Claims Act allegations that it submitted false claims to the government by inflating certain indirect cost rates in connection with work performed on a Department of the Army contract.

Integral Consulting Services, Inc. (ICS) is a Maryland-based company that provides IT solutions to federal government agencies and commercial organizations.  The services ICS provides range from biometric technologies to enterprise IT management and development of software applications.  In 2012, ICS was awarded an Army contract, W911W5-12-D-0002, under which it was required to provide the Army’s National Ground Intelligence Center’s Biometric Intelligence Program with identity intelligence analysis support.

The civil settlement agreement resolves allegations that from on or about May 1, 2012 through June 27, 2014, ICS took costs and expenses it and its employees incurred in connection with litigation arising out of a teaming agreement with another contracting company and included the costs and expenses in the General and Administration (G&A) indirect cost pool that was spread amongst ICS’s various government contracts, including Army Contract Number W911W5-12-D-0002, and submitted to the United States government.  The inclusion of such costs had the effect of inflating the claims paid by the Army to ICS.

The civil settlement resolves United States ex rel. Amit Dalal v. Integral Consulting Services, Inc., Civ. No. GJH-14-2529 (D. Md.), a lawsuit filed by a relator under the whistleblower provision of the False Claims Act.  The Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the recovery by the United States. As part of the civil resolution, the relator will receive approximately $92,315.

Source: https://www.justice.gov/usao-md/pr/defense-contractor-agrees-pay-over-half-million-dollars-settle-false-claims-act

 

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.

 

 

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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