Keyperson Insurance:

Allowable?
 

INQUIRY:

Is Keyman insurance unallowable?

RESPONSE: This question has been asked of me several times recently, even by larger firms.  My response:  It Depends! 

FAR 31.205-19(e)(v) states - "Costs of insurance on the lives of officers, partners, proprietors, [Typically those considered as the Key man or to be politically correct Key Person], or employees are allowable only to the extent that the insurance represents additional compensation"  (FAR 31.205-6 provides more detail on Compensation). 

 Typically,  the Key Person of a company does not have to pay for the insurance and it IS NOT added as additional compensation to them.  This is so they, nor the company, have to pay taxes on the Key Person insurance.  Therefore, in this case, it would not be allowable according to FAR 31.205-19(e)(v). 

Alternately, if the cost of the Key Person insurance IS added as additional compensation, then it would be allowable according to this same clause.

Women Owned Small Businesses

SBA ruling is now final on set-asides

Someone in your firm should be on top of this!

follow this link to SBA site to read full notice

Facility Security Officer (FSO) - Overhead or G&A

 

INQUIRY:

FSO (Facility Security Officer) - Should this cost be charged to Overhead or G&A? 

RESPONSE: In my opinion, I would assign FSO costs to Overhead.  Generally, those costs that benefit more than contract and cannot, or are not, charged direct to contracts are considered overhead.  I would not typically assign FSO to G&A because the FSO is required only because of contract requirements. 

Now, if you have other general security type costs in place for your company as a whole, say for instance, ADT/Brinks/etc. or a security officer for the general business, I would assign that costs either entirely to G&A or allocate a portion to Overhead and G&A based on a ration of labor hours or labor dollars. 

FYI: Document under what circumstances you identity the costs to Overhead, G&A or Both in your Policy Manual.  Date the changed or new policy and keep a copy of the old policy for reference purposes.  Remember, your Policy Manual is a dynamic document and therefore will continue to change as your company evolves. 

New Business Development

Real Concerns for the "Truly Small Business"
 

Marketing and New Business Development!  So necessary to survival and growth yet such an illusive, confusing and oft-times expensive function.  And we all know it.  My thoughts and plans on this issue follow:

Without effective marketing and new business development, especially in government contracting, a firm cannot fairly compete in the marketplace.

In my opinion, there continues to be "Information Overload" for the very small and medium small firms.  So many resources, so many government agency sites, so many basic training options depicting the same information.  Am I not right?

To hire an experienced New Business developer, on an employee or consulting basis, is costly.  Yet you must move in one of those directions eventually.

Let's face it, most of the time, it still matters who you know and what resources (money) you have to put toward this function.  And how do we as small players get to know the right people or get access to the tools the growing and large firms do?

You are my colleagues, and over the years this has been an issue that I constantly sought to assist many of you, where I could, offering my extensive "real life" experiences as it pertains to marketing.

From a cost and pricing aspect, I have asked, and continue to ask, that everyone include a projected cost for "New Business Development" in their G&A or Overhead budgets so the cost would be reflected in any bids and proposals that you win.

I have been approached by marketing firms and individuals offering their services but I have yet to consider any to offer for our members consideration.  Until now.

I have been in discussions with a firm that has been around for more than 30 years.  I am looking to get realistic information on what they can offer and if the service they offer can "really" help the truly small business (you, my colleagues).  No Hype, but Results. 

For now, what I can again ask you to do is, include a projected indirect cost in your upcoming budgets and proposals of between $500 and maybe $1,000 per month for "New Business Development" support (or if you call that function Marketing or Selling).  Do not call it advertising!

I will be conferencing again shortly with this well established firm and seeking to obtain a discount to our online community subscribing members for at least the first year to allow you to evaluate the cost/benefit of the service.  Maybe we can get a discount based on the number of firms in our community who are interested.  Hey, it doesn't hurt to ask.

I have been told that the average growth in business is 10%-20% for those firms that use the service and tools.

I would truly like to see our taxpayer dollars, through stimulus or other funding, go to offset this cost for our truly small business colleagues.  Yes, I would like to be able to discuss this with with decision makers at the SBA, Department of Commerce, DOD, and other agencies that are established to assist truly small businesses. 

We have to level the playing field whenever and wherever we can.

please follow this link to read more on this

Eleven Examples of Deficiencies in Cost or Pricing Data - What to Avoid! 

INQUIRY: How do I determine if my cost or pricing data is adequate, or not deficient?

 

RESPONSE: There is no set formula for determining when cost or pricing data is deficient enough to be reported to the contracting officer by an auditor.  However, the following are some 11 examples of cost or pricing deficiencies that should be checked prior to submitting data:

 

(1) Significant amounts of unsupported costs

Exempt, Salaried, Direct Labor -

Can more than 40 hours per week be billed to customer?
 

INQUIRY: Some Large Firms say it's okay that they only record and charge 8 hours per day/40 hours per week for their exempt direct people, regardless of how many hours they work.  What do you think?  Is it okay to charge/bill more than 40 hours per week for exempt employees?

RESPONSE: I want to give you a reference that may clear some things up for you, especially the question on what some Large Primes told you.

(For those who don't have a copy of this manual, it is available online at www.dcaa.mil.)

So, regardless of what the large firms do or say, you can see the guidance for yourself. 

And, yes, generally you should be recording all hours worked and you can charge for all hours worked.  You just have to remember to adjust any hourly rates billed to the government, up or down, based on the actual hours worked compared to the set salary for the period.  This is one of the acceptable methods for accounting on this type of costs. 

Inspirational Corner: 

I continue to pray earnestly for you my colleagues.  It is not easy to maintain humility, kindness, and integrity in the business world while still trying to be successful.  For so many the almighty dollar is their life.  Yes we must and should work hard.  Yes we should strive to be the best at whatever we do.

But a good name (integrity) is rather to be had than riches.  I would rather know that I am known to be trust worthy than to be known as wealthy.

Besides, in case you have forgotten or did not know, you don't have to pursue riches to the detriment of your integrity and compassion.  Why?  Because we are all already heirs to vast wealth and power. 

My Father and Brother, yours also, are the wealthiest persons on earth.  I am striving to live the life to meet their requirements so I can claim my inheritance.  There is nothing in this world that compares to what is already waiting for you and I!  

So, I occupy now, until the time comes to claim my real inheritance.  And you are an heir also.  I am not going to allow some comparatively small money, fame, glory, or perceived power stop me from my true inheritance.  Don't you either. 

That is why, I consider myself "The Apprentice to the Master" and I study to learn how to get closer to Him.  He Is My Key Top Contact so He is my most important focus.  That is why I study the directions in the Book provided us by the "True American Idol".  I go straight to the Source.  
 

That is why I sleep well at night, most of the time.  Yes, that's right.  I have my tough days when I take my eye off of Him and begin to sink.  But, that's when I look up and take back hold of His outstretched arm.  His eye is on the sparrow, and I know He watches me.  He Never Let's Go of Us.  We Let Go Of Him.

Looking for peace and joy, not only when things are going good, but through the storms also?  Then spend time with the One who promises to provide you that peace and joy.  Get to know Him.  Learn of Him.  I share this with you because I was asked to and not because there is any good thing in me.  I am at best just a willing unworthy vessel. 

God's got my back!  Yours too, if you so choose.

May His blessings, mercy, and comfort surround you, your family, and all your endeavors according to the riches and mercy of His love.

follow this link for more inspirational thoughts