For the serious small government contractor  

COST & PRICING DVD

Greetings,    

Spring has Sprung, at least according to the calander.  So how are you?  Well, if you are reading this, then inspite of all the issues and trials, I can think of at least one thing to be very thankful for.  I think you know what that might be. 

You Are Alive.  Maybe tired, frustrated, overworked, underpaid, unappreciated at times, misunderstood often, lonely at times, confused, etc., etc., etc., But You Are Alive! 

So, with all that other stuff you have to deal with, you must be someone special because somehow you have not lost your mind, but have managed to get through all of lifes issues, so far to-date.  So I applaud you!

Have you noticed how, just through the prior newsletter issue, there was such a big deal and turmoil predicted on the Government Shutdown?  Now it is relegated back a bit for more "pressing" items to try to keep us in a state of disarray. 

Yes, we have to be aware of what is going on and how to be prepared to address things, but don't let these ever-changing and never-ending situations control you.  I don't!  No way.  I am aware and try to be prepared.  That's the most one can do.  Do your best, stay as up to date as you can, and RELAX.  Believe me, something seemingly more important will come along. 

We received a great deal of positive feedback and thanks for the article in Februarys newsletter discussing DCAA versus DCMA.  I am glad it was widely read and helpful.  It was in response to inquiries from VIP Online Community Members like you.

I truly hope you determine that this Spring/Summer you will take care of yourself so you will be strong physically and mentally to take care of the many who depend on you.    Enjoy this issue    Paul Sr.  

Comments/suggestions send directly to me at paulgunn@paulgunn.com 

Government Contract Accounting System Requirements - You Can Do It! 

Are government accounting system requirements only applicable for Cost Reimbursement Type Contracts?

 This is a widely misunderstood concept.  Many contractors feel that they do not have to worry about audits since they do not have any cost plus fixed fee (CPFF) type contracts. Others feel that since their contract(s) are small they are okay.

Boy do they find out the hard way that this is not true.  Let me tell you how it generally works, but before I start I do not want you to get overwhelmed okay.  With the right support and tools, You Can Do This!  At the end I have provided links to Tools proven to help you gain a realistic and practical understanding of government contract cost and pricing.

True, your accounting system is more likely to be audited with CPFF type contracts, but it is more accurate to use the term Flexibly Priced Contracts of which CPFF types are included. 

Here is a list of some other types of contracts that may be included under the umbrella of Flexibly Priced Contracts:  Time and Materials (T&M), Labor Hour, and Fixed Price Level of Effort among others.  FAR Part 16 describes in more detail types of contracts.

Don't be misled though! Your accounting system can also be audited if you........

follow this link for article 

Fee/Profit - Key Determinative Factors - FAR 15.404-4 

You never know if/when you may have to defend your Fee/Profit Objective.  I recommend utilizing the information below to develop or revise your documented policy (You Do Have A Policy Manual, Right?  If not and you want to consider the option of obtaining a Template then follow this link.  Now, moving on:

Utilize those excerpts below that apply to your company as a whole but more importantly on each specific contract.  This is because contract type determines fee/profit limits and factors that may apply.  I have highlighted in various colors/bold/underline those items that are of particular importance.  The following is what the government is instructed to follow so why not incorporate the applicable elements into your companies' process and supporting data.

FAR 15.404-4 Profit

(a) General. This subsection prescribes policies for establishing the profit or fee portion of the Government prenegotiation objective in price negotiations based on cost analysis.

(1) Profit or fee prenegotiation objectives do not necessarily represent net income to contractors. Rather, they represent that element of the potential total remuneration that contractors may receive for contract performance over and above allowable costs. This potential remuneration element and the Government's estimate of allowable costs to be incurred in contract performance together equal the Government's total prenegotiation objective. Just as actual costs may vary from estimated costs, the contractor's actual realized profit or fee may vary from negotiated profit or fee, because of such factors as efficiency of performance, incurrence of costs the Government does not recognize as allowable, and the contract type.

(2) It is in the Government's interestto offer contractors opportunities for financial rewards sufficient to stimulate efficient contract performance, attract the best capabilities of qualified large and small business concerns to Government contracts, and maintain a viable industrial base.

follow this link for full article 

The Small Contractors Accounting System

Pre-award versus Post-award - Survey versus Audit - Understanding the Intent and Letter of the law as it pertains to small prospective contractors accounting systems.

Despite all of the various focus and opinions that are discussed on this topic, the following depicts my SME interpretation and preferred applicability of the current guidance and objectives to auditors, government procurement staff, and the small contractor as it relates to the pre-award survey of the accounting system, and the post-award audit option. 

The interpretation of the guidance and ensuring the customer requesting the review understands the options they have and the limitations of a small contractor are important to this process.  The post-award audit option is an important issue that the requesting customer should be aware of.  As a contractor, you should know what to share when supporting your opinion.

According to the DCAA Audit Program and DCAAM 7640.1Guidance The major objectives of the pre-award audit are to obtain an understanding of the accounting system to appropriately complete the Pre-award Survey of Prospective Contractor Accounting System, SF 1408, and to opine as to whether the design of the contractor's system is acceptable for the award of a prospective Government contract.

Let's break this down and explain what it means to you the contractor.....

INPUT - A marketing option to consider.  Contact Karen Buckley directly

at kbuckley@input.com   No Marketing - No Growth!