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Government Contractors' Newsletter |
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For the serious small government contractor |
April 2011 | |
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COST & PRICING DVD
COMPASS (most popular), NAVIGATOR, or GUIDE Packs. (as low as only $395.00)
The popular cost effective alternative to attending live workshop. Ideal ongoing reference tool! Recorded Live
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 Greetings,
It is so good to be able to write to you again. Can you believe that one third of the year is gone! Time stands still for no one or nothing.
I am so thankful because we survived the severe storms and tornados that have devastated Huntsville, much of North Alabama, and so many other states. Looking around we see no power, dusk to dawn curfew, and much loss of life and destruction of material possessions. It is also pretty bad here and our prayers go out to all those who have suffered so much loss.
From time to time our lives are interrupted by situations that are out of our control and unexpected. They are truly a character building experience. It helps us to understand what should be really important in our lives.
I hope you are able to rise above your circumstances and grow stronger from both the good and not so seemingly good situations. Each of you is continually in my prayers.
Because the storm damage here limited our computer battery power, email, and internet access, this newsletter reflects many of the full articles that typically are linked to our online community. Good for You Readers! Battery is going, going, goooooonnnn :)
Enjoy this issue Paul Sr.
Comments/suggestions send directly to me at paulgunn@paulgunn.com |
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Veteran Entrepreneur Training Symposium in Reno, June 27-30, 2011
Scott Denniston - Executive Director, NVSBC
Do you run a Veteran-owned or service-disabled Veteran-owned small business (VOSB/SDVOSB) and want to work with the government? Or do you want to team with a Veteran-owned company but aren't sure how?
The National Veteran Small Business Coalition has created the Veteran Entrepreneur Training Symposium (VETS) to help you accomplish your small business goals.
The conference will provide you with the information you need to navigate the Federal acquisition process - from the government perspective as well as the commercial side. General Sessions and breakouts will include a variety of subjects.
Follow this link to find out more details or to register |
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 Focus on your Business, not Back-Office Administration! -Option for your Payroll & HR functions - By Devin Errett - ADP North Alabama District Manager As a government contractor, your focus is on reducing your expenses and making your bids more competitive. Every dollar spent on Administration and complying with government regulations is a dollar that isn't focused on being more competitive. Also, Administration is time consuming. That time is better spent building your brand and hunting for the next contract. Because of this reality, businesses are looking to outsource any non-essential task. According to a recent PriceWaterhouseCoopers study, Payroll & HR top the list of business functions that are considered for outsourcing. The study also showed that handling those functions in-house is 18-34% more expensive than compared with Outsourcing. Due to their high degree of risk and their complexity, Payroll and HR are ripe for moving out of the organization. So, how would it benefit me? 1. Protection from IRS, State, and Local Tax Jurisdictions. One of the main reasons Small businesses run into trouble (and shut down) is due to Payroll Tax problems. 2. Excellent Integration with Deltek, QuickBooks, and other Software providers. You need your Labor Cost Information in one place for proper reporting. 3. Ensure Compliance with HR Regulations - Put worrying about EEO1, OSHA, ADA, FMLA, etc... reporting behind you! Setting up Payroll and HR Outsourcing is relatively simple. Once you've provided your employee and employer information, including all Tax Jurisdictions, Company Policies, etc..., you will be transitioned through Implementation and onto the Service. The days of worrying about these issues will be behind you. Then, you'll be able to focus on growing your business!!! Contact Devin Errett to find out more at Devin_Errett@adp.com. |
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Denying Access of Data to Prime
INQUIRY: What is the far clause for a lower tier subcontractor to deny audit access to the prime for competitive purposes?
RESPONSE: There is no FAR clause that provides for permitting a subcontractor's denial of a prime contractor audit access to the subcontractor's books and records. A subcontractor is required to demonstrate its compliance with CAS and/or FAR (as applicable) in accordance with the applicable flow-down contract clauses. If a subcontractor denies its prime contractor access to the subcontractor's books and records, the prime contractor will have to request assistance from the contracting officer to ensure the subcontractor's compliance with CAS and/or FAR.
FAR 15.404-3 states that the prime contractor shall conduct appropriate price or cost analyses to establish the reasonableness of proposed subcontract prices. DFARS PGI 215.404-3 provides that if a prime contractor is unable to complete its required price or cost analyses of a subcontractor's proposal because the prime contractor has been denied access to the subcontractor's records, then the prime contractor may request assistance from the contracting officer to analyze and evaluate the subcontractor's proposal.
follow this link for more |
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Repealed: Expanded 1099 Reporting Requirements
So, what happened since our discussions and survey on this issue? If you have not heard, the expanded 1099 reporting requirement was repealed "for now".
Many of you responded to our "very short" survey on this issue and provided insightful comments. It appears there were many who responded from many sources, that Capitol Hill decided to address the issue more definitively. Your Member Survey Results, along with pro and con comments, were also forwarded to several key decision makers who were interested in the feedback.
I believe your input and feedback contributed to the decision. Thank you for responding to the survey.
Refresher: Last year, Congress expanded the Form 1099 reporting requirement to include goods in addition to services. Beginning in 2012, businesses would have been required to file 1099 forms for payments of goods and services above $600 annually. The 1099 reporting requirements for services is already a part of every businesses generally acceptable accounting practice, or it should be! So the repeal results in business reporting as usual, rather than additional tracking and reporting. |
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Allowability of Travel Costs for Spouse
INQUIRY:
Under FAR 31.205-46, travel costs are allowable if reasonable and do not exceed max per diem rate. Does the FAR address married couple travel allowances? While expenses can clearly be considered duplicate, does the FAR address and/or prohibit duplicate allowances?
RESPONSE:
DEPENDS! Generally, the Joint Travel Regulations (JTR) as it pertains to Civilians should be your guide. The allowability of the cost depends on the purpose of the travel and the purpose of the dependent/spouses attendance.
For example:
ü If it is a long term duty assignment or relocation, then more of the travel cost is allowable for spouse/dependent.
ü If the spouse is traveling on assignment also or there is a legitimate business reason for spouse attendance, then the cost is typically allowable compared with if traveling solely as a companion.
ü If travel is for an award ceremony then the awardees spouses travel can be allowable.
As you can see, you must be very specific about the purpose of the trip and then review the JTR for it's' applicability. Search the Joint Travel Regulations and you should find more details that should help for your specific situation.
NOTE: The JFTR, Volume 1 applies to uniformed personnel, and the JTR, Volume 2 applies to DoD civilianemployees and others traveling at DoD expense.
Search the Joint Travel Regulations at http://www.defensetravel.dod.mil/site/travelreg.cfm and you should find more details that should help for your specific situation. Hope this helps! |
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Project Stabilization Agreement (PLA) Fringe Benefits
INQUIRY:
1. I have a question regarding SCA and Non SCA Company fringe benefits and/or union benefits paid subject to core employees under the project stabilization agreement (PLA). - It's is my understanding that SCA and Non SCA Company fringe and/or union benefits under a PLA should be allocated to direct cost because the particular cost can be identified to a particular final cost objective i.e. the specific project. My support for this assumption is my understanding of FAR 31.202. Question: Is my understanding correct?
2. Or, if a company consistently treats SCA/DBA fringe and/or union benefits as indirect cost as part of its larger indirect fringe benefit cost pool, is it permitted to do so under FAR 31.203? I believe treatment as identified in # 1 above is also consistent with GAAP.
So, again my question is can we include the PLA fringe in our larger indirect pool or should the PLA fringe be allocated to direct cost, i.e. the project since the final cost objective can be determined? Note: The PLA union portion of fringe benefits is a small portion of our overall total indirect fringe pool.
RESPONSE:
Overall: I tend to agree with your suggestion to segregate the PLA union fringe benefits.
More Detail: In my opinion, since the PLA special fringes appear to be over and above those normally paid to non PLA employees, I would consider identifying those as direct for the appropriate contract. The issue that could arise is that for any other type of out-of-the-normal situation of applying fringes, you would also have to do the same thing. This could become cumbersome and would involve a greater administrative expense in tracking, reporting, and allocating the fringes. You would have to increase your Indirect (typically G&A) cost pool to account for these costs.
Remember, the key is to minimize the impact of "Double Charging" a contract/job with the same cost! That cannot always be avoided, but the goal is to "Minimize" the impact of your cost allocation method on this effect.
Based on what you describe; IF those PLA fringes are unique, then by all means I would identify them separately and assign them directly to the contracts, OR I would establish a separate Fringe Pool and allocate the PLA fringes to those impacted contracts/jobs based on the PLA wages only.
Either way, you will want to update your Policies to reflect the new process. I recommend that you then notify your DCAA office, if you have been audited in the past, and indicate you have an updated allocation of your indirect fringe cost.
The PLA Fringes are a small portion of your overall total fringes. If you calculate the Fringe Rate with and without the PLA fringes, and the result is not significant, you can decide to keep them all in one pool.
It gets back to the point of Risk and Materiality of the impact. If the impact is significant enough for your firms' objective, then I would segregate the PLA fringes and allocate them either DIRECTLY as a separate Direct Cost Line Item or as an additional, separately allocated Fringe Cost Line Item.
Don't over complicate the matter. Subsequent to my review and analysis, your initial suggested resolution seems appropriate to me if you follow the guidelines I identified above.
Let's see if any of our readers have input based on their experience on this issue. |
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 DCAA Sample Statement of Condition and Recommendations
Over the years I have encountered many instances of DCAA auditors finding significant deficiencies of small businesses as it pertains to written policies, procedures, and practices. The following sample of a typical standard wording in an audit report of finding is presented for your understanding. Remember, being prepared is better than hoping issues won't apply to you.
Auditor Condition Finding: Contractors cost accounting systems written policies, procedures and practices have significant deficiencies which do not meet the requirements of FAR 53.301-1408. The policies and procedures do not identify exclusion of unallowable costs (FAR 31.201-6) and the proper segregation of direct costs from indirect costs (FAR 31.203(c)). Further, written policies and procedures do not document the composition of its indirect expense pools and the allocation bases. Adequately written policies and procedures are necessary to provide clear directive, reliance, and consistency.
Auditor Recommendations: Contractor must have all policies and procedures in written format. In addition, contractor should become familiar with FAR Part 31 expressly unallowable costs as identified in FAR Part 31.205 and identify, segregate and exclude unallowable costs. The policies and procedures must require that transactions are screened for allowability at the time of original entry into the accounting records. Contractor must also create accounts for accumulating indirect expenses to ensure compliance with the requirements of FAR Part 31.203(c), and must establish written policies and procedures documenting the composition of its indirect expense pools and allocation bases.
So, what is the simplistic conclusion of the matter? Have a sound Chart of Accounts, Adequate Timekeeping, Good Job/Contract tracking of Direct Costs, Basic Indirect Cost Pools, Basic Internal Controls, ability to show Separation of Unallowable Costs, and some form of Documentation of it all (Policy Manual)!
FYI: The above are covered on our Cost & Pricing Workshop DVD (Recorded Live), our Policy Manual Template, and in our limited live workshops. These are practical, applicable, and meaningful tools critical to small business contractors. Follow the lead of your successful colleague firms and take advantage of the tools made available to you. |
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INPUT - A marketing option to consider. Contact Karen Buckley directly
at kbuckley@input.com No Marketing - No Growth!
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 Are you under any pressure? Things around you getting Crazzyyy? About to Blow!!!! |
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