GC_Cost_Accountant

Thanks again to everyone for the comments and great points. Retreadfred: Thanks. You understood correctly in that we have significant underbilled indirect cost. On a contract by contract basis, it is not very significant - but in total across our entire contract portfoio, it becomes financially material. I am the head of our compliance function and, together with the head of our contracts function, designed a compliance checklist for each variance invoice that will be issued - to include researching Limitation of Costs/Funds clauses as they apply to that specific contract (at the billing line item level) and to the specific GFY funds allocated to the contract. So - I'm hoping (fingers crossed) that this risk is mitigated by our designed controls process. Policyguy: Thanks. I am - personally - not a fan of waiting it out. My company's leadership is. I come from a government contracts accounting consulting and litigation background and have had some clients who were political lightning rods for oversight/scrutiny. I've seen that you have to fight for what is yours, if you truly want it. But - Vern's post you referenced is excellent and I will pass it on to a couple of key "wait-it-out" people in leadership to give them something to contemplate while barbequeing over the holiday weekend... Retreadfred and H2H: Agree on the SOL restart being a DCAA initiative. But - I've seen that fight go both ways. In court it goes to the contractor, but many contractors don't take it that far. I don't feel that the leadership team at my company has the fortitude to go down the ASBCA road...although I have and will certainly continue to recommend this if Cognizant Agency doesn't step up to the plate.

Thanks H2H. We do have a little flex time on the 6 year statute as several of our early year ICS's have been subsequently recertified/resubmitted. So - I believe the clock resets in those cases. ACO has verbally told me (on the phone calls very rarely returned or answered) that the only reason the Cognizant Agency can't address provisional indirect rate agreements, updates to those agreements, and final/audited rates on a more timely basis is that they are only 60% staffed for their workload. I'm 60% staffed for my compliance role, yet somehow I have to get my ICS filed by June 30 or suffer the later consequences... Seems to me like contract administration responsibilities should be bilaterally upheld, versus unilaterally, but at the end of the day I'm only an Accountant who plays a lawyer on TV. I would agree with you that with the COFD/CDA route - we are leaving the administration world and jumping head-first into the litigation realm. Unfortunately, I have both the head of contracts and general counsel involved in discussions on this matter and - although the cash flow is material - they all want to wait it out, but somehow expect me to pull a rabbit out of my hat to be able to collect the variances before de-obligations occur. I just wanted to run the circumstances above by everyone and see if there was something or anything I was missing in the normal administrative regs that could be leveraged here as my rabbit in the hat. (COFD/CDA route is more of the unleashed pit bull approach...) Thanks again for your thoughts. They are greatly appreciated.

First – I apologize if this post is repeated from elsewhere in the forum. I performed several keyword searches and read a number of posts and did not see it addressed. Background: FAR 52.216-7(e) requires two conditions for billing indirect costs (anticipated final rates, and mutual agreement). In my case, the Company’s Cognizant Agency is behind in reviewing/approving billing rates by years (and even further behind on final rates – no surprise there to anybody, I’m sure). We have indirect rate swings (both ways) in prior years that – when netted against each other - are material to the Company and have a greater risk of being de-obligated and going unpaid with the passing of each additional day. Our FY 2013 agreements extended into June 30 of 2014 and just expired. While the company submitted provisional billing rate packaged in early January, we have no response or indication of reviews and/or impending agreement issuances. The Company wants to bill true up invoices for prior years based upon our certified incurred cost submission rates. Many of our Federal clients will not pay the true-up invoices without an actual rate agreement. Overall, the cash shortfall for FY 2014 billings alone is in the millions. Questions: How does a contractor bill indirect cost on flexibly-priced contracts when there is no current, unexpired mutually negotiated indirect cost billing agreement upon as per FAR 52.216-7(e)(2)? E.g., is there another clause or provision or procedure of which I am not aware that allows a contractor to bill certified, submitted (and unaudited) final indirect rates (or course with the proviso that – should the audit find unallowable cost, the Company would repay for any amounts decremented) I have been considering submitting both provisional rate submissions and billing true-up notifications with “expiration language”, such as: “As the enclosed indirect cost rates represent the [Company’s] anticipated final rates under FAR 52.216-7(e)(1), [Company] will consider a mutual billing rate agreement to exist with [Agency] under FAR 52.216-7(e) for billing these rate prospectively and retrospectively unless [Agency] provides written notice to the contrary by [insert Reasonable Date Here]” I realize that – in legal parlance – a non-response would constitute “implied consent” should the Agency not respond in writing by the stated date. I am also not a JD and especially am not a Government Contracting JD, so - to that end, is implied consent enforceable against the Federal Government? From a equitability in contracting perspective, it seems terribly inequitable to the contractor to float the Government’s cost because they are unable to execute their charged oversight functions (reviews and audits) on a timely basis. As an aside, I know that there’s always the potential to request a COFD on provisional or final indirect rates as submitted, which would accelerate the Agency’s requirement to address the matter to 60 days and, if not addressed, can become a CDA claim. While this is technically a solution, the company risks its client relationships in doing this and it is not a preferred choice. Any thoughts or advice would be greatly appreciated.

Hi - I'd like to get folks opinions on defining and managing overhead pools by the utilization of professional staff. For instance, a company might have a High-Utilization Overhead Pool and a Low-Utilization overhead pool. For sake of discussion, let's say that to be included within the High-Utilization OH Pool that a professional's time must be at or above 75% directly billable. Anyone with less than 75% directly billable utilization "lives" in the Low-Utilization Pool. For definition purposes, I'm assuming that utilization is the relative number of directly billable dollars or hours to total available dollars or hours, with available hours being 2,080 less paid absences. Pretty straightforward scenario so far, right? The challenges (and potential CAS issues) that I can potentially foresee are in managing utilization-based OH pools once they are implemented. Since professional staff utilization is constantly in flux from week to week, and month to month, it is entirely conceivable that someone could have 80% utilization in January and 60% utilization in December and, thus, qualify for inclusion in different OH pools in different time periods. My big question is - does the movement of an individual's direct and indirect cost from one OH pool to another OH pool constitute a cost accounting practice change? In my opinion - it has the potential to be a cost accounting practice change as defined in 9903.302-2 because the shifting of employees from High OH Pool business units/departments to Low OH Pool business units/departments is tantamount to changing how indirect cost is allocated to a direct cost base and/or changing the direct cost allocation base. If the only components of cost in the OH pools/bases were the professionals' indirect and direct labor costs, I think that a change would not necessarily exist. However, other costs in the OH pools - such as Facilities, Service Center Allocations, etc. - might not switch OH pools with the labor - and, thus, end up with a different allocation basis. Also - as an aside - I know that this all likely depends upon the materiality - in terms of the number of people moving between pools - and the frequency of the movement. If the firm has 50,000 professionals and a couple hundred professionals a year move between pools, there is likely no material affect to any of the allocations. My personal opinion is that the frequency of movement can be managed with a rule set such as - in order to move business units/departments from high to low OH pools, a professional must have utilization above or below the threshold above for the last twelve months (for instance). Any thoughts on (1) whether CAS violations and/or cost accounting practice changes exist in this structure, and (2) whether there are common rule sets used by industry to for stability of the rate bases in utilization based structures, would be greatly appreciated.

I'm posting this to obtain confirmation that others read the rules the same way as I do. If a company incures costs to re-brand itself, are those costs allowable? The costs would include outside vendors, internal labor expended on the effort, advertising costs and legal costs (associated with trademarking). My question is in two parts: Part 1 - My understanding is that most of these costs, excluding the legal cost associated with obtaining a trademark for the brand, would meet the criteria set forth in FAR 31.205-1(f)(1), as being unallowable public relations or advertising costs. Does anyone have an argument to make that would state any of these costs (excluding legal cost for the brand trademark) are allowable? Part 2- Trademark legal costs are not expressly unallowable under FAR 31. However - in this circumstance - are they unallowable because they fall under "purchased services performed by outside organizations" as contemplated by FAR 31.205-1©, and/or are directly associated costs with a rebranding effort that is considered unallowable under FAR 31.205-1(f)(1)? Would be interested in hearing some debate around allowbility of any of these costs, since their primary purpose is to rebrand the company.