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Corduroy Frog

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  1. Contractor is not disclosed anything with DCAA. No DS-1 or anything at all. Suppose an employee is awarded a $5000 bonus for performance on a particular contract. Emphasize this is not a company-wide bonus, seasonal bonus, or anything else other than a performance bonus. We wish to charge Direct Labor instead of Fringe for this $5000. In absence of anything disclosed to DCAA, is there a FAR Clause that allows charging to Direct Labor, or disallows such charging?? Thanks in advance for your help.
  2. Whoa! Accountants, perhaps more than any other profession, encounter things that are not right, and are dishonest. Some of us are even requested to alter the books. We are often requested to put lipstick on a pig and call it something else. If we blew the whistle on everything we saw, we would not be able to find a job. However, my response to anyone who requires me to change the financial reporting results, is that I'll hit the door. If you have someone who will lie for you, you also have someone who will lie to you. This has cost me at least one job in my career. You should be able to put a glass eye in a duck's butt and be able to see this.
  3. Part of the issue is geographical area. If this were to occur in New Jersey or somewhere in the unionized states, an employee could invoke the DOL in a heartbeat. Where I live, and in AL, GA, MS, AR, employees are not knowledgeable of the SCA, and even so will not blow the whistle on their employer for fear of being terminated. My client is not so obtuse as I have presented. I have dramatized this in order to paint the picture. Yet it is true that SCA is avoided, even though money is available to cover it. Some COs are not anxious to fund money, but none of them will refuse something they know to be legal.
  4. Thank you Mr. Culham. I agree with your comments. Maybe I could pose a question: Is there a wage so low that the SCA cannot be avoided? Like if an employee is paid only $20/hr. is it possible that he could be classified as something other than an SCA Labor Category. Vern, are you out there my friend???
  5. So many subcategories, it's hard to figure out where to post this question. It is rather basic, so I'll post here. As an accounting consultant (not an HRO specialist), I have a customer who would rather face the guillotine than to deal with SCA. They want to hire the cheapest person they can find, and then classify as an overglorified whatever to avoid paying benefits. Paying a guy $15 an hour to sweep the floor and then classifying him as a Cyber Engineer just so they won't have to pay him a lousy $4.50 an hour for benefits. Please comment on this gross misrepresentation, and discuss what can happen to a government contractor as a result.
  6. Good grief Vern - are idioms of speech not allowed? Specifically, two renewals are being parlayed with zero increase (not even escalation), and another is restructured with a little more money but an increased scope of work.
  7. Here_2_help I always enjoy your responses. When Reagan took office in 1980, the deficit was only $46B. I will agree that in the face of ever-rising deficits, Inflation and Interest Rates have not risen to meet expectations of conventional rationale. I am certainly not macroeconomic-minded to understand why it doesn't happen. But the dollar is tanking against other currencies, and I wonder if the economics of huge deficits respond when "enough is enough". Gov't customers are always price-conscious (in spite of claims of "best value"), but I seem to notice this year, money is very tight.
  8. With the deficit in the trillions, and the govt laying awake at nights figuring out how to giveaway more money, has anyone (other than me) noticed a shortage of available money for contract renewals? For the first time in awhile, the U S Dollar is tanking against other currencies, and printing money is assured to create more inflation. Am I the only one who has noticed this?
  9. No one seems to know my role in the above - so I'll clarify. I am an independent accountant - much more familiar with GAAP issues and IRS issues than contractural problems. My "customer" is a small govt contractor who has no contracts expert to turn to - so I end up with the issues. Hope this helps. Yes the same line of posts earlier about "padding" bids on fixed price contracts. In spite of all the padding, my customer is still turning in only a 4-5% profit margin on sales. More last year due to PPP loans. Risks have involved subcontractor overruns, facility shutdowns, unexercised opetions, declared holidays (where govt employees are paid but contractor employees are not), etc. I hope this brings the moral issue into focus.
  10. I have probably asked this question before, and if memory serves me right, there was a montage of conclusions. Does DCAA limit the Fee on a given contract? If so, I would think it varies whether the contract is cost-plus, T&M or fixed price. I have been accused of having sleazy customers doing such things as "padding" costs. This one proposed a fixed-price of $300,000, contractor cost of labor and travel $90,000, and a large subcontract for $140,000. Indirects are another $40,000 or thereabouts. Total cost $270,000. Profit of 10%, Fee based on cost is 11.11%. After the contract was negotiated, turns out the large subcontract is being whittled down to $50,000, and indirects attached to the effort are now $25,000. Expected total cost is now only $165,000. Profit is 45%, and Fee based on cost is 81.8%. Unofficial sources tell me DCAA mandates that if Fee exceeds 30% on a fixed-price contract, the excessive money has to be given back. Was not told whether the 30% was a profit margin or a Fee based on cost (These are two different numbers). What say ye?
  11. Is there a separate threshold depending on whether it is a new contract or a mod??
  12. Suppose an employee wants to make $100,000 per year. The contractor has three contracts, but because of the availability of money, he is paid $75 on one contract, $50 on another contract, and $48 on another contract. Because the company wants their indirect rates to be low, he is only paid $25 on Overhead and $25 on G&A. How is this elaborate scheme perceived by DCAA, DOL, a contracting officer who finds out about it, or anyone else?
  13. It's me again - appears a number of people don't know what I am presenting, and I may have given incomplete information. The Frog is a Mr. There is an intent to deceive. No one wants to propose a fee of 12% because the selection committee would throw the contractor out on his butt. So in order to get to the desired price, other costs have to be padded, and only a 6% fee is proposed. The padding of labor or materials may (or may not) be to cover risk, and it appears if risk is a significant factor, the proposal is quite a bit more palatable to those who know. Significant risk should be solved with a cost-plus contract, but for a small contractor, getting the customer to agree to a cost-plus contract is more difficult than hitting the moon with a pea-shooter. The only question was whether the above-described practice was an example of defective pricing. I read the response by Vern Edwards very intently, and it appears he is saying it is not deemed as defective pricing, unless cost and pricing information is requested. It could be considered dishonest, and it seems to me that it is. In the real world, however, putting the risk into an exorbitant fee is met with much more consternation than padding labor/material costs for risk.
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