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  1. Thanks, H2H! Since they are unallowable, how do you book them to the contract? Do you mean book them to an unallowable Overhead or unallowable G&A GL code that is associated with the contract in question?
  2. Hi Vern, Meaning, the Total Estimated Cost (i.e. directs plus indirects). Exclusive of fixed fee. Thanks!
  3. Hi all, This is more of an accounting question, but if a subcontractor overruns the budget of a CPFF completion (assuming they complied with the LOF and LOC clauses their prime included in the subK, but in an effort to complete the work, decided to eat some costs out-of-pocket), where do these costs get booked? Costs will include labor, fringe, and possibly some travel/transportation/per diem costs. Thanks!
  4. Thanks all for the help! Between H2H's confirmation re: SF 1408 and Neil's reference to the DFARS (which don't apply to the agency my clients work with, but which serve as a strong basis for determining adequacy and seem to align closely with SF 1408), I think I've got what I need to move forward. Thanks again for the enlightening inputs!
  5. Thank you both for your replies! H2H, understood re: differing indirect rate approaches. I'm familiar with that, though I guess my question was geared more toward determining if the ICE model is used even if the company only ends up with a single indirect rate. Basically, if a sub wanted to ultimately get to a point where they'd have indirects that could pass muster in an audit, would ICE be the model for them to develop their indirect(s)? As to the audit piece, I'm ultimately trying to get at a sound, reasonable expectation for new subs who might be looking at receiving a CPFF subK but who don't have a NICRA or audited financials. They often want to know what type of audit they need to get for the prime to deem them worthy of FAR 16.301-3(a)(3), and who can conduct those audits. Through my own research and outside guidance I arrived at a GAGAS compliant audit using SF 1408. Sounds like that would be sufficient, from what I read in your message, but please correct me if I misunderstood. RTF, agreed re: 52.216-7. When coming from the prime's perspective, we always flowed-down that clause to CPFF and T&M subKs even though it wasn't required.
  6. here_2_help thank you so much! Your response sheds a lot of light on audits in general for me... Super helpful! I have a couple follow-up questions/comments based on some of the information you provided... You mention that because these subs have had audits done, somebody at some point deemed their accounting system adequate. I guess my follow-up question to this is: what if the audit wasn't conducted with USG contract compliance in mind? And what if the sub only has G&A and no fringe or OH (as is the case with one of my clients)? Is it still considered ICE-compliant? I've heard that the type of audit that should be conducted is done in compliance with GAGAS and which results in a successful recommendation by the auditor via SF 1408. Would you deem that sufficient? Or are there other "must-haves" in an audit to make a sub's rates airtight? Thanks so much!
  7. Hi all, New to the forum! I'm a government contracts specialist who consults for a variety of primes and subcontractors. Some of my clients are small businesses who have not yet primed a government contract, but implement a variety of government subcontracts. They have undergone external audits of their indirects and thus been issued CPFF subKs. Their subKs include FAR 52.215-2, so they could be subject to audits of both direct and indirect costs if the prime is audited. My question has two parts, the first general, the second more specific: 1. Since they have no NICRA and are not subject to CAS, what is the risk of their *indirects* being questioned under an audit per 52.215-2 (if the auditor determines the subcontract must also be audited). And if they are audited, would the auditor simply look for unallowable costs or would they also look at the way the indirect pools and bases were established? This leads to my next, more specific question... 2. One of these clients has 2 years of audited financials and had their indirects prepared by an outside firm using the ICE model. A colleague I work with who has extensive audit experience, reviewed their rates and claims that their rates are not compliant with ICE (OH is billed on direct consultant labor and B&P dollars are not broken out but are instead incorporated in OH labor, not the G&A pool) and they are therefore at risk if they are audited under 52.215-2. Is this a true risk, given that they are only a sub? Would an auditor realistically dig into how line items are allocated among indirect pools and, if necessary, require them to redo their rates and credit the subcontract any difference?
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