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Is there anything wrong with an exempt (i.e. salaried) employee working on a government contract and not charging the time to it? It sounds like the government is getting work for free, but could there be a CAS violation or some other problem? The contract is not in an overrun and time is not being shifted from one contract to another.

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Maybe the employee is charging to an indirect/overhead pool. That is common.

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Maybe the employee is charging to an indirect/overhead pool. That is common.

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Guest carl r culham

It could be as Joel notes but suggest it may be worth investigating further including, if necessary, conversation directly with the contractor to find out the details. You would not want to be in the position of thinking the employee is not charging to the contract and then be surprised later.

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Is there anything wrong with an exempt (i.e. salaried) employee working on a government contract and not charging the time to it? It sounds like the government is getting work for free, but could there be a CAS violation or some other problem? The contract is not in an overrun and time is not being shifted from one contract to another.

Depending on the materiality of the charge and if the related labor is direct or indirect this could be an issue. The employee is obviously mischarging his labor as his charged labor expenses are not following his actual incurred/booked labor. CAS has levels of materiality that are considered when reporting non-compliances. If this is an isolated one time transaction and the impact is minimal there would appear to be no basis for correction. However, as stated above I would inquire of the contractor to ascertain the employee's correct labor base, how many hours charged and if the employee's actions are direct or indirect in order to obtain a clear picture of this issue.

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Is there anything wrong with an exempt (i.e. salaried) employee working on a government contract and not charging the time to it? It sounds like the government is getting work for free, but could there be a CAS violation or some other problem? The contract is not in an overrun and time is not being shifted from one contract to another.

There are two issues here. One is proper allocation of costs and the other is what is billed against the contract. When you say "working on a government contract," I assume you are referring to work that directly benefits that contract and no other. If that is the case, the cost of the employee's time should be allocated to the benefitted contract and no other. Of course this does not mean that the contractor has to bill the government for the cost of that time. There is no requirement that a contractor charge the government for all costs incurred in regard to a contract. However, from the government's perspective, there is a prohibition against acceptance of voluntary services.

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Rod_p & retreadfred,

The key point that both of you have missed is that the contractor may have established that certain employee classifications, functions and/or activities never charge direct to contracts. For example, let's say that the contract manager function always charges time to an indirect cost account. That practice might lead to a situation where, even though an individual contract manager supported a single contract on a full-time basis, that manager would never, ever charge time to the contract. And that would be proper and in accordance with the contractor's established practices.

A contractor's practices will be disclosed in its Disclosure Statement; it if doesn't have a D/S then it will have policies and/or procedures. Such practices will not be hidden.

What would be a problem is if the time-charging practices within a single function and/or activity were treated inconsistently in similar circumstances. That would be a potential violation of CAS 402 (and FAR 31.202(a), as well).

Finally, retreadfred states that work that benefits one contract and no other "should be" (which I read in context to be "must be") charged directly to that contract. This is a piece of myth-information because the FAR definition of "direct cost" was revised a couple of years ago to correspond with the CAS definition of "direct cost." If you look closely at the definition of "direct cost" found in FAR 2.101 you will see that a direct cost is one that "IS" identified specifically with a particular final cost objective ... which is different than the old definition, which stated that a direct cost is one that "CAN BE" identified specifically with a particular final cost objective.

Hope this helps.

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