This is my first post to the forum. I sincerely hope I give enough information that I won?t get beat up too bad but if I don?t, please be gentle.

Here is the scenario. CPFF contract with multiple subcontractors. Period of Performance is by Government Fiscal Year. Subcontractors have submitted their invoices for September during the month of October. Once those invoices are received they are applied to the Prime contractors cost statement and then paid. The prime contractor submits a cost voucher for payment which is subsequently rejected since the subcontractors cost was applied AFTER the PoP had expired even though the costs were incurred during the PoP. DCAA stated the reason for rejection was the contract did not specifically allow for costs to be incurred outside the PoP.

Contract does contain 52.216-7. I also assume that DCAA is basing the rejection on the CAM para 6-202.2 Procedure Where Term of Contract Performance Period is Explicit A contract may provide that it expires on a specified date, unless terminated before that date, and obligates the contractor to devote a specified level of effort for a stated time period [see FAR 16.306(d)(2) and FAR 52.249-6(a)]. The auditor shall not approve for reimbursement any costs incurred by the contractor subsequent to the expiration date stated in the contract, or in excess of contract limitations.

Has anyone else had a similar issue with lagging charges and how was this resolved? Assume that a modification to the contract will not be processed.

Making sure I understand situation. POP ends 30 Sept. Subs send you their Sept invoices in Oct. Those invoices miss your billing cycle and therefore wind up on your November invoice, with appropriate indirect cost pools applied.

Was the entire invoice rejected or just the indirects applied to the subcontractor costs?

Making sure I understand situation. POP ends 30 Sept. Subs send you their Sept invoices in Oct. Those invoices miss your billing cycle and therefore wind up on your November invoice, with appropriate indirect cost pools applied.

Was the entire invoice rejected or just the indirects applied to the subcontractor costs?

I had a feeling I wasn't fully explaining. Let me try for a better picture here. This isn't the exact scenario but it should (I hope) show the problem. All dates and amounts are completely arbitrary.

PoP ends 30 Sep. 15 Oct subcontractor submits an invoice to the prime for their 1-30 Sep labor in the amount of $100K. 1 Nov, subcontractor is paid $100K and that same cost then hits the prime contractors cost statement. 15 Nov Prime contractor submits a cost voucher in the amount of $100K for payment (I'm purposely ignoring any burdens and fee that would be applied). 17 Nov, DCAA rejects voucher as the cost is outside the PoP.

Does that clarify my question? Thanks

So DCAA is saying that since the contract ended on 30 September, and you paid the contractor on 1 November, you incurred the cost after the period of performance. Are you working on a cash basis accounting system? I presume not. Yet it sounds like DCAA is equating the timing of payment with the timing of cost incurrence. I'm not an accountant, but that does not sound right to me. You incurred the cost in September. Maybe one of the accountant types who hang out here will weigh in.

Vern,

You are absolutely correct with your assessment of the situation. No to the cash basis question. Thanks

This is a fairly typical DCAA audit finding, along with the one that says invoice funding doesn't match MOCAS. Anyway, Vern is correct that the way to approach this is to look at when the work was performed, not when it was recorded on the contractor's books. Most experienced people understand that there is a lag, especially when subcontractors are involved.

The work was performed within the PoP, even if the lagging costs were outside of it. So long as the contractor was within funding limits, I would expect such allowable costs to be reimbursed by the customer.

Fundamentally, applying DCAA's logic would mean you could never determine final price once the PoP had expired. Any accounting transaction outside the strict PoP couldnt' be recognized. For example, you could't adjust final billing rates after the PoP had expired. Even more bizarre, you could never give the customer a credit it was entitled to, since the credit would be outside the PoP. So DCAA's position cannot be correct, since we all know the absurd results I note would be contrary to just about everything.

Hope this helps.

This is my first post to the forum. I sincerely hope I give enough information that I won?t get beat up too bad but if I don?t, please be gentle.

Here is the scenario. CPFF contract with multiple subcontractors. Period of Performance is by Government Fiscal Year. Subcontractors have submitted their invoices for September during the month of October. Once those invoices are received they are applied to the Prime contractors cost statement and then paid. The prime contractor submits a cost voucher for payment which is subsequently rejected since the subcontractors cost was applied AFTER the PoP had expired even though the costs were incurred during the PoP. DCAA stated the reason for rejection was the contract did not specifically allow for costs to be incurred outside the PoP.

Contract does contain 52.216-7. I also assume that DCAA is basing the rejection on the CAM para 6-202.2 Procedure Where Term of Contract Performance Period is Explicit A contract may provide that it expires on a specified date, unless terminated before that date, and obligates the contractor to devote a specified level of effort for a stated time period [see FAR 16.306(d)(2) and FAR 52.249-6(a)]. The auditor shall not approve for reimbursement any costs incurred by the contractor subsequent to the expiration date stated in the contract, or in excess of contract limitations.

Has anyone else had a similar issue with lagging charges and how was this resolved? Assume that a modification to the contract will not be processed.

Can you tell us which DCAA office is involved?

Retreadfed

I would prefer not to. That would pretty much point to a specific company.

Here_2_help,

I agree with you entirely. This isn't the first bizarre circumstance that has come out of this office.

Can you tell us which DCAA office is involved?

Retreadfred,

I would assert that it doesn't matter which particular DCAA office issued the finding(s). It could--and has--come from any of them. As I posted, it's a fairly typical finding, one that is generated by auditors strictly comparing two dates rather than thinking through what is really happening.

H2H

Retreadfed

I would prefer not to. That would pretty much point to a specific company.

Here_2_help,

I agree with you entirely. This isn't the first bizarre circumstance that has come out of this office.

Fair enough. Let's zoom out some and see if you can tell us what Region the office is in. I have been dealing with DCAA offices around the country for over 30 years. it seems like from time to time, specific offices get on a kick about a particular topic. This is a new issue to me and if this office has cognizance over one of my clients, I would like to give them a heads up.

No question this is a valid charge. The answer is very simple. The concept is called 'Accrual' (GAAP, Generally Accepted Accounting Principles). It is an Accounting 101 type thing.

If you see some of my prior posts, the deterioration of DCAA is really beyond belief. In today's DCAA, it is not a shock that there are DCAA teams lacking the ability to grasp the basic concept of accrual accounting.