On to Consulting

@Neil Roberts not sure what your question is about my use of the term "downward adjustment"? But to hopefully clarify, I just mean some type of credit to a federal customer with a flexibly priced contract for the difference between billings at the "actual" indirect rates for the year and billings to other customers at potentially lower agreed to rates. There being a G&A line item is contract specific, so I can't answer the question about is there a contractual line item in each.

I don't see how FAR 31.203 answers the question of whether or not federal government customers need to be "made whole" when a company gives a lower rate to a commercial customer or another agency. The referenced FAR goes into great detail about how to calculate rates and what goes into that but I don't see any insight into what to do when you have another customer with no FAR requirements in the contract. Do you have a specific line of thought?

Do you by any chance have any example of a contract term that would govern what happens when the rates are trued-up? By that I mean, an example that would potentially impact across contracts, i.e. the true up of G&A on one contract impacts the G&A billed to another? I don't see how the impact of truing up rates on one contract could potentially lead to how the true up of another contract would be handled.

Can anyone tell me if there is anything that needs to be done to account for some customers getting a lower final price due to a downward adjustment to the G&A rate as part of contract negotiations? For context, the company has cost plus effort and this is not supply schedule POs. Over the years they have contracted G&A rates all over the board with no regard for actuals or consistency. They are now trying to clean up their contract accounting and are curious if there is any adjustment or credit that needs to be made when there are commercial customer contracts with lower indirect rates. My inclination is that contracts get negotiated at different rates all the time and that the government only cares about the "actual" rate or the agreed to rate for the purposes of their contracts and that DCAA would not have any visibility into varying rates that are negotiated with other customers. But I would love a second opinion on this. Also, please note, this is not referencing sales discounts for payment terms, as an example. This is true indirect rates that were agreed to as part of the contracts/POs with various customers. Although, as a side bar, I'd also love a second opinion on sales discounts. Currently, I have instructed a client to book the discount to an unallowable account and credit materials so that the government doesn't pay for the discount the client is giving on payment terms. But if anyone has any second thoughts, I'd happily take those too:) Please note, I've been in the industry (DCAA and private) for 15 years but I am BRAND NEW to Wifcon so please go easy on me! lol

I recommend setting up specific accounts to capture expressly unallowable costs and unallowable costs that are readily identifiable. For all other accounts, I recommend an annual analysis plan for reviewing the GL and identifying any unallowables or potential unallowables based on materiality. I disagree whole heartedly with the above point that it needs to be statistically sound. As a DCAA auditor of 12 years, with a focus in Incurred cost, and now a consulting profession that's a few years old, I've never known of a statistical valid method being of any relevance on the company side. That is the foundation of the AUDIT side so that they can project but that is totally different.