FAR UPDATE , Allowable Cost and Payment (Jun 2013)

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1 FAR UPDATE , Allowable Cost and Payment (Jun 2013) "It's never too early to prepare for your incurred cost submission (A webinar sponsored by Pleasant Valley Business Solutions) 1

2 Objective Know the regulations Know the support requirements for an adequate submission Know who you are submitting to Know which schedules can be complete routinely, monthly, quarterly and upon independent audit.

3 Know the Regulations FAR Update Allowable Cost and Payment (June 2013) DCAA FAR Cost Principles Guide FAR , Composition of Total Costs FAR , Direct costs FAR , Indirect costs FAR , Selected Costs DCAA Penalties for Mischarging Truth in Negotiations Act (TINA) Other agencies may have specific reference documents

4 FAR Update Allowable Cost and Payment (June 2013) Updated to include incurred cost schedule adequacy guidelines FAR (d)(2)(iii) An adequate indirect cost rate proposal shall include the following data unless otherwise specified by the cognizant Federal agency official. [Standard ICS Schedules A - O] FAR (d)(2)(iv) The following supplemental information is not required to determine if a proposal is adequate, but may be required during the audit process. [Optional ICS Schedules A - O] FAR (d)(2)(v) Requires contractors to update billings on all contracts to reflect the final settled rates within 60 days after settlement. 4

5 DCAA FAR Cost Principles Guide Total Cost FAR , Composition of Total Costs - The total cost, including standard costs properly adjusted for applicable variances of a contract, is the sum of the direct and indirect costs allocable to the contract, incurred or to be incurred, plus any allocable cost of money pursuant to , less any allocable credits. FAR , Allowability - A cost is allowable only when the cost complies with all of the following requirements FAR , Reasonableness - A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. FAR , Allocability - A cost is allocable if it is assignable or chargeable to one or more cost objectives on the basis of relative benefits received or other equitable relationship. Terms of Contract (indirect rate ceilings) FAR , Selected Costs (Select unallowable costs defined) 5

6 DCAA FAR Cost Principles Guide Total Cost (Continued) FAR Credits - The applicable portion of any income, rebate, allowance, or other credit relating to any allowable cost and received by or accruing to the contractor shall be credited to the Government either as a cost reduction or by cash refund. FAR , Direct costs - A direct cost is any cost that can be identified specifically with a particular final cost objective. FAR , Indirect costs - After direct costs have been determined and charged directly to the contract or other work, indirect costs are those remaining to be allocated to intermediate or two or more final cost objectives. FAR , Selected Costs

7 Know the support requirements for an adequate submission Final Trial Balance for the current and previous fiscal years Job Cost for each direct cost account on the trial balance Contract Brief Additional info for Contract type, Customer type, Contract limitations, etc T&M Billing Rate Schedules Subcontract Vendor Brief Prime contract number working on. Address Point of Contact Subcontract Value Period of Performance Award Type Paid when Paid Value Added analysis

8 Know the support requirements for an adequate submission (Continued) All Sales Invoices to customers Quarterly 941 Filings Listing of Decisions, Agreements or Approvals from DCAA, CO Listing of Accounting or Organizational changes

9 Routine Schedules Contract Briefs (update for mods) Subcontract Briefs (update for mods) Value Added Analysis Subcontractor Cost Paid When Paid Trial Balance Review for Reasonableness Review for Allocability Review for FAR Part 31 Unallowable Listing of Decisions, Agreements or Approvals from DCAA, CO (Schedule M) Listing of Accounting or Organizational changes (Schedule M)

10 Monthly Schedules Indirect Cost Rate Calculation (Schedules A through E) Job cost (Schedule H) Indirect Cost Rate Variance Analysis T&M Sales Invoices (Schedule K, I) CPFF Sales Invoices (Schedule I)

11 Quarterly Schedules Labor reconciliation to Quarterly 941 (Schedule L)

12 Annual Schedules Final Trial Balance Final Indirect Cost Rate Calculation Final Job cost

13 Adequate ICS Schedules (A) Summary of all claimed indirect expense rates, including pool, base, and calculated indirect rate. (B) General and Administrative expenses (final indirect cost pool). Schedule of claimed expenses by element of cost as identified in accounting records (Chart of Accounts). (C) Overhead expenses (final indirect cost pool). Schedule of claimed expenses by element of cost as identified in accounting records (Chart of Accounts) for each final indirect cost pool. (D) Occupancy expenses (intermediate indirect cost pool). Schedule of claimed expenses by element of cost as identified in accounting records (Chart of Accounts) and expense reallocation to final indirect cost pools. (E) Claimed allocation bases, by element of cost, used to distribute indirect costs. (F) Facilities capital cost of money factors computation. (G) Reconciliation of books of account (i.e., General Ledger) and claimed direct costs by major cost element. (H) Schedule of direct costs by contract and subcontract and indirect expense applied at claimed rates, as well as a subsidiary schedule of Government participation percentages in each of the allocation base amounts. (I) Schedule of cumulative direct and indirect costs claimed and billed by contract and subcontract. (J) Subcontract information. Listing of subcontracts awarded to companies for which the contractor is the prime or upper-tier contractor (include prime and subcontract numbers; subcontract value and award type; amount claimed during the fiscal year; and the subcontractor name, address, and point of contact information). (K) Summary of each time-and-materials and labor-hour contract information, including labor categories, labor rates, hours, and amounts; direct materials; other direct costs; and, indirect expense applied at claimed rates. (L) Reconciliation of total payroll per IRS form 941 to total labor costs distribution. (M) Listing of decisions/agreements/approvals and description of accounting/organizational changes. (N) Certificate of final indirect costs (see , Certification of Final Indirect Costs). (O) Contract closing information for contracts physically completed in this fiscal year (include contract number, period of performance, contract ceiling amounts, contract fee computations, level of effort, and indicate if the contract is ready to close). 13

14 Contact Information Plaza America Drive, #609 Reston, VA

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