How to Survive a DCAA Pre-Award Audit



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How to Survive a DCAA Pre-Award Audit February 27, 13 Presented by: Paul H. Calabrese Senior Manager 301-214-4137 pcalab@rubino.com Bio http://www.rubino.com/company/staff/11- paul_h_calabrese/view LinkedIn www.linkedin.com/in/pcalabrese Overview DCAA requirements per DCAM 5-2.2 SF 1408 back side of form Cost accounting structures Compliance procedures and forms Preparing for a DCAA review - suggestions 3 1

Pre-Award Survey Purpose is to insure that contractor is: Financially capable Adequate accounting system To avoid potential problems with the financial management of a government cost type contract that requires oversight DCAA performs surveys for DOD contracts & on reimbursable basis for civilian agencies, such as NASA, USAID 4 DCAM 5-2.2 Request by PCO Determine adequacy & suitability of a contractor s Accounting system Practices for accumulating cost under prospective contract Scope is to reach an informed opinion not a full accounting system review 5 DCAM 5-2.2 Utilize SF 1408 Pre-award Survey of Prospective Contractor Accounting Sys. See handout The adequate accounting system criteria is stipulated in FAR 53.9-1(f) If a recent survey was accomplished, DCAA can draw on that information 6 2

DCAM 5-2.2 Disclose compatibility between contract provisions and contractor s accntg sys. Disclose whether system will provide reasonable data to project costs, EAC Equity & consistency of direct charging regarding the proposed contract If cost type contract, consideration as to indirect on actual or s/b ceiling rates 7 DCAM 5-2.2 Comment on any unusual items of cost that should be subject to an advanced agreement or further negotiation SF 1408 Attachments I and II: Section I - Recommendation Section II Evaluation Checklist / next 8 SF 1408 Is accounting system in accord with GAAP? Accrual based system End of period cost in the correct year Labor cost Subcontractor Consultant Indirect expenses 9 3

SF 1408 Accounting system provides for: Distinguish between direct and indirect exp Identify, accumulate direct cost by contract Logical, consistent allocation of indirect cost to intermediate & final cost objectives Accumulation of cost under G/L control No off-book transactions via Excel files SF 1408 Accounting system provides for: Timekeeping system identifies employees labor charges by intermediate or final cost objective Labor distribution system that charges to the appropriate cost objective 11 SF 1408 Accounting system provides for: Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account Job cost reports Bill of material ODC detail Labor distribution B&P and IR&D cost Schedule of indirect expenses 12 4

SF 1408 Accounting system provides for: Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account Financial statements: Balance Sheet and Statement of Income Job cost reports and indirect rates on a monthly basis 13 SF 1408 Accounting system provides for: Segregation and exclusion of unallowable cost per FAR Part 31.2 Contract special provision clauses Advanced agreements with ACO Concurrence letters with DCAA 14 SF 1408 Accounting system provides for: Work breakdown structure (WBS) Identification of costs by Contract Line Item Number (CLIN) and by units (lot) as if each unit or line item was a separate contract if required by proposal format CLIN / SLIN / ACRN Contract / Delivery Order(Task/Sub-Task) 15 5

SF 1408 Accounting system provides for: Work breakdown structure (WBS) Identification of Change Orders by contract provision Segregation of pre-production from production cost termination issues Pre-contract clause Time period and dollar limit 16 SF 1408 Accounting system provides financial info: Limitation of cost FAR 52.232-18 Limitation of fund FAR 52.232- Support for progress payment requests, FAR 52.216-16 17 SF 1408 The accounting system designed and Records maintained in such a manner that: Adequate, reliable data are developed for use in pricing follow-on acquisitions 18 6

SF 1408 Is the accounting system currently in full operation? 1. In operation, 2. Set up, but not yet in operation, 3. Anticipated (planned), or 4. Non-existent. 19 SF 1408 Section I Recommendation Yes / No Yes, with a recommendation that a follow-on accounting system review be performed after contract award. Explanation is required for: Set up or anticipated (planned) Cost Accounting Structure Proper segregation between federal and commercial, between federal contracts Contract delivery orders, contract line item numbers Work Breakdown structures (WBS) Segregate funds and cost 21 7

Cost Accounting Structure Proper delineation between allowable and unallowable cost as prescribed in Federal Acquisition Regulation (FAR) Part 31.2 Distinguish between direct and indirect expenses with consistent definitions Pool indirect cost to develop indirect rates with proper allocation bases 22 Cost Accounting Structure Job cost report Labor Distribution report ODC Detail Schedule of indirect expenses Billing reports See handout report samples per http://sympaq.com/cost-accounting-products/ 23 Cost Accounting Structure Job Cost Report Cost elements: D/L, Fringe, overhead, ODCs, TCI base, G&A WBS task/sub-task, CLIN/SLIN/ACRN Prior Year, MTD, YTD, ITD columns Funding and total contract values Backlog (ITD cost less funding) Indirect at provisional, close at actual 24 8

Cost Accounting Structure Job Cost Report Tracks Bid and Proposal (see IR&D) Tracks Independent Research and Development like direct job, with ODCs and fringe or overhead, if applicable Transferred in total to G&A to be allocated over TCI base Change order accounting: claims, terminations, and change orders 25 Cost Accounting Structure Labor Distribution Reporting Labor Distribution (L/D) run weekly, partial week at month-end to accrue labor and entire month; must maintain timesheets for partial week LD displays hour, cost no pay rates LD sorted by contract (direct, indirect and paid-time-off) LD sorted by each employee 26 Cost Accounting Structure Labor Distribution Reporting Other L/D Sorts: Contract at various WBS Bid and Proposal Independent Research & Development Weekly time sheet edit reports are distributed to managers for review 27 9

Cost Accounting Structure Schedule of Indirect Cost Schedule showing a list of G/L expense accounts summarized and divided by the appropriate allocation base Fringe, overhead, G&A Fringe included Paid-Time-Off (PTO) and allocated over total labor less PTO 28 Cost Accounting Structure Schedule of Indirect Cost Overhead: manufacturing, engineering, overhead at company facility versus off-site (at government site facility), regional overheads, such as DC area versus lower cost Norfolk or San Diego Allocated over direct labor dollars plus bid and proposal (including applied fringe if applicable) 29 Cost Accounting Structure Schedule of Indirect Cost G&A pool includes: Executive staff Accounting and finance HR, IT, purchasing Contracts subcontract admin. Marketing, B&P, IR&D 30

Cost Accounting Structure Schedule of Indirect Cost G&A Pool is allocated over the Total Cost Input (TCI) base: Direct labor Applied fringe Overhead (s) Other direct costs Subcontracts and materials 31 Cost Accounting Structure Invoicing or Billing Cost plus Fixed Fee Firm fixed price Time and material 32 Cost Accounting Structure CPFF Invoicing Public Voucher SF 34/35 Current month (adjustments flow thru) Cumulative / YTD should reconcile to books and records per Job Cost Provide cost element detail @ WBS Directs at actual Indirect rates at provisional 33 11

Cost Accounting Structure FFP Invoicing Progress payment based on total incurred cost to date SF 1443, no profit Fixed amount per month divided by 12 Payments based on deliverables from milestones schedule, items completed Commercial invoice total amount 34 Cost Accounting Structure T&M Invoicing Labor hours (MTD) and (ITD) by labor classification multiplied by contract billing rate Includes negotiated fixed labor hour rates from contract/delivery order Other direct cost at actual G&A indirect rate at provisional 35 Compliance Procedures & Forms Billing procedures Contract brief form + SF 34/35 Certification for invoice policy Code of ethics hotline number Consultant Subcontracts policy Consultant agreement Subcontractor agreement (legal) 36 12

Compliance Procedures & Forms Estimating Get proposal, contracts and finance to work together for TINA sweeps Government property Indirect allowability training Certification for employees to sign 37 Compliance Procedures & Forms Purchasing manual Purchase Request, Purchase Order Personnel manual including benefits Compensation policy 38 Compliance Procedures & Forms Timekeeping Timesheet, overtime authorization, Job assignment record, Timesheet certification for employees Travel Travel authorization, trip report Travel&Expense report, meal record 39 13

Other Requirements Business Systems DFARS 252.242-7005 Accounting system per 252.242-7006 Earned valued management system per 252.234-7002 Estimating system per 252-215-7002 Material management and accounting system per 252.242-7004 Contractor Code of Business Ethics and Conduct FAR 3-13 40 Preparing for DCAA Review 1. Accounting system: self-assessment Review existing commercial accounting system, document it 2. Corrective action plan (DCAA follow-up) What is the GAP between commercial system and new cost accounting system that is compliant with FAR/CAS Identify/recommend areas need change 41 Preparing for DCAA Review 3. Transition plan Blueprint of what the new system will look like 4. Training of contractor personnel 5. Implementation Most work accomplished by contractor personnel, include new hires-expertise 42 14

Preparing for DCAA Review 6. Compliance check Consultant would return to check out cost accounting system and procedures to ensure the corrective action plan provided to DCAA was properly implemented Within 5 to 6 months after implementation Should happen before DCAA follow-up 43 Preparing for DCAA Review Steps 1 through 3, do not train or implement until contract is awarded E.g. Firm won t purchase and commit to expensive job cost software unless awarded new contract 44 Preparing for DCAA Review Format of presentation Use 3 ring notebook make it professional grade Sample reports to support SF 1408 checklist Existing or new compliance procedures Include SF 1408 and any comments if DCAA determined you to be previously inadequate via the SF 1408 45 15

Preparing for DCAA Review Respond to each item in the SF 1408 if you had a negative determination OR Complete ICQ Survey of Contractor s Organization FAR Part 31 Assessment (internal controls/policies) 46 Preparing for DCAA Review PURPOSE: Corrective Action Plan To demonstrate to the government via their rep. DCAA that you understand the compliance requirements, cost accounting system design and you will use the appropriate job cost software to adequately administer all financial aspects of the government contract 47 Any Questions 48 16

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01/02/01 04/13/06 7:25:18 PM Fantastik 1 Corporation Page 1 (Task Level) Job Cost Ledger Period 01-01 Listing from B01.001 to B01.002 Using Actual Rates Printing Contract Status: All Printing Task Status: All Customer BETA SERVICES Task B01.001 Name BETA, TASK 1 Type Leader Rate FFP TIFFANY MAIBERGER Actual Element of Cost MTD YTD ITD Hours Amount % Hours Amount % Hours Amount % Direct Cost Labor - S&I 144.00 $3,398.41.19% 144.00 $3,398.41.19% 290.00 $7,373.97 13.48% Fringe Benefits 9.5593% $324.86 0.97% $324.86 0.97% $324.86 0.59% Direct Cost Subtotal $3,723.27 11.16% $3,723.27 11.16% $7,698.83 14.07% Other Direct Cost Subcontractor Services $26,000.00 77.93% $26,000.00 77.93% $41,000.00 74.93% Travel $550.00 1.65% $550.00 1.65% $550.00 1.01% ODC Subtotal $26,550.00 79.58% $26,550.00 79.58% $41,550.00 75.93% Total Direct 144.00 $30,273.27 90.74% 144.00 $30,273.27 90.74% 290.00 $49,248.83 90.00% Overhead - MC 7.4156% $0.00 0.00% $0.00 0.00% $0.00 0.00% Overhead - SI 12.0987% $450.47 1.35% $450.47 1.35% $1,042.26 1.90% Total Excluding G&A $450.47 1.35% $450.47 1.35% $1,042.26 1.90% General & Administrative 8.5924% $2,639.90 7.91% $2,639.90 7.91% $4,429.44 8.09% Total Indirect $3,090.37 9.26% $3,090.37 9.26% $5,471.70.00% Grand Total $33,363.64 0.00% $33,363.64 0.00% $54,7.53 0.00%

02/28/01 04/13/06 1:54:27 PM Fantastik 1 Corporation Page 1 Project Time Card History Listing from B01.001 to B01.002 Period Range: 01-01 to 01-01 Time Card Date Range: 01/01/01 to 01/31/01 Group By Task Only Contract.Task Client Manager B01.001 B00001 Internal Name External Name Home Division External Number BETA SERVICES NAVAL SUPPLY LAN WAN SUPPORT N00237-01-F913 Period Ending Employee\Vendor Name Company Labor Category Client Bill Category Regular Hours OT Regular Dollars OT 01/15/01 ANGELINA JOLILLIE D01 D01 24.00 0.00 $360.00 $0.00 01/15/01 DEMI MOORENOVICH D02 D02 8.00 0.00 $0.00 $0.00 01/15/01 HILLARY SHANK D02 D02 8.00 0.00 $0.00 $0.00 01/15/01 MORGAN FREEMANSKI D02 D02 8.00 0.00 $0.00 $0.00 01/15/01 TIFFANY MAIBERGER D05 D05 8.00 0.00 $309.52 $0.00 01/15/01 TOM DRUZE D02 D02 8.00 0.00 $0.00 $0.00 01/31/01 ANGELINA JOLILLIE D01 D01 16.00 0.00 $240.00 $0.00 01/31/01 DEMI MOORENOVICH D02 D02 16.00 0.00 $400.00 $0.00 01/31/01 HILLARY SHANK D02 D02 8.00 0.00 $0.00 $0.00 01/31/01 MORGAN FREEMANSKI D02 D02 8.00 0.00 $0.00 $0.00 01/31/01 TIFFANY MAIBERGER D05 D05 8.00 0.00 $288.89 $0.00 01/31/01 TOM DRUZE D02 D02 24.00 0.00 $600.00 $0.00 Task Total 144.00 0.00 $3,398.41 $0.00 Contract.Task Client Manager B01.002 B00001 Internal Name External Name Home Division External Number BETA SERVICES NAVAL SUPPLY LAN WAN SUPPORT N00237-01-F913 Period Ending Employee\Vendor Name Company Labor Category Client Bill Category Regular Hours OT Regular Dollars OT 01/15/01 HILLARY SHANK D02 D02 8.00 0.00 $0.00 $0.00 01/15/01 HILLARY SHANK D02 D03 0.00 0.00 $250.00 $0.00 01/15/01 MORGAN FREEMANSKI D02 D02 8.00 0.00 $0.00 $0.00 01/15/01 TIFFANY MAIBERGER D05 D05 8.00 0.00 $309.52 $0.00 01/15/01 TOM DRUZE D02 D02 (16.00) 0.00 ($400.00) $0.00 01/31/01 HILLARY SHANK D02 D02 8.00 0.00 $0.00 $0.00 01/31/01 HILLARY SHANK D02 D02 (16.00) 0.00 ($400.00) $0.00 01/31/01 MORGAN FREEMANSKI D02 D02 8.00 0.00 $0.00 $0.00 01/31/01 TIFFANY MAIBERGER D05 D05 8.00 0.00 $288.89 $0.00 01/31/01 TOM DRUZE D02 D02 8.00 0.00 $0.00 $0.00 Task Total 24.00 0.00 $1,048.41 $0.00 Contract Total 168.00 0.00 $4,446.82 $0.00

02/28/01 04/13/06 1:52:08 PM Fantastik 1 Corporation Page 1 Other Direct Cost Detail by Task Listing from Contract: B01 to Contract: B01 Listing from Task: 001 to Task: 002 Period Range : 01-01 to 01-01 GL Number Range : Start to End Task 001 Contract B01 Status Active Project Internal Name BETA, TASK 1 Contract Value $1,085,000.00 Manager Client Division Funded Value TIFFANY MAIBERGER BETA SERVICES Management Consulting $1,085,000.00 Cost Category Description Detail Post.Batch Transaction Description Amount Task 001 Contract B01 Manager TIFFANY MAIBERGER Travel Status Active Project Client BETA SERVICES 50.00 Internal Name BETA, TRAVEL TASK 1 ALEXANDRIA Contract Value CAR RENTAL$1,085,000.00 Division Funded Value Management Consulting $1,085,000.00 AP01-01-001 CAR RENTAL $250.00 T. MAIBERGER Cost Category Detail AP01-01-001 TRAVEL REIMBURSEMENT $300.00 Description Post.Batch Transaction Description Amount Account Total $550.00 EOC Total $550.00 Subcontractor Services 5400.00 SUBCONTRACTS TECHNOLOGY SERVICES, INC. AP01-01-001 JANUARY SUBCONTRACTING $32,000.00 AP01-01-001 DECEMBER INVOICE ADJUSTMENT ($7,000.00) AP01-01-001 DECEMBER INVOICE ADJUSTMENT $1,500.00 AP01-01-001 DECEMBER INVOICE ADJUSTMENT ($500.00) Account Total $26,000.00 EOC Total $26,000.00 Task Total $26,550.00

01/02/01 04/13/06 7:12:51 PM Fantastik 1 Corporation Page 1 Analysis of Indirect Rates For Period 01-01 Tier: Fringe Benefits Pool/Base:Company Fringe Benefits PTD YTD 00 00 00 CC Account ID Account Name Actual Budgeted Actual Budgeted 62.00 VACATION LEAVE-EARNED $3,399.86 $5,000.00 $3,399.86 $5,000.00 62.00 OTHER LEAVE-USED $1,445.65 $5,000.00 $1,445.65 $5,000.00 6300.00 INSURANCE $3,000.00 $3,000.00 $3,000.00 $3,000.00 Unadjusted Pool Total $7,845.51 $13,000.00 $7,845.51 $13,000.00 Adjusted Pool Total $7,845.51 $13,000.00 $7,845.51 $13,000.00 00 8000.00 G&A LABOR $2,306.31 $3,000.00 $2,306.31 $3,000.00 5000.00 DIRECT LABOR $28,753.92 $30,000.00 $28,753.92 $30,000.00 5000.BP B&P LABOR $1,638.41 $2,500.00 $1,638.41 $2,500.00 5005.00 DIRECT LABOR OVERTIME $75.00 $500.00 $75.00 $500.00 7000.00 OVERHEAD LABOR $2,248.57 $3,500.00 $2,248.57 $3,500.00 5000.00 DIRECT LABOR $42,604.36 $45,000.00 $42,604.36 $45,000.00 5000.BP B&P LABOR $807.50 $1,500.00 $807.50 $1,500.00 5005.00 DIRECT LABOR OVERTIME $1,643.21 $2,500.00 $1,643.21 $2,500.00 7000.00 OVERHEAD LABOR $1,994.82 $2,000.00 $1,994.82 $2,000.00 Unadjusted Base Total $82,072. $90,500.00 $82,072. $90,500.00 Adjusted Base Total $82,072. $90,500.00 $82,072. $90,500.00 Rate 9.56% 14.36% 9.56% 14.36%

01/02/01 04/13/06 7:12:51 PM Fantastik 1 Corporation Page 2 Analysis of Indirect Rates For Period 01-01 Tier: Overhead - MC Pool/Base:Overhead - MC PTD YTD CC Account ID Account Name Actual Budgeted Actual Budgeted 7000.00 OVERHEAD LABOR $1,994.82 $2,000.00 $1,994.82 $2,000.00 70.00 TRAVEL $150.00 $500.00 $150.00 $500.00 7300.00 SUPPLIES $1,175.00 $1,000.00 $1,175.00 $1,000.00 7515.00 DEP EXP FURNITURE & $50.00 $50.00 $50.00 $50.00 7525.00 DEP EXP EQUIPMENT $0.00 $50.00 $0.00 $50.00 Unadjusted Pool Total $3,469.82 $3,600.00 $3,469.82 $3,600.00 Fringe Allocation $190.69 $275.13 $190.69 $275.13 Adjusted Pool Total $3,660.51 $3,875.13 $3,660.51 $3,875.13 5000.00 DIRECT LABOR $42,604.36 $45,000.00 $42,604.36 $45,000.00 5000.BP B&P LABOR $807.50 $1,500.00 $807.50 $1,500.00 5005.00 DIRECT LABOR OVERTIME $1,643.21 $2,500.00 $1,643.21 $2,500.00 Unadjusted Base Total $45,055.07 $49,000.00 $45,055.07 $49,000.00 Fringe Allocation $4,306.94 $7,428.57 $4,306.94 $7,428.57 Adjusted Base Total $49,362.01 $56,428.57 $49,362.01 $56,428.57 Rate 7.42% 6.87% 7.42% 6.87%

01/02/01 04/13/06 7:12:52 PM Fantastik 1 Corporation Page 3 Analysis of Indirect Rates For Period 01-01 Tier: Overhead - SI Pool/Base:Overhead SI PTD YTD CC Account ID Account Name Actual Budgeted Actual Budgeted 7000.00 OVERHEAD LABOR $2,248.57 $3,500.00 $2,248.57 $3,500.00 70.00 TRAVEL $225.00 $1,000.00 $225.00 $1,000.00 7300.00 SUPPLIES $1,0.00 $1,000.00 $1,0.00 $1,000.00 7515.00 DEP EXP FURNITURE & $50.00 $0.00 $50.00 $0.00 7525.00 DEP EXP EQUIPMENT $0.00 $0.00 $0.00 $0.00 Unadjusted Pool Total $3,823.57 $5,700.00 $3,823.57 $5,700.00 Fringe Allocation $214.95 $481.48 $214.95 $481.48 Adjusted Pool Total $4,038.52 $6,181.48 $4,038.52 $6,181.48 5000.00 DIRECT LABOR $28,753.92 $30,000.00 $28,753.92 $30,000.00 5000.BP B&P LABOR $1,638.41 $2,500.00 $1,638.41 $2,500.00 5005.00 DIRECT LABOR OVERTIME $75.00 $500.00 $75.00 $500.00 Unadjusted Base Total $30,467.33 $33,000.00 $30,467.33 $33,000.00 Fringe Allocation $2,912.46 $4,402.12 $2,912.46 $4,402.12 Adjusted Base Total $33,379.79 $37,402.12 $33,379.79 $37,402.12 Rate 12.% 16.53% 12.% 16.53%

01/02/01 04/13/06 7:12:52 PM Fantastik 1 Corporation Page 4 Analysis of Indirect Rates For Period 01-01 Tier: General & Administrative Pool/Base:General & Administrative PTD YTD 00 00 00 00 00 00 CC Account ID Account Name Actual Budgeted Actual Budgeted 8000.00 G&A LABOR $2,306.31 $3,000.00 $2,306.31 $3,000.00 80.00 TRAVEL $700.00 $1,000.00 $700.00 $1,000.00 80.00 OCCUPANCY $2,575.00 $2,575.00 $2,575.00 $2,575.00 8300.00 SUPPLIES $400.00 $550.00 $400.00 $550.00 8400.00 OUTSIDE PROFESSIONAL $1,750.00 $2,500.00 $1,750.00 $2,500.00 8515.00 DEP EXP FURNITURE & $25.00 $0.00 $25.00 $0.00 Unadjusted Pool Total $7,756.31 $9,725.00 $7,756.31 $9,725.00 Fringe Allocation $2.47 $412.70 $2.47 $412.70 B&P $3,337.51 $3,800.72 $3,337.51 $3,800.72 Adjusted Pool Total $11,314.29 $13,938.42 $11,314.29 $13,938.42 00 00 00 62.00 VACATION LEAVE-EARNED $3,399.86 $5,000.00 $3,399.86 $5,000.00 62.00 OTHER LEAVE-USED $1,445.65 $5,000.00 $1,445.65 $5,000.00 6300.00 INSURANCE $3,000.00 $3,000.00 $3,000.00 $3,000.00 5000.00 DIRECT LABOR $28,753.92 $30,000.00 $28,753.92 $30,000.00 5000.BP B&P LABOR $1,638.41 $2,500.00 $1,638.41 $2,500.00 5005.00 DIRECT LABOR OVERTIME $75.00 $500.00 $75.00 $500.00 50.00 TRAVEL $2,400.00 $5,000.00 $2,400.00 $5,000.00 50.BP TRAVEL-B&P $300.00 $0.00 $300.00 $0.00 50.00 OTHER DIRECT COSTS $2,325.00 $,000.00 $2,325.00 $,000.00 5300.00 CONSULTANTS $0.00 $1,000.00 $0.00 $1,000.00 5400.00 SUBCONTRACTS $26,000.00 $,000.00 $26,000.00 $,000.00 7000.00 OVERHEAD LABOR $2,248.57 $3,500.00 $2,248.57 $3,500.00 70.00 TRAVEL $225.00 $1,000.00 $225.00 $1,000.00 7300.00 SUPPLIES $1,0.00 $1,000.00 $1,0.00 $1,000.00 7515.00 DEP EXP FURNITURE & $50.00 $0.00 $50.00 $0.00 7525.00 DEP EXP EQUIPMENT $0.00 $0.00 $0.00 $0.00 5000.00 DIRECT LABOR $42,604.36 $45,000.00 $42,604.36 $45,000.00 5000.BP B&P LABOR $807.50 $1,500.00 $807.50 $1,500.00 5005.00 DIRECT LABOR OVERTIME $1,643.21 $2,500.00 $1,643.21 $2,500.00 50.00 TRAVEL $1,800.00 $500.00 $1,800.00 $500.00 50.BP TRAVEL-B&P $75.00 $0.00 $75.00 $0.00 50.00 OTHER DIRECT COSTS $175.00 $500.00 $175.00 $500.00 5400.00 SUBCONTRACTS $11,500.00 $8,000.00 $11,500.00 $8,000.00 7000.00 OVERHEAD LABOR $1,994.82 $2,000.00 $1,994.82 $2,000.00 70.00 TRAVEL $150.00 $500.00 $150.00 $500.00 7300.00 SUPPLIES $1,175.00 $1,000.00 $1,175.00 $1,000.00 7515.00 DEP EXP FURNITURE & $50.00 $50.00 $50.00 $50.00 7525.00 DEP EXP EQUIPMENT $0.00 $50.00 $0.00 $50.00 Unadjusted Base Total $135,236.30 $149,300.00 $135,236.30 $149,300.00 Fringe Allocation ($2.47) ($412.70) ($2.47) ($412.70) B&P ($3,337.51) ($3,800.72) ($3,337.51) ($3,800.72) Adjusted Base Total $131,678.32 $145,086.58 $131,678.32 $145,086.58 Rate 8.59% 9.61% 8.59% 9.61%

Standard Form 35 September 1973 4 Treasury FRM 00 35-1113-01 Exception approved by NARS, -77 PUBLIC VOUCHER FOR PURCHASES AND SERVICES OTHER THAN PERSONAL CONTINUATION SHEET VOUCHER ID SCHEDULE NO. SHEET NO. 1 U.S. DEPARTMENT, BUREAU, OR ESTABLISHMENT BETA SERVICES NUMBER AND DATE OF ORDER DATE OF DELIVERY OR SERVICE ARTICLES OR SERVICES (Enter description, item number of contract or Federal supply schedule, and other information deemed necessary) QUAN- TITY COST UNIT PRICE PER AMOUNT BETA SERVICES 999999 MAIN STREET ANYWHERE, VA 230 Task Name: BETA, TASK 1 Period of Performance: 02/01/01 to 02/28/01 Invoice Date 02/28/01 Fantastik 1 Corporation 15839 Crabbs Branch Way Franklin Office Park Rockville, MD 855 Contract Cost Contract Fee Total 85.0000% of Fee Cost and 85.0000% of Fee 1,000,000.00 85,000.00 1,085,000.00 72,250.00 1,072,250.00 Labor Labor - Systems Integration Subtotal Outside Service Subtotal Other Direct Cost Miscellaneous Subcontractor Services Travel Subtotal Indirect Costs Overhead - SI General & Administrative Subtotal Current Billing Cumulative Billed Hours Dollars Hours Dollars 96.00 96.00 0.00 0.00 $2,619.05 498.00 $13,402.54 $2,619.05 498.00 $13,402.54 $0.00 0.00 $0.00 $0.00 0.00 $0.00 $50.00 $0.00 $4,000.00 $45,000.00 $550.00 $4,050.00 $45,650.00 $2,095.24 $,722.04 $1,007.89 $8,024.07 $3,3.13 $18,746.11 Base Fee $608.04 $6,0.49 Total Billed 96.00 $,380.22 498.00 $83,899.14

02/28/01 04/13/06 2:38:53 PM Fantastik 1 Corporation Page 1 Invoice Worksheet Listing from Contract: A01 to Contract: A01 Listing from Task: 001 to Task: 003 For Period 02-01 ALPHA SERVICES User Invoice ID: 9999 LEE HIGHWAY SUITE 140 FALLS CHURCH, VA 241 Funding Ceiling Billed Prior This Invoice Remaining $1,247,750.00 $46,8.00 $54,440.00 $1,146,500.00 Your Contract N004-00-F237 Contract Name ALPHA SERVICES Contract Cost Fee Value $1,650,000.00 $140,250.00 $1,790,250.00 Period of Performance: 02/01/01 to 02/28/01 Current Period Inception to Date Element of Cost Hours Rate Billing Hours Dollars Labor LEVEL 1 A01 88.00 $55.00 $4,840.00 0.00 $11,000.00 LEVEL 2 A01 152.00 $75.00 $11,400.00 559.00 $41,700.00 LEVEL 5 A01 48.00 $125.00 $6,000.00 1.00 $15,000.00 Total Labor 288.00 $22,240.00 879.00 $67,700.00 Other Direct Costs Miscellaneous $250.00 ($1,050.00) Subcontractor Services $32,000.00 $32,000.00 Travel $0.00 $1,950.00 ODC Subtotal $32,250.00 $32,900.00 Total Direct $54,490.00 $0,600.00 Indirect Costs $0.00 $0.00 Total Indirect Total Billed Before Fee $0.00 $0.00 $54,490.00 $0,600.00 Fee $0.00 $0.00 Taxes $0.00 $0.00 Retainage $0.00 $0.00 Total Billed $54,490.00 $0,600.00

Fantastik 1 Corporation 15839 Crabbs Branch Way Franklin Office Park Rockville, MD 855 12/31/00 DEC 00 Due Date 01/30/01 GAMMA SERVICES P.O. BOX 11254 ANYTOWN, NJ 08881 DECEMBER BILLING DECEMBER BILLING $30,000.00 $30,000.00 Client ID G00001 Invoice # DEC 00 $30,000.00