Transforming Subcontractor and Customer Management. Presented by: Asa Gilliland Sharon Edelmann Zoe Rann

Transforming Subcontractor and Customer Management Presented by: Asa Gilliland Sharon Edelmann Zoe Rann

Redstone GCI Unanet Partner Based in Huntsville, AL with consultants located in Northern Virginia, Orlando and Atlanta Provide strategic accounting and compliance services to companies working with the U.S. Government FAR, CAS, DFARS Business Systems Compliance DCAA/DCMA Business Systems Mock Audit, Corrective Actions and Rebuttal Litigation Support Accounting System Software Implementation & Outsourcing Support Incurred Cost Submission Preparation & Review Human Resources Compliance (FLSA, SCA, DBA, et. al Federal Requirements) Proposal Support, Cost/Pricing and Budgeting Support Copyright 2016. Redstone GCI, Inc. 3

A Bit of Recent History 2016 NDAA Section 893 Effective on the date of the enactment of this Act, the Defense Contract Audit Agency may not provide audit support for non-defense Agencies unless the Secretary of Defense certifies that the backlog for incurred cost audits is less than 18 months of incurred cost inventory. Copyright 2016. Redstone GCI, Inc.

Audit Guidance on Revised Policy and Procedures for Sampling Low- Risk Incurred Cost Proposals Key Question: Available to prime contractors in application to subcontractors All low risk sampled as follows: Low-Risk Adequate Proposals by Auditable Dollar Value (ADV) Low-Risk Sampling Percentages Less Than $1Million 0% $1Million to $50 Million 5% $50Million to $100 Million 10% $100Million to $250 Million 20% Greater than $250 Million 100% Copyright 2016. Redstone GCI, Inc.

Some Recent Findings from DOD-IG reports Disclaimed Opinions 16.2% Decrement to total Cost $8.6M CQ subcontract labor inadequate documentation $33.9m CQ Prime did not monitor SubK Labor Quals. $6.6m CQ 20% decrement to all subcontract costs as a result of inadequate monitoring CQ = cost questioned Copyright 2016. Redstone GCI, Inc. $37.9m CQ FFP Contract with inadequate purchase documentation on contract requirement or prudent price $52m CQ unsupported SubK Cost and failure to audit SubK systems

Events & Trends Why Discuss Prime Ktr-Sub Roles? DFARS proposed rule 2013- D034 Evaluating Price Reasonableness for Commercial Items FAR 15.403-1 Prohibition on obtaining Certified Cost or Pricing Data (c)(3) Commercial items Director DDP: Pentagon will demand fair prices on commercial items/services You can buy those at the hardware store right? Copyright 2016. Redstone GCI, Inc. 8

Events & Trends Why Discuss Prime Ktr-Sub Roles? Litigation Laguna Construction Co. ASBCA No. 58569 KBR CoFC (Subcontractor prices and Kickbacks) US Court of Appeals Circle C Construction SCA violation, electricians underpaid $9,916 Government damages $763,000 (3x contract price for electrical work) tainted work = valueless and treble damages Underpayment was by a subcontractor Copyright 2016. Redstone GCI, Inc. 9

Events & Trends Why Discuss Prime Ktr-Sub Roles? DCAA CAM 6-802.2 Basic Responsibilities The responsibility of the prime contractor for managing its subcontracts is stated in FAR 42.202(e). The prime contractor is responsible for subcontract award, technical and financial performance monitoring, ensuring that indirect rate proposals and annual rate adjustments are submitted To accomplish this responsibility, the prime contractor should have adequate internal controls to assure subcontract costs are allowable, allocable & reasonable. R E A D I N G FAR 42.202(e)(2) The prime contractor is responsible for managing its subcontracts. The CAO s review of subcontracts is normally limited to evaluating the prime contractor s management of the subcontracts. Copyright 2016. Redstone GCI, Inc. 10

Prime Contractor Audits of Subcontractors DCAA CAM 6-802.4 Prime Contractor Audits of Subcontract Claims on those low risk subcontracts where the prime contractor performs the audit, DCAA shall review the work papers (scope and extent of audit was sufficient) DCAA Audit 11015, Testing of Paid Vouchers, Section C-1, step 8a-e: ensure that the prime contractor is performing steps similar to that done by the government COR (i.e. billings are consistent with scope of work), subcontractor billing rates are updated timely, timely resolution of subcontractor overpayments, requesting DCAA assist audits for major subcontractors Copyright 2016. Redstone GCI, Inc. 11

Other Trends Who is my Contract Auditor? Independent CPA firms DOE engaged KPMG (2011) & DOE OIG recent report with concerns for unaudited costs (Hanford Nuclear Site) DHS engaged auditors from GSA Schedule DHHS/CMS engaged auditors from GSA Schedule NASA OIG Recommendation (Dec 2014)---Risk created by DCAA Low-Risk ICP Sampling Prime contractor related to subcontracts DCMA Instruction 135 Contract Closeout DCAA Post-payment voucher review The Unanswered Question: Audits or reviews? Copyright 2016. Redstone GCI, Inc. 12

Regulations Relating to Subcontracting FAR 52.216-7(d)(5) Prime Responsibility for settling indirect rates 44.101 Definition of subcontractor any supplier, distributor, vendor of firm that furnishes supplies or services to a prime or other subcontractor 15.404-(b)(3) Subcontract pricing considerations FAR 42.202(e)(2) FAR 52.215-12 Subcontractor Certified Cost or Pricing data Subpart 9.1 Responsible Prospective Contractors Copyright 2016. Redstone GCI, Inc. 13

Prime Contractor Compliance Alternatives with Respect to Subc. Pre-award Differentiate price from cost analysis (prime should perform price analysis does not require access to subcontractor cost data) Recognize that prime contractor responsibilities may or may not be authority (e.g. commercial item determination) Documentation is critical (not just for contract negotiations, but also for future government audits, including TINA, estimating, purchasing, voucher reviews and incurred costs) for price reasonableness, source selection (competitive or sole source or selecting best value vs lowest price) Copyright 2016. Redstone GCI, Inc. 14

Pricing: Audits vs. Non-Audits Question: Does submission of certified cost or pricing data trigger the requirement for an audit? Response (DAU): No, the submission of COPD does not automatically trigger a corresponding audit of that data. Cost or price analysis of that data can be performed without validating (auditing) the submitted data. Note the distinction between audited and nonaudited is clearly identified in DCMA reports (e.g. forward pricing rates). Copyright 2016. Redstone GCI, Inc. 15

Prime Contractor Compliance Alternatives with Respect to Subc. Post-award You define managing subcontracts, but give consideration to DCAA and/or customer expectations. Do not inject audits into policies or procedures unless compelled to do so (note DCMA CPSRs include a note clearly stating these are not audits) Subcontractor self-certifications (accounting system, provisional rates, indirect cost rate proposal submission if also required by prime contracts); but self-certifications without any corroborating data are risky business Subcontract clause with access to specified records and/or third party verification (mock audits) Copyright 2016. Redstone GCI, Inc. 16

Prime Contractor Compliance Alternatives with Respect to Subc. Closeout Consider contract close-out expediencies Quick close-out and/or DCAA Low Risk (concept) Convert to FFP (with support for the fixed price) Third party audits (attestation or agreed upon procedures/mock audit) Copyright 2016. Redstone GCI, Inc. 17

Incurred Cost Proposal (ICPs) 52.216-7 Allowable Cost and Payment Clause May 2011 Defines an adequate final indirect cost rate proposal (ICP) & timing --within 6 months of end of contractor fiscal year Written understanding of final indirect cost rates (rate agreement letter) Within 120 days of rate agreement, submit a completion voucher for contracts physically complete in the applicable year (government recourse is unilateral modification and accounting system deficiency) Completion (close-out) invoice (w/i 60-days) shall include settled subcontract amounts and rates. The prime contractor is responsible for settling subcontractor amounts..and providing the CO with status of subcontractor audits Copyright 2016. Redstone GCI, Inc. 18

Incurred Cost Proposals The Most Frequent Issues (Direct Costs) T&M Costs (amounts invoiced) Employee qualifications ( T labor rate categories) Subcontractors billed at contractor T rates Evidence of subcontractor payments Direct and Indirect travel Lowest available airfare Travel changes Direct Labor Timecards or evidence of payment Directly associated with unallowable costs (e.g. lobbying) Direct Material of Subcontract Costs Missing procurement files including authorizations or funding increases Evidence of payment or failure to manage subcontractor Copyright 2016. Redstone GCI, Inc. 19

Contact Information: Redstone Government Consulting, Inc. 4240 Balmoral Drive SW,,Suite 400 Huntsville, Alabama 35801 Telephone: 256-704-9800 Email: Asa Gilliland Senior Managing Consultant agilliland@redstonegci.com R. Scott Butler, CPA Owner-Managing Director sbutler@redstonegci.com Copyright 2016. Redstone GCI, Inc. 20

Do You IMU? Presented by: Sharon Edelmann, Director of Technology Services

The World Without IMU Import Export 22

Automation with the IMU Schedule it IMU Do something before Many at a time Import Export Do something after Email results to you AND Save History / Logging 23

Why is the IMU useful? External system export and/or import Core of our Deltek and Dynamics SL integrations Import CC transactions when file arrives Internal export/import combination Export Sum of Comp Time Earned Hours + Import Assignment budget Schedule to email an export Regularly export certain data to email to PMs 24

How does the IMU work? Communicates with Unanet over HTTP Install IMU on any machine that can bring Unanet up on browser How many? Can install multiple IMUs on a machine Each one selfcontained and unaware of the others Hosting Hosted at your location, but this may be changing 25

IMU Ex/Im Combination Examples Reports project task/expense type pairs that are out-ofbalance where Actuals + Future Assignments <> Plan Provides automatic leave time entry into locked timesheet for business hours missing from the timesheet (Flex Time / PTO) Corrects hand-entered project and person data (from Quickbooks) by resetting features inconsistent with company standard Executes data checks and reports via email any content that is incomplete or incorrect. (Finds T&M plans/assignments without labor categories or without cost structures defined; Finds project profiles with budgets that don t tie to sum of task profile budgets; Finds BOT/EOT dates in direct project and task profiles) Creates assignment on travel task based on presence of labor task assignment ; Creates non-billable task for all direct contract efforts Calculates a 4-parameter determination of Red-Yellow- Green project condition based on current revenue as measured against straight-line estimate to funded value at POP end date Imports updated single-day holiday assignments based on Unanet s holiday table 26

Resources + Q&A Unanet Help Docs Kc.Unanet.com Ask your CAM! 27

Transforming Customer Account Management Presented by: Zoe Rann, Customer Account Manager

Transformation First comes thought; then organization of that thought, into ideas and plans; then transformation of those plans into reality. ~Napoleon Hill The only way you survive is to continuously transform; That makes you an innovation company. ~Ginni Rometty 29

Collaboration 30

All of Unanet Contributes CXO CAM Support PMO Services Finance 31

Finance Team 32

Project Management Office 33

Professional Services 34

Customer Support 35

Customer Account Management 36

Executives 37

Single Source of Truth 38

Shared Metrics 39

Questions 40

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