Buckle Up, Contractors! The intensity of the ride is looking to get bumpier; DCAA Issues Guidance on Expressly Unallowable Costs.

Bill Walter is a Partner in DHG’s Government Contract Advisory practice. He has over three decades of experience in the government contracting industry. DCAA recently issued two pieces of guidance to its auditors likely foretelling the next big challenge between contractors and DCAA auditors.  The guidance focuses on the identification of expressly unallowable costs and the recovery of penalties on those questioned costs. On December 18, 2014, the Agency issued MRD14-PAC-021(R), Audit Alert Distributing a Listing of Cost Principles That Identify Expressly Unallowable Costs.  The guidance contains over 32 pages of cost principle excerpts and directs the DCAA auditor to question “costs based on a cost principle that is on the list” and “treat the questioned costs as expressly unallowable and subject to penalties.” On January 7, … Continue reading

Proposing a Simpler Exemption

On November 19, 2012 the Office of Federal Procurement Policy (OFPP) and the Cost Accounting Standards (CAS) Board issued an invitation for public comments concerning a proposed modification to the existing “commercial item” exemption. (77 Fed. Reg. 69422). The proposed change eliminates the detailed listing of permissible contract types included in the exemption found at CFR 9903.201-1(b)(6).  This will likely provide an exemption for more contracts that clearly should not be subject to CAS coverage. The CAS Board “believes that there is an inconsistency in the regulatory text” of the exemption between the current exemption wording and “other applicable statutory and regulatory provisions.”  The Board wants to expand the scope of contracts exempt from CAS and to allow for a more generalized statement. Currently, the exemption … Continue reading