Accounting and Costs

Auditing Contractor Business Systems

This course covers audit approaches, procedures, and techniques to conduct oversight reviews of government contractor internal business systems, identifying the tools, policies, procedures, operating instructions, and documentation considered necessary for verifying compliance with relevant government contract requirements.   It is recommended for individuals with responsibilities for conducting internal compliance audits and oversight reviews, as well as those who are subject to such activities.

Cost & Price Realism

Government Contracting Officers are required to “purchase supplies and services from responsible sources at fair and reasonable prices”:

“(1) The contracting officer is responsible for evaluating the reasonableness of the offered prices. The analytical techniques and procedures described in this subsection may be used, singly or in combination with others, to ensure that the final price is fair and reasonable. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required.

(2) Price analysis shall be used when certified cost or pricing data are not required

(3) Cost analysis shall be used to evaluate the reasonableness of individual cost elements when certified cost or pricing data are required. Price analysis should be used to verify that the overall price offered is fair and reasonable.”2

The CO is given the following additional guidance:
“Normally competition establishes price reasonableness. Therefore, when contracting on a firm fixed-price or fixed-price with economic price adjustment basis, comparison of the proposed prices will usually satisfy the requirement to perform price analysis, and a cost analysis need not be performed.”3

Government Contractors, when purchasing supplies or services under a government cost reimbursement contract, are held to a similar standard.4 Furthermore, when bidding on any contract for which “certified cost or pricing data” are required, contractors are instructed to:

“Conduct price analyses of all subcontractor proposals. Conduct cost analyses for all subcontracts when certified cost or pricing data are submitted by the subcontractor. Include these analyses as part of your own certified cost or pricing data submissions for subcontracts expected to exceed the appropriate threshold in FAR 15.403-4.”5

Cost Analysis, Price Analysis, and Cost Realism – critical and essential tools used in assessing fairness and reasonableness of proposed prices – must be understood by buyers and sellers in all government contracting situations – government contracting officers, and contractors alike,

Taught in a straight forward manner from the perspective of the Buyer, Cost Realism: Practical Price and Cost Analysis in Government Contracting presents a thorough discussion of these concepts in practical and actionable terms. Participants will learn not only the “why’s” but the “how to’s”. The course objective, simply stated, is to have participants obtain a working level understanding of what the dual techniques of Cost Analysis and Price Analysis are, when they are to be used, how to accomplish them, and how to use the results in determining Cost Realism. This objective is achieved through a thorough review and analysis of the regulations and illustrated through a variety of real world examples, scenarios and case studies.

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1 FAR 15.402 – Pricing Policy
2 FAR 15.404-1(a) – Proposal Analysis Techniques
3 FAR 15.305 – Proposal Evaluation
4 FAR 44 – Subcontracting Policies and Procedures
5 FAR Table 15-2 – Instructions for Submitting Cost/Price Proposals When Cost or Pricing Data Are Required particularly when the contractor fills both the seller’s and buyer’s shoes in performing on a government contract.

FAR Part 31 Cost Principles

Most government contracts require identification of the elements and a stated cost at the time estimates are prepared. Additionally, as work progresses, as change orders are negotiated and after completion of work. This course reviews the cost principles applicability to the various contract types and procurement methods of the government. This course also addresses the current areas of audit scrutiny by the government and methods of complying with the regulations including business systems and disclosure requirements.

Preparing the Incurred Cost Submission

Doing business with the US Government is always challenging and the many onerous accounting requirements only make it more difficult. The purpose of this class is to help add clarity to Incurred Cost Submission requirement, which is an annual requirement for any contractor with flexibly priced contracts. This course will provide government contractors with a step by step guide in developing their Incurred Cost Submission to ensure that all allowable costs are properly captured and claimed for reimbursement, while also minimizing audit risk. Before contractors can fully understand the mechanics of the submission they have to understand the detailed government contract accounting requirements governing allowability, allocability, and reasonableness. The course will provide attendees with a detailed review of the both the required and optional schedules of the submission. Additionally, through the use of a case study, attendees will walk through a sample submission and gain a thorough understanding of the critical data points, supporting documentation, and how to reduce DCAA audit risk. This course will provide attendees with the expertise needed to successfully complete the submission and prepare for the audit. In addition, we will provide the attendees with real life examples of existing incurred cost challenges, DCAA audit positions, and a detailed overview of the current DCAA audit environment and the challenges they present to contractors. Whether you are completing your incurred cost submission for the first time or learning that what you’ve been doing for the last 20 years is now in question, this course can provide you the answers.

Supply Chain Trifecta Week: MMAS, CPSR, Managing Government Property

CPSR: Complying with Contractor Purchasing System Requirements

This is a comprehensive course addressing US Government contractor requirements related to letting subcontracts under government prime contracts. Participants will learn the flow of the acquisition process, the types of procurements and the types of contracts, how to prepare a solicitation, and identify sources, how and when to perform price or cost analysis, how and when to request and evaluate performance of a technical analysis, the clauses to include in government subcontracts, what to include in small business plans, US Government contract unique purchasing related activities and events, purchasing file documentation requirements, areas to address in purchasing policies and procedures, purchasing system contractual requirements, and government oversight. This course provides participants with the knowledge needed to comply with US Government contractor contractual requirements regarding implementation and maintenance of an adequate purchasing system. It is recommended for those individuals who are responsible for US Government contractor purchasing or subcontracting, implementing and maintaining adequate purchasing systems and supporting US Government Contractor Purchasing System Reviews (CPSRs), and conducting oversight of purchasing systems.

MMAS: Material Management & Accounting Systems

This is a comprehensive course addressing US Government contractor requirements related to Material Management & Accounting Systems (MMAS). Participants will learn the nature and intent of the DFARS rules, and details regarding US government audit techniques, and strategies for avoiding or minimizing the effect of adverse audit findings. This course provides participants with the knowledge needed to comply with US Government contractor contractual requirements regarding implementation and maintenance of a compliant MMAS. It is recommended for those individuals with contract containing the MMAS clause who are responsible for US Government contract compliance, material planning, sourcing, inventorying, issuing, and accounting for materials and material costs, as well as those responsible for implementing and maintaining an adequate MMAS, or conducting related compliance oversight.

Managing Government Property

Concentrated training on the requirements for managing Government owned property (acquired property and furnished property) to ensure contractor and Government personnel will effectively manage the Property lifecycle per regulations and contractual requirements. This training will also include key points that will assist in resolving Property Management business system issues prior to occurrence. Includes point-by-point training on:

  • Authority. Including allowability, allocability, and reasonableness
  • Types of Government Property
  • Item Unique Identification and other reporting requirements
  • Self-assessments and Metrics
  • Contractor obligations and Government responsibilities
  • Property provided to Subcontractors
  • Use of commercial practices, voluntary consensus standards or industry standards
  • Understanding ownership and title on acquired property

The Trifecta: Price Analysis, Cost Analysis, and Contract Negotiations

The US Government relies on contractor pricing proposals and cost representations to establish prices and/or reimburse actual costs. In this regard, the burden is on the contractor to demonstrate that prudent business actions have been taken to determine that the prices paid to lower tier suppliers are fair and reasonable. In addition, the Government contracting officer has a responsibility to assure that the Government pays a fair and reasonable price for the goods and services it acquires. This course is designed to provide specific guidance in performing and documenting price analysis and cost analysis for goods and services acquired for US Government contracts and subcontracts. Students will benefit from attending either one day, two days, or all three days of this course, depending on the extent to which they utilize/need to understand price analysis and/or cost analysis.

Upcoming Seminars