Whats New

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The Basics Beverly Arviso, CPA, CPCM,
CFCM Founder, Arviso, Inc. beverly_at_arvisoinc.com 7
57-373-9536
Defense and Homeland Security Consortium
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Course Objectives

• The Basics
• Contract Administration
• Contract Accounting
• Questions and Answers

Defense and Homeland Security Consortium
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The Basics

• Taxpayer ID Number
• IRS 1-800-829-1040
• Dunn Bradstreet Number
• 1-800-333-0505
• www.dnb.com
• Register in the Central Contractor Registration
• www.ccr.gov
• On-line Representations and Certifications
  Application (ORCA)
• https//orca.bpn.gov
• Cage Code
• www.dlis.dla.mil

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Contract Administration

• Federal Acquisition System
• Federal Acquisition Regulation (FAR)
• www.arnet.gov
• Agency Supplements
• Except as authorized by law, agency supplements
  shall not conflict with or be inconsistent with
  the FAR

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Contract Administration

• Who acts for the Government?
• Contract Specialist
• Contracting Officers
• Warrants via SF1402
• Only person authorized to enter into contracts on
  behalf of the Government
• Administrative Contracting Officer (ACO), FAR
  42.302
• Contracting Officers Representatives
• COR Training
• COR Assignment Letter

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Contract Administration

• Most contract types are classified by how they
  are priced
• The objective to be achieved when negotiating
  contracts type and price is to agree on a type
  and price that will result in reasonable
  contractor risk while providing the contractor
  with the greatest incentive for efficient and
  economical performance

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Contract Administration

• Impact of Contract Types
• The amount of government financial review and
  surveillance is determined by the type of
  contract awarded
• The government will have greater interest in the
  companys accounting practices where incurred
  costs are the primary factor in establishing the
  amount the contracting agency ultimately pays for
  the work performed
• When the final contract price is unaffected by
  actual cost or performance, government
  procurement policy requires considerably less
  review and surveillance

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Contract Administration

• Contract Types
• Firm Fixed Price (FFP)
• Time-and-Materials (TM)
• Cost Reimbursement
• Indefinite Delivery/Indefinite Quantity (IDIQ)
• Delivery vs. Task Order
• Government Wide Acquisition Contracts (GWACs)
• Multiple Award Contracts

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Contract Administration

• RFP Process
• Identification of a need
• Site Surveys
• Industry Days
• Draft RFPs
• Bid/No Bid Decision
• Identify Team
• Internal and External Parties
• Teaming Agreements
• Non-Disclosure Agreements
• Release of RFP
• Begin writing BEFORE RFP is released.how?

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Contract Administration

• Read the solicitation (and read it again and
  again)
• Determine Contract Type
• Schedule B, Supplies or Services and Prices/Cost
• Schedule C, Statement of Work
• Schedule L, Instructions, Conditions, and Notices
  to Offerors
• Schedule M, Evaluation Factors for Award

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Price Analysis vs. Cost Analysis

• What is the difference between cost and pricing?

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Price Analysis

• The government is able to determine the price to
  be fair and reasonable without evaluating the
  separate cost elements and proposed profit
• Competition in the market determines the price

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Price Analysis

• Price Analysis Techniques
• Competitive price proposals
• Comparison of previously proposed prices for the
  same or similar items or service
• Commercial items or services
• Prices set by law or regulation
• Catalog prices
• Price Analysis alone may not be sufficient for
• Sole source FFP and TM procurements
• Modification or changes to existing FFP or TM
  Contracts

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Cost Analysis

• Analyzing the various cost elements that make up
  the price, e.g., labor, materials, overhead, and
  profit, in order to determine if the price
  proposed is fair and reasonable to the Government
• Price analysis must still be performed
• Each element of cost must be verifiable
• Direct Labor
• Materials
• Travel
• Subcontract costs

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Direct Labor Rate Development

• Actual direct labor rates
• Labor category rates
• Blended rates (covers several categories)
• Weighted average category rates
• Category rates when using prime and subcontractor
  labor

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Indirect Rate Development

• Define direct costs
• Define indirect costs
• Costs that cant be directly assigned to the
  contract
• Consist of cost pools and allocation bases
• Pools are defined by placing costs in logical
  groupings, e.g., fringe costs, overhead costs,
  GA costs, unallowable, etc.
• The allocation base is defined as some measure of
  cost that can be used to allocate the pool cost,
  e.g., direct labor hours, direct labor dollars,
  machine hours, etc.
• Indirect rate cost pools/allocation base
• Document indirect rates

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Indirect Rate Development

• Indirect Rates
• vary from company to company
• are valid for the course of 1 fiscal year
• determine the multiplier for the company
• Are used for
• Budgeting
• Billing
• Proposals
• Forward pricing rate agreements (FPRAs) (FAR
  15.407-3)

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Contract Administration

• Negotiations
• Pre and post negotiation memorandums (PNMs), FAR
  15.406-3
• Consider using for subcontract negotiations
• Certificate of Current Cost or Pricing Data, FAR
  15.406-2
• Contract Award
• Request Debrief
• Must be in writing
• Request must be received within 3 days after
  notification
• Invite teaming partners or conduct separate
  debrief depending on size and complexity

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Contract Administration

• Contract Award Meeting
• Can vary by size and complexity of procurement
• Corporate policy defines
• Attendees (including teaming partners)
• Roles and Responsibilities of Attendees

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Contract Administration

• Contract Award Meeting
• Preparation and Review of a Contract Brief
• Sets forth job charging requirements
• Sets forth Billing and Payment Requirements
• Defense Finance and Accounting Services (DFAS)
• Wide Area Workflow (WAWF)
• Sample Invoice can be found at www.dcaa.mil
• Set forth any pertinent clauses or special terms
• Small Business Set Aside Requirements
• Publicity notification requirements
• 75 notification
• Fee withholds

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Contract Administration

• File Documentation
• RFP
• Proposals (All Volumes)
• Teaming Agreements/Non-Disclosure Agreements
• Original contract and all agreements
• Modifications
• Task and Delivery Orders and all Modifications
• Correspondence
• Update contract brief

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Contract Administration

• Changes
• Inside or outside the scope of work
• Work at Risk
• Tracking and approval process
• Subcontractors?
• Contract Close-out
• Incurred Cost Submissions
• Sample can be found at www.dcaa.mil
• Final Invoice
• Sample can be found at www.dcaa.mil
• Release of Claims and Assignment of Refunds,
  Rebates, and Credits

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Contract Accounting

• Infrastructure Needed
• Accounting System Polices and Procedures
• General Ledger Design
• Invoicing
• Project Budgeting and Reporting
• Timekeeping Policies and Procedures
• Travel and Expense Reimbursement
• Purchasing and Receiving

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Accounting System Policies and Procedures

• Segregation of Costs (FAR Part 31)
• System must be able to track costs and allocate
  to projects
• Direct vs. Indirect Cost
• Clear distinction on chart of accounts
• Direct costs are recorded on a job by job basis
• Indirect costs are calculated at the corporate
  level and allocated to the jobs
• Development of Indirect Rates
• Fringe
• Overhead
• GA
• Unallowable

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Accounting System Policies and Procedures

• Billing and Collections Procedures and Controls
• Contract Review/Preparation of Contract Briefs
• Invoice Preparation
• Generated from accounting system books and
  records
• Invoice Review by Program Manager
• Payment monitoring
• Budgeting and Reporting
• Corporate Indirect Rate Budget
• Project Budgets
• Reporting Budget vs. Actual

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Timekeeping Policies and Procedures

• Manual or electronic
• Record all hours worked
• Time should be entered daily, in ink, for all
  employees
• Job Number and Project Name should be pre-printed
  if possible
• Charge Numbers should be provided by Supervisor
  not accounting department
• Vacation, holiday, sickness, and excused time
  should be recorded
• Annual Training
• Proof of Process Compliance

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Travel and Expense Reimbursement

• FAR Part 31.205-46
• Expense Reports
• Each employee must complete an expense report for
  travel
• Receipts should be required for all claimed costs
• Document
• Date and place of the expense
• Purpose of the trip
• Name of employee and title or relationship to
  contractor
• Use lowest reasonable cost
• Per Diem Rates
• www.gsa.gov

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Purchasing and Receiving

• Requestor Submits a Purchase Request
• Purchasing Issues the Purchase Orders (POs)
• Prepare and obtain approval prior to making the
  purchase
• POs should be sequentially numbered and
  maintained in a log
• Item is Received and Compared to the PO
• Invoice is Received and Payment is Made for
  Accepted Item(s)
• If property is purchased with Government funds,
  it is considered Government Furnished Property
  and FAR Part 45 should be followed

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Contract Accounting

• Defense Contract Audit Agency (DCAA)
• Types of Audits
• Accounting system
• Financial capability
• Pre-award
• Timekeeping
• Billing
• Incurred Cost
• DCAA Resources
• www.dcaa.mil
• Information for Contractors Guide
• DCAA Audit Programs
• DCAA Contract Audit Manual

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Questions

• Beverly Arviso, CPA, CPCM, CFCM
• Founder, Arviso, Inc.
• beverly_at_arvisoinc.com
• 757-373-9536