Contract Management Session NISH PacW and NW NCWC 2010 FINAL

7/31/2019 Contract Management Session NISH PacW and NW NCWC 2010 FINAL

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2010 NISH PacWest/Northwest NCWCContract Management Session

Extreme MakeoverContract Management

Edition

NISH PacWest/Northwest NCWC

October 2010


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Todays Guests

Talk Show Host and Executive Producer: Fil Tellez

NW Regions Steve Osher

PW Regions Isleen Gimenez Wilson


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Todays Show

Introductions

What is Contract Management

Top 10 of 2010 What not to say to your government

customer

Things you dont want your government

customer saying to you DCAA Audits Types/Processes


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Todays Episode is NOT

Targeted at specific NPAs or PAs

Intended to spark controversy

Designed to offend


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Todays Episode IS

About Information Sharing

Reflecting on Lessons Learned in a

Humorous Way

Contract Management with anEmphasis on:

Open Lines of Communication

Relationship Management


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Introductions

Steve Osher, Director Contract Management,NW Region

Isleen P. Gimenez Wilson, ContractManagement Team Manager, PW Region

Fil Tellez, Senior Contract Management SME,

NISH National Office


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Top 10 of 2010

Things You Should Not

Say to Your Customer


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1. This is an AbilityOne Contract

and Its Mine Forever

Consider the government representativeas a true customer, do not convey asense of entitlement.


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2. That Issue is YourProblem

Respond in a solution-oriented way,offering suggestions about ways inwhich to address the problem


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3. NISH Came Up with

That Price

Know your contract price andcorresponding cost elements, respondwith what you know is included in yourprice.


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4. We Didnt Know You Were

Serious about the Deadline

Always assume deadlines are firm,notifying customer in advance if anextension is needed; when caught offguard respond positively that you willget the information in ASAP.


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5. Ive never met your contractingofficers representative.

Always provide a communicationmatrix/directory of staff for the projectand keep it updated so the customer isalways aware of who to contact.


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6. I did not know the

subcontractor did not show up.

The entire performance requirement isthe responsibility for the contractor;simply respond that you will addressthe deficiency immediately.


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7. People with disabilities

cant do that.

Remaining true to your mission, a moreappropriate response would be thatyou will find the right person for the

job.


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8. Thatsnot in the contract.

Dont rush to respond if you are unsure;assure the customer that you willreview the SOW, assess additionalcosts, if necessary, and proceed

accordingly.


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9. I dont have a copy of the SOW, Idont know if theres money in the

contract for that or not.

Always maintain a copy of the SOW,refer to it regularly, and offer to seewhat you can do to provide therequested additional service within the

contractual requirements.


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10. Since I hadnt heard from you, Ididnt think there were any

problems.

No news is not necessarily good news;check in with your customerfrequently, even if briefly, to assesstheir satisfaction level.


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Top 10 of 2010

Things You Dont WantYour Customer Saying

to You


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1. Weve never met your

Senior Leadership.

The Executive Director, CEO (ChiefExecutive Officer), COO (ChiefOperating Officer), and/or similarpositions should touch base with

his/her customers on a regular basis.


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2. What is NISH? What is

AbilityOne?Assume the government customer has never heard of

AbilityOne and/or NISH. Provide an overview tohelp them gain a basic understanding. Next, refer

your customer to the regional NISH representativeto explain the details. NPA ProjectManagers/Supervisors are the first ones to know ofpersonnel changes. Be sure to stay abreast ofgovernment personnel changes and alert your NISH

regional representative so thateducation/awareness of the AbilityOne/NISH can berepeated as necessary.


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3. I dont know who to call

when there is a problem.

Ensure that a communication matrix is inplace. A communication matrixcontains a hierarchy of contacts foreach agency

(Nonprofit/Government/NISH)


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4. I feel like Im managing

your contract for you.

Actively use your Quality ControlProgram and be proactive in providingsolutions.


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6. Weve been experiencingperformance issues for months.

Meet and greet your customers regularly to foster

healthy relationship management. Following aQuality Control Plan should prevent surprises. Donot assume that different departments within thegovernment agency are speaking to each other.Own the responsibility for communicating across all

departments within the government agency.


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7. We didnt know your agencycould provide that type of service.

Continually share with the governmentcustomer the different types ofservices your agency can offer.


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9. Its a day after the due dateand you are just nowrequesting

an extension?

Keep the government informed about thestatus of your proposal and request anextension if you are not able to meet therequested deadline. Your governmentcustomer may have to take action to ensure

that you continue to receive payment forservices that you have provided.


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10. Your proposed price is twiceas high as last year though

there are no SOW changes andyouve provided no explanation.

It is our responsibility to the governmentto provide justification for any changesin our price proposal.


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Fil Tellezs Top 10 ContractManagement Tips

Summarized1. Its Always About the Relationship!

2. READ Your Solicitation/Contract!

3. Never Assume!

4. Communicate with the RightAuthority!

5. Document, Document, Document!

Fil Tellezs Top 10 Contract


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6. Bargain in Good Faith, Be Reasonable andBe Aware!

7. Require FAIR, EQUITABLE and IMPARTIALTreatment!

8. Focus on Issues not Emotions!

9. Know When to Talk and When to Listen!10. Be Responsive and Responsible!

Fil Tellezs Top 10 ContractManagement Tips

Summarized


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2010 NISH PacWest/Northwest NCWC

Contract Management Session

DCAA Audits; Types

and ProcessesA Briefing and Discussion of Audit Types, Triggers, Processesand Actual Experiences

Fil Tellez

Contract Management SME, NISH National

Defense Contract Audit Agency


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Agenda

Who is DCAA

Types of Audits They Conduct

Actual Experiences

DCAA Auditor Recommendations


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Who is DCAA

The Defense Contract Audit Agency was establishedby a directive of the Department of Defense

Performs all contract auditing for the Department of

Defense (DoD) Provides accounting and financial advisory services,

in connection with the negotiation, administrationand settlement of contracts and subcontracts

Provides support to all DoD procurement andcontract administration activities.

DCAA also furnishes contract audit service to otherGovernment agencies by cooperative agreement.


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Role of Auditor

The role of the auditor is advisory, exceptthat on cost-type contracts the auditor isrequired to comply with specific contract

provisions. The auditor has a responsibility to plan and

perform the audit to obtain reasonableassurance about whether the contractorsubmissions and supporting data are free ofmaterial misstatement, whether caused byerror or by fraud.


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Role of Auditor

When fraud or similar unlawful activityis suspected, the auditor shall be

guided by Chapter 4, Section 700 ofthe DCAA Contract Audit Manual(CAM).


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Audit Guidance

DCAA Contract Audit Manual

http://www.dcaa.mil/cam.htm

DCAA Auditors are instructed by theCAM
http://www.dcaa.mil/cam.htmhttp://www.dcaa.mil/cam.htm


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Audit Objectives

The purpose of contract auditing is toassist in achieving prudent contracting

Provide Government procurementpersonnel; Financial information and advice relating

to contractual matters and

Evaluations regarding the effectiveness,efficiency, and economy of contractors'operations


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Other Support

Contract claims To government legal counsel

Investigations With the FBI

Office of Inspector General (OIG)

GAO

Criminal Investigators (DoD/CivilianAgency)


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Audit Authority

Emanates from DCAA Charter and thecontract terms and conditions

FAR 52.215-2 provides the auditor'sprimary authority for access to contractorrecords.

DCAA Auditor is the contracting officersrepresentative and is granted access asthat designated entity


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FAR 52.215-2; Audit and

Records - Negotiation This clause provides the contracting

officer's representative with the

authority to examine and auditcontractors' books, records,documents and other evidence and

accounting procedures and practices,regardless of form or type


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What Can They Audit

Format of Records;

Machine readable media

Disk Tapes

etc.


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What Can They Audit

Types of records;

Data bases,

Application software, Data base management software,

Utilities,

etc.


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General Types of DCAA

Audits Proposal Evaluations

Systems Review and Analysis

Operations Audits


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Specific Audits

Incurred Cost Reviews

Cost inputs/Expenses

AllowableAllocable

Fair And Reasonable

Not prohibited by law or regulations


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Specific Audits

Systems Reviews (Accounting andPurchasing)

Capability to support cost type contractsor line items

Billing systems

Purchasing System


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Cost Principles

FAR Part31refers federal agenciesto utilize

OMB Circular A-122 Cost Principlesfor Non-Profit Organizations

Pricing Memorandum Number 3

also refers federal agencies to thisCircular when reviewing costs on

AbilityOne covered contracts


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FAR Part 31

31.701 Purpose. This subpart provides the principles for

determining the cost applicable to work

performed by nonprofit organizations undercontracts with the Government.

A nonprofit organization, for purpose ofidentification, is defined as a business entityorganized and operated exclusively forcharitable, scientific, or educational purposes, ofwhich no part of the net earnings inure to thebenefit of any private shareholder or individual


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FAR Part 31

31.702 General.

Office of Management and Budget (OMB)

Circular No. A-122, Cost Principles forNonprofit Organizations, sets forth principlesfor determining the costs applicable to workperformed by nonprofit organizations under

contracts (also applies to grants and otheragreements) with the Government.


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OMB Circular A-122

Applicability.

These principles shall be used by all Federal

agencies in determining the costs of workperformed by non-profit organizations undergrants, cooperative agreements, costreimbursement contracts, and other

contracts in which costs are used in pricing,administration, or settlement.


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OMB Circular A-122

Applicability(cont)

All of these instruments are hereafter

referred to as awards. The principles do notapply to awards under which anorganization is not required to account tothe Federal Government for actual costs

incurred.


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OMB Circular A-122

http://www.whitehouse.gov/omb/circulars/a122/a122.html
http://www.whitehouse.gov/%0Bomb/circulars/a122/a122.htmlhttp://www.whitehouse.gov/%0Bomb/circulars/a122/a122.htmlhttp://www.whitehouse.gov/%0Bomb/circulars/a122/a122.htmlhttp://www.whitehouse.gov/%0Bomb/circulars/a122/a122.htmlhttp://www.whitehouse.gov/%0Bomb/circulars/a122/a122.html


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Likely Audit Triggers

Cost type contract or cost type CLIN withinschedule of FFP type contracts

Incurred costs associated with purchasing ofmaterials structured on reimbursable lineitem basis under FFP contract type

Forward Pricing Rate Agreements

FFP type contracts under the AbilityOneProgram where actual G&A is proposed.


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But Why?

Use of price and cost analysis iscommonly misunderstood.

Yes, the preference of PR3 is for useof price analysis vice cost analysis

Yes, the federal preference is for use

of price analysis vice cost analysis BUT


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FMT Viewpoint

While AbilityOne contracts are FFP innature they are negotiated

procurements conducted on a solesource basis.

Therefore, price analysis is not

likely, and cost analysis mayprevail, and is totally appropriate.


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FMT Viewpoint

Therefore, you may be required tosupport the individual elements of cost

in your price proposals andthe G&Arate proposed may require the KO/COto request a field audit assist.

Also understand, the 9.5% G&Asafehavenno longer exists so it too maybe subject to justification.


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DCAA Response

When the KO/CO calls for a field auditassist, the type of audit of your G&A rates iscalled a 230 Audit, similar to what they

would accomplish on a review of a ForwardPricing Rate Agreement submittal.

230 refers to FAR 52.230-6/3 whichrequires a disclosure statement when

submitting FPRAs for review. This is covered in the CAM, Chapter 9.


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DCAA Response

My DCAA point of contract concurs in myassessment that on sole source contracts,the CO/KO would likely resort to Cost

Analysis on any procurement of majordollars.

For a 230 type audit they would look forvisibility that future out years would

experience similar rates inclusive of anyprice escalations and is limited to the ratesand factors being proposed.


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Actual Experiences

Various NPAs

Mostly cost incurred type audits

Validation of General andAdministration rate proposed


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C di


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DCAA AuditorRecommendations

Were not the bad guys

We can be helpful and assistive with your

cooperation Provide us with your information in timely

manner so that we can meet our targetdeadlines

Ask questions

DCAA A di


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Know your contract and what itrequires

What are your terms and conditions? What are the performance requirements?

What negotiated agreements did you

achieve that may not be documented? Provide clarifications of your point of view

as to the contract agreement.

DCAA A dit


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See ICE model for cost typecontracts

Designed for small business Need to know for development of pools

and bases

Step by Step process for overhead

development

Good format for cost type contracts.


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ICE Model

Incurred Cost Electronically (ICE)Model

http://www.dcaa.mil/ice.htm

DCAA Says If this is your first experience with the ICE

Model, please contact your local DCAA Office todiscuss the model and its requirements before

preparing the proposal. So, call DCAA to discuss use of ICE with them

prior to downloading electronic copy

DCAA A dit
http://www.dcaa.mil/ice.htmhttp://www.dcaa.mil/ice.htm


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Use supporting data and formatsyou are familiar with.

Budget formats EXCEL spreadsheets w/period expenses

Operating Plans

What you might provide a bankerw/detailed analysis of where the money isgoing


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FMT Recommendations

Be cooperative

Avoid emotional responses

Keep your processes simple but

thorough

Track actual incurred costs andexpenses by contract/project

Plan, Do, Check, Act Report


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FMT Recommendations

Contact your NISH Region when auditsare intimated by your federal customer

Act immediately, dont wait Committee must be advised of any

audits conducted of AbilityOne covered

contracts


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Thank You

Happy Trails!

F.M. Fil Tellez [email protected] 703.626.3108

Steve [email protected]

Isleen Gimenez [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

Documents

Contract Management Session NISH PacW and NW NCWC 2010 FINAL