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Small Business Conference San Diego Regional Innovation
ClusterFebruary 25, 2014
The views expressed in this presentation are DCAA's views and not necessarily the views of other DoD organizations
Agenda8:00-8:05 Introductions - Lou Kelly, Chairman, SDRIC
8:05-8:45 Meet the DCAA Managers - Ron Reichel, DCAA
Senior Financial Liaison Advisor, Camp Pendleton
8:45-9:45 DCAA Pre-award Accounting System Audits - Chiho Ly, Senior Auditor, San Diego Branch Office
9:45-10:00 Break
10:00-11:00 DCAA Provisional Billing Rates/Public Vouchers
Crystal Arnote, Auditor, San Diego Branch Office
Coral Schuster, Senior Auditor, San Diego Branch Office
11:00-11:55 DCAA Incurred Cost Submissions - John Doherty, Regional Audit Manager, Western Region Office
11:55-12:00 Wrap Up - Lou Kelly, Chairman, SDRIC
OverviewDCAA Organization
Meet the Managers
DCAA Initiatives/Changes Affecting Small Business
DCAA Internet Resources/Tools
Elevating Concerns
Subject Matter Presentations
Department of Defense (DoD) Organization
Secretary of Defense
Deputy Sec of Defense
Department of Army
Procurement
Departmentof Navy
Procurement
Departmentof Air Force
Procurement
Under Secretary(A T & L)
DCMA
Under Secretary(Comptroller)
DCAA
Inspector General
Defense Contract Audit Agency
Approximately 5,000 employees located at over 300 offices throughout the United States and overseas
Responsibilities and Duties:Perform all needed contract audits for DoD
Provide accounting and financial advisory services to DoD (and civilian when requested) acquisition and contract administration components during all contract phases:
Pre-award
Contract execution
Settlement (contract closing)
DirectorPatrick FitzgeraldDeputy Director
Anita Bales
CentralRegionVacant
Martha McKune
EasternRegion
David JohnsonVacant
NortheasternRegion
Ron MeldonianWilliam Adie
Mid-AtlanticRegion
Ken SaccocciaChris Andrezze
WesternRegion
Donald MullinaxSteve Hernandez
General CounselDefense Legal Service
Susan Chadick
Assistant Director,Resources
Philip Anderson
Assistant Director,OperationsTom Peters
Internal ReviewAngela Janysek
Field Detachment Karen Cash
Terry Schneider
RegionsHeadquarters
Assistant Director, Integrity &
Quality AssuranceGary Spjut
Executive OfficerJoe Garcia
Executive OfficerJoe Garcia
DCAA Organization
Assistant Director,Policy & PlansDon McKenzie
Financial Liaison AdvisorDCAA's FLAs are auditing professionals assigned to buying commands and are DCAA's principal point of contact at the commands. The FLA's duties range from expediting advisory audit reports to on-the-spot consultation on complex financial and accounting matter related to contract costs.
San Diego Audit ManagementTrish Lee - Regional Audit Manager (RAM) Western Region Office
Linda Jung - Branch Manager San Diego
Branch Office
Terry Allen – Supervisory Auditor San Diego
Branch Office
San Diego Audit ManagementJohn Doherty – Regional Audit Manager Western Region Office – Incurred Cost
Dave Hazlett – Branch ManagerSan Diego North Incurred Cost
Branch
Elizabeth Reynaga – Branch ManagerSan Diego South Incurred Cost
Branch
David Ortiz – Supervisory AuditorSan Diego South Incurred Cost
Branch
DCAA Initiatives/Changes Affecting Small Business
DFARS threshold changes for proposal audits (DFARS PGI 215.404-2(c))
Pre-award financial condition & forward pricing rates transferred to DCMA
Incurred cost backlog initiativeDedicated audit teams
Low risk sampling
SF1408 Checklist implementation
DCAA Initiatives/Changes Affecting Small Business
Small Business Outreach InitiativeWebsite presentations for small business
Website tools (Checklists, ICE, Etc.)
Coordination w/ small business contacts at major buying commands (FLAs)
Participation in seminars/workshops
NDIA/SBTC joint DCAA/DCMA committee meetings quarterly to discuss small business issues
DCAA Initiatives/Changes Affecting Small Business
Small Business Outreach Initiative (cont.)Mandatory auditor small business audit training to Include:
Background on importance of small business
General guidance when beginning audit of small business
Communicating with small business
Auditing small business – focus on differences between large and small business
Small Business Focal PointThe small business focal point advises the Agency Director on policy issues related to small business concerns, serves as the primary point of contact and source of information, and collects and monitors relevant data regarding the Agency's conduct of audits. The small business focal point's duties are segregated from ongoing audits in the field or any activities that could compromise the independence of the Agency or undermine compliance with applicable audit standards.
Headquarters, Defense Contract Audit AgencyAttn: Operations, Small Business Focal Point8725 John J. Kingman Road, Suite 2135Fort Belvoir, VA 22060-6219Chief, Operations Audit Liaison (937) 255-7789 or [email protected]
DCAA Internet Resourceswww.dcaa.mil
Audit Process Overview – Information for Contractors Manual
DCAA Pre-award Accounting System Checklist
DCAA Contract Proposal Adequacy Checklist
DCAA Forward Pricing Rate Adequacy Checklist
DCAA Incurred Cost Adequacy Checklist
Incurred Cost Electronically (ICE) ModelEZ-Quant - Suite of three statistical applications
Links to Acquisition Regulations
Additional DCAA Internet ResourcesSmall Business Presentations:Accounting System Requirements
Real-time Labor Evaluations
Incurred Cost Submissions
Contract Briefs
Provisional Billing Rates
Public Vouchers
Monitoring Subcontracts
Elevating ConcernsIf you cannot resolve disagreement or misunderstanding of auditor findings with the auditor and wish to elevate your concerns, we strongly encourage that you do so through the DCAA chain of command.
First, the supervisor
Branch Manager
Regional Audit Manager
Regional Director
Elevating ConcernsSB focal point cannot change results or direct the audit offices to do anything. Focal point will refer the issue to the Regions for resolution with contractor.
Director will not change results - Regional Directors have oversight of the Regions.
So resolve concerns at lowest level possible
Then the ACO is the deciding official.
DCAA Audits Through Various Phases of a Contract
Accounting System
Estimating System
Proposal Review
- Labor Rates
- Indirect Rates
- Materials
- ODC
Annual Incurred Cost Reviews
Real Time Labor
Provisional Billing Rates
Progress Payments
Vouchers
Accounting System
Contract Closing
Pre-Award ThroughoutContract Life
Contract Completed
Contact Information
DoD Office of Small Business Programswww.acq.osd.mil/OSBP
Preaward Accounting System
AuditsSDRIC Conference February 25, 2014
The views expressed in this presentation are DCAA's views and not necessarily the views of other DoD organizations
20
OverviewPurpose of the Preaward Accounting System Audit
Preaudit Activity
SF 1408 Step-by-Step
Exit Conference
Common Deficiencies
DCAA Tools for Contractor Use
Questions and Answers
Purpose of the Preaward Accounting System Audit
Prior to the award of a Government contract, FAR Part 9.104 requires prospective contractors to have:
adequate financial resources
adequate accounting system
Purpose of the Preaward Accounting System Audit (cont.)
An examination before contract award requested by the Procuring Contracting Officer (PCO) or cognizant Administrative Contracting Officer (ACO)
Gain an understanding of the design of the prospective accounting system
DCAA will complete a SF 1408
Purpose of the Preaward Accounting System Audit (cont.)
Based on our audit, DCAA will opine as to whether or not the design of the accounting system is suitable for the award of a prospective contract in accordance with FAR 53.209-1(f), Standard Form 1408 (SF 1408), Preaward Survey of Prospective Contractor Accounting System
Preaudit Activity
DCAA or Buying Command will request contractor complete Accounting System Checklist
Preaudit Activity (cont.)Important because: You will become aware of the
requirements of an acceptable accounting system
You are prepared for the audit Faster turn around Less rework by contractor and auditor Quicker contract award
Preaudit Activity (cont.)
Contractor should be prepared to demonstrate how accounting system satisfies SF 1408 criteria at the walkthrough
Preaudit Activity (cont.)
DCAA will request contractor Policies and Procedures
DCAA will request information to complete an Internal Control Questionnaire (ICQ)
SF 1408 Step-by-Step
1. Generally Accepted Accounting Principles
Accrual basis accounting system?
General ledger (G/L) to post costs to?
Ability to generate financial reports?
2.a. Proper Segregation of Direct Costs from Indirect Costs
Policies and Procedures
Chart of Accounts
Demonstrate entering a direct cost and an indirect cost into accounting system
2.b. Identification and Accumulation
of Direct Costs by Contract
Will request:Profit & Loss (P&L) by Job, Contract, Delivery Order or Contract Line Item Number (CLIN)
Chart of Accounts
Contractor’s proposal
2.c. Allocation of Indirect Costs
Contractor proposal
Indirect rate sheets
Documented bases and pools
Written Policies and Procedures
2.d. Accumulation of Costs under G/L Control
Can the P&L by Job reconcile to the G/L control accounts?
How often are costs posted to the G/L?
Policies and Procedures
2.e. Timekeeping SystemPolicies and Procedures
Timekeeping document (paper or electronic timecards)
Timecards completed and certified by the employees
Timecards approved by the employees’ supervisors.
When are timesheets filled out
Reconcilable labor cost distribution records
Who monitors the timekeeping system and how often
2.f. Labor Distribution System
Policies and Procedures
Labor Distribution Payroll Register
Labor Distribution P&L by Job
Who Monitors and How Often
2.g. Interim Determination of Costs
What is the process for posting costs?
Responsible personnel
Frequency
2.h. Unallowable CostsPolicies and Procedures
What is an unallowable cost – FAR Part 31.205
How will unallowable costs be identified AND excluded
Who and how often will unallowable costs be monitored
Chart of Accounts which identifies unallowable accounts
2.i. Costs by Contract Line Item
Contractor’s proposal
Who creates new jobs in the system
How is the level of contract information communicated to the person creating the new job in the system
2.j. Segregation of Preproduction Costs from Production Costs
Policies and Procedures
Chart of Accounts with unique preproduction project numbers
Can costs be accumulated for a specific timespan
3.a. Limitation of CostsPolicies and Procedures
Proposal’s rate calculation sheet
Procedure for contract briefs
Billing template
Who and how often are total contract expenditures monitored against contract limitations
3.b. BillingsPolicies and Procedures
Invoice example with current and cumulative amounts
How will invoice reconcile to the P&L by Job or G/L by cost elements
Timing of vendor and subcontractor payments
Exit Conference
Results of AuditYes
Yes, with a recommendation that a follow on accounting review be performed after contract award
No
Common Deficiencies
Narrative on the Accounting System Checklist – Incomplete or uses simple definitions without the how (who, what, when)
No written pool and base descriptions
Excel ‘timecards’ which are changeable, unsigned, and uncertified
Common Deficiencies (cont.)
Not routinely posting to books of account (at least monthly)
Lack of process to monitor
Lack of understanding of what is unallowable FAR Part 31.205
Common Deficiencies (cont.)Billing the Government for cost when payment to subcontractor or vendor will NOT be made in accordance with terms and conditions of the subcontract or invoice and ordinarily within 30 days of the contractor’s payment request to the Government.
No process to brief contracts
Common Deficiencies (cont.)
Chart of Accounts with numbers only and no account description
Invoices do not show both current and cumulative amounts
Unable to create P&L at level of detail required by RFP
DCAA Tools for ContractorsSF 1408
Preaward Checklist
Information for Contractors
FAR Part 31.205 – Unallowables
Preaward Accounting Audit Program
Contract Audit Manual (CAM)
Participant QuestionsHow to schedule a preaward audit? What is the cost of a preaward audit?
How long does the preaward audit last?
My company did not receive a pre-audit verification even though we paid an accounting firm a great deal of money.
Participant QuestionsIf a small business has not been tasked does the audit expire?
Is providing payroll data to DCAA related to a proposal count as an audit?
We just won our Seaport-e IDIQ contract. Does DCAA plan on auditing our accounting system?
Participant QuestionsThe current pre-award accounting system audit covers 12 of the 18 criteria for a business system audit as required by DFARS 252.242.7006(c). When can a covered contractor expect to have a DCAA audit the remaining 6 criteria?
With all the new auditors, will DCAA enhance its training?
Provisional Billing Rates and Public Vouchers
SDRIC Conference February 25, 2014
The views expressed in this presentation are DCAA's views and notnecessarily the views of other DoD organizations
OverviewProvisional Billing Rates (PBRs)
Procedures for Establishing PBRs
When & What to Submit
DCAA Review
MonitoringPublic Vouchers
Contractor Responsibilities
Wide Area Workflow (WAWF)Common DeficienciesFrequently Asked Questions
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Provisional Billing Rates
Establishing Billing RatesFAR 42.704(b)
The contracting officer (or cognizant Federal agency official) or auditor shall establish billing rates on the basis of information resulting from recent review, previous rate audits or experience, or similar reliable data or experience of other contracting activities. In establishing billing rates, the contracting officer (or cognizant Federal agency official) or auditor should ensure that the billing rates are as close as possible to the final indirect cost rates anticipated for the contractor’s fiscal period, as adjusted for any unallowable costs. When the contracting officer (or cognizant Federal agency official) or auditor determines that the dollar value of contracts requiring use of billing rates does not warrant submission of a detailed billing rate proposal, the billing rates may be established by making appropriate adjustments from the prior year’s indirect cost experience to eliminate unallowable and nonrecurring costs and to reflect new or changed conditions.
60
Purpose of PBRsUsed for interim billing during the contractor’s fiscal year
Established to approximate the contractor’s final year- end rates
Billings should be reconcilable to the cost accounts for both current and cumulative amounts claimed and comply with contract terms
Note: PBRs are ONLY for use in provisional billing. They are NOT for use in bidding/forward pricing or final indirect rates.
61
Reasons for Contractor SubmissionContractors are STRONGLY encouraged to submit a billing rate proposal to assist the responsible official in establishing rates
Opportunity to present and explain expected changes
Note: Vouchers and progress payments may be REJECTED if submitted without using properly established billing rates
62
When to Submit?PBRs should be submitted at least annually
PRIOR to the BEGINNING of contractor fiscal year
ANDWhen established billing rates no longer represent expected final year end rates due to unforeseen events/circumstances
Note: The PBR submissions should represent the contractor’s entire fiscal year
63
What Should Be Provided?Letter stating the proposed rates and period covered
Proposed billing rate calculations (Pool and Base) with brief rationale
Prior fiscal year (FY) pool and base
Current FY to date pool and base
Pool and base projection for remainder of current FY
Upcoming FY budget pool and base, if available
Comparative analysis with explanation of any significant differences
64
DCAA ReviewDCAA may perform the following procedures:
Compare proposed pool and base to prior year and year-to-date pool and bases
Compare proposed pool/base/rates to those submitted on incurred cost submission
Review trend of questioned costs in relevant incurred cost audits and consider an adjustment for unallowable expenses in calculating current year provisional billing rates
65
Contractor Self-MonitoringPeriodically throughout the year
Throughout the yearImmediately after year-endUpon submission of the final indirect rate proposal
PBRs may be adjusted by either party at any time to prevent substantial under or over payment – FAR 42.704(c).
If PBRs are adjusted, the contractor should submit adjustment vouchers accordingly
66
AdjustmentSubmit a letter with new rates, an explanation as to what caused the change, and with supporting data
If DCAA/DCMA has NOT issued a memo:Begin using the new rates immediately
If DCAA/DCMA HAS issued a memo:Continue using the rates as listed on the memo unless you receive a new memo from DCAA/DCMA
Please contact your cognizant office if you have concerns
NOTE: If PBRs are adjusted, use the new rate on the current year cumulative expenses
67
Common DeficienciesWaiting until completion of the final indirect rate proposal to submit proposed PBR
Unable to support proposed significant rate changes
Delayed response to DCAA information requests
68
Common DeficienciesConsistent over/under estimations
Using PBR as proposal rates for potential contracts
Not using correct PBRs on vouchers
If a contract outlines a set of maximum indirect rates a PBR MUST still be established
69
Common DeficienciesFailure to remove unallowable costs from the billing rate projections
Failure to adjust provisional billing rates based on actual experience:
Before year end, if there are known or reasonably anticipated significant variances
After year end once actual rates, net of unallowable expenses, are calculated
70
71
Public Vouchers
Overview
Cost type contracts provide for interim payments for costs on a cost voucher. DCAA will perform voucher reviews based on risk.
Fixed price contracts are subject to FAR Part 32 financing methods (progress payments).
72
Contractor Responsibilities
73
Contact cognizant DCAA office after contract award
Ensure DCAA has the necessary information to process contract billings
current provisional billing rates
copy of contract brief (include special contract provisions)
Maintain adequate billing system internal controls
Maintain adequate support for amounts billed
Submit timely incurred cost proposals and final vouchers in accordance with FAR 52.216-7
Adequate Billing System
74
Adequate accounting system
Established billing rates with timely adjustments to reflect year end allowable costs
Vouchers must be based on established billing rates
Contracts are briefed by contractor to ensure vouchers accurately reflect special cost limitations and other contract restrictions
Adequate Billing System
75
Interim vouchers prepared directly from cost accounting records
Adequate incurred cost proposals are submitted timely
Maintains a Cumulative Allowable Costs by Contract worksheet
Final vouchers submitted in accordance with FAR 52.216-7
Preparation of VouchersContractor is responsible for preparing and submitting claims for reimbursement according to the terms of the contract
Vouchers should not be submitted more than once every two weeks
Public voucher claims for reimbursement must be submitted via Wide Area Workflow (WAWF):
First voucher on a contract is an interim voucher, as are all subsequent vouchers prior to the final voucher
Final voucher will not be submitted until all contract work is completed
76
Wide Area Workflow (WAWF)
DFARS 252.232-7003 REQUIRES the use of WAWF as the primary system for submission and processing of payment requests.
77
Wide Area Workflow (WAWF)Includes a voucher sampling approach that replaces the direct bill program
DFARS 242.803 gives DCAA authority to:Approve interim vouchers selected using sampling methodology for provisional payment and forward to the disbursing office
ALL provisionally approved interim vouchers are subject to a later audit of actual costs incurred
Review final vouchers and send to the Administrative Contracting Officer (ACO)
78
Submission of Interim VouchersVouchers must be prepared and submitted in accordance with the terms of the contract, including any special billing/payment instructions
All vouchers should be submitted in WAWF unless contract terms require submission of hard copy vouchers
Guidance/training for completing cost vouchers can be found on the WAWF website: https://wawf.eb.mil
In WAWF, the “Cost Voucher” is the equivalent of the SF 1034
Data equivalent to the SF 1035 must be included in an electronic file and uploaded to WAWF
79
Submission of Interim VouchersRequired information and examples can be found in DCAA Manual 7641.90, Information for Contractors, pages 46 – 49 at: http://www.dcaa.mil/DCAAM_7641.90.pdf
Required information includes:
Contract Number and Delivery/Task Order
Contract Costs and Fixed Fee
Identify Fee Withholding Threshold
80
Submission of Interim VouchersRequired information includes (cont.):
Current and Cumulative Costs Billed
Breakdown by Major Cost Element (i.e., Labor, Materials, Overhead)
Fee Earned And Due
Total Claimed Amount
Adjustments (i.e., Withheld Fee, Excess Costs Incurred)
Total Voucher Amount
81
Submission of Adjusting Vouchers
Adjusting voucher:
Addresses changes to billing rates during or after year-end
Can be on a separate voucher or combined with interim voucher
82
Submission of Final VouchersLast voucher to be submitted on a contract
A separate completion voucher will be submitted for each individual project or task order for which a separate series of public vouchers has been submitted
In accordance with FAR 52.216-7(d)(5).
83
Common DeficienciesBilling to incorrect DODAAC
Math errors
Billed costs not allowed per the contract terms (e.g., overtime)
Not billing in accordance with contract terms:Fixed-fee
Funding & Cost Ceilings
84
Common DeficienciesIncorrect provisional billing rates (indirect costs)
Billing rates not adjusted to year-end actual rates
Inability to provide sufficient supporting documents in a timely manner
85
Frequently Asked Questions
86
Question: How do I know what DCAA office is my cognizant office?
Response: Visit www.dcaa.mil/office_locator.html, search by CAGE Code, DUNS Code, or ZIP Code.
Frequently Asked QuestionsQuestion: Do I submit the Provisional Billing Rate Proposal to the ACO or DCAA Office?
Response: FAR 42.704 states the office responsible for final indirect cost rates also establishes provisional billing rates
87
Frequently Asked QuestionsQuestion: Can I just use the most recent FY end rates for provisional billing purposes?
Response: No
88
Frequently Asked QuestionsQuestion: Once provisional billing rates are established with DCAA or the ACO, do I need to submit proposed changes based on new information?
Response: Yes
89
Frequently Asked QuestionsQuestion: Is there any general guidance for how a contractor should be inputting information into WAWF?
Response: Yes
https://wawftraining.eb.mil/xhtml/unauth/web/wbt/wawfra/vendor/DocumentCreate.xhtml
90
Frequently Asked QuestionsQuestion: When information is incorrect on a voucher, can the contractor recall/correct the voucher or does a new voucher have to be submitted?
Response: Contractors cannot correct the following fields on submitted vouchers: contract number, delivery order number, Cage Code, document type, shipment number/date, and voucher number/date.
Recalling or Resubmitting Invoices Quick Reference guide:
http://www.dtra.mil/documents/business/wawf/RecallorResubmit.pdf
91
Participant QuestionsWhat is the process a new contractor should follow to obtain DCAA approved PBRs?
What marketing/business development activities are allowed in the rate computation?
92
Participant QuestionsHow does the progress invoice type work in WAWF?
How does the MOCAS information sharing work?
How do I submit the portion of the invoice that was not accommodated for in the original submission?
93
ResourcesInformation regarding WAWF is available on the Internet at https://wawf.eb.mil/.
Additional Information and Links:
WAWF Training & Practice: https://wawftraining.eb.mil
Help guides: http://www.dfas.mil/ecommerce/wawf/info.html
DFAS (To check invoice payment status): myInvoice: https://myinvoice.csd.disa.mil//index.html
Information for Contractors Manual (Enclosure 5): http://www.dcaa.mil
94
Incurred Cost Submissions
SDRIC Conference February 25, 2014
The views expressed in this presentation are DCAA's views and not necessarily the views of other DoD organizations
Incurred Cost SubmissionsDue Dates of SubmissionsDelinquent SubmissionsAdequacy ReviewAudit RequirementsRequired Submission SchedulesICE ModelPenaltiesFrequently Asked Questions
96
Due Dates of SubmissionsIncurred cost claims are due six months after completion of the contractor’s fiscal year end.
Per the Allowable Cost and Payment Clause (FAR 52.216-7(d)(2))
Allowable cost and payment clause applies to cost-reimbursement type contracts (FAR 16.307)
97
Delinquent SubmissionsIf submissions are six months delinquent, DCAA will recommend a decrement factor and for the CO to make a unilateral determination. (FAR 42.703-2(c)(2))
98
Incurred Cost Adequacy ReviewWe check for the schedules listed FAR 52.216-7(d)(2)(iii)
Any missing or unreconcilable schedule could cause us to report the submission as inadequate.
Recommend self-assessment
http://www.dcaa.mil/incurred_cost_checklist.htmlAdequacy Checklist
99
Audit RequirementsFAR 31.201-2 (d) Requires contractors to maintain records and supporting documentation to demonstrate allowability and allocability of costs.
FAR 31.205 also requires specific documentation to demonstrate the allowability of certain cost elements
100
Examples of Specific Documentation Under FAR 31.205
FAR 31.205-33, Professional and Consultant Service Costs, requires the following evidential matter:
Details of all agreements (e.g., work requirements, rate of compensation, and nature and amount of other expenses, if any) with the individuals or organizations providing the services and details of actual services performed;
Invoices or billings submitted by consultants, including sufficient detail as to the time expended and nature of the actual services provided; and
Consultants’ work products and related documents, such as trip reports indicating persons visited and subjects discussed, minutes of meetings, and collateral memoranda and reports.
101
Examples of Specific Documentation Under FAR 31.205
FAR 31.205-46, Travel Costs indicates costs shall be allowable only if the following information is documented:
Date and place (city, town, or other similar designation) of the expenses;
Purpose of the trip; and
Name of person on trip and that person’s title or relationship to the contractor
102
ICE MODEL
ICE is an EXCEL spreadsheet that provides contractors with a standard user-friendly electronic package to assist in preparing
timely and adequate incurred cost submissions.
It should result in less time being spent in: Submission preparation.
Supporting the audit.
103
ICE BENEFITS• User Friendly
• It includes all schedules required for an adequate submission per FAR 52.216-7
• Updates are performed electronically and the linking feature updates all impacted schedules.
• ICE creates an inventory of electronic files that can be used in subsequent years to compare costs and facilitate submission preparation.
• The submission of an adequate proposal may expedite contract closings.
104
Required Information in Incurred Cost Submission FAR 52.216-7(d)(2)(iii) (referenced to ICE model)
Schedule A Summary of Indirect Expense RatesSchedule B, C, D Indirect Cost PoolsSchedule E Claimed Allocation BasesSchedule F Cost of MoneySchedule G Booked and Claimed Direct CostsSchedule H Direct Costs by Contract at Claimed RatesSchedule H-1 Government Participation by PoolSchedule I Cumulative Allowable Cost WorksheetSchedule J Subcontract InformationSchedule K Hours and Amounts on T&M ContractsSchedule L Payroll ReconciliationSchedule M Accounting/Organization ChangesSchedule N Certificate of Indirect CostsSchedule O Contract Closing Information
105
Schedule ASummary of Indirect Expense Rates
106
Schedule B, C, D—Indirect Cost Pools
107
Schedule E—Claimed Allocation Bases
108
PER G/L, F/S PER G/LOverhead & TRIAL BAL/FSADJUSTMENTS CLAIMED
Overhead Pool 543,522$ (32,912)$ 510,610$
Overhead Base:
Total Contract Labor 633,012$ 633,012$ IR&D Labor 14,287 14,287 B&P Labor 9,525 9,525 Total Overhead Base 656,824$ -$ 656,824$
Overhead Rate 82.75% 77.74%
Overhead Base* - Straight time direct labor dollars of all contracts and projects including labor costs of IR&D/B&P projects.
PER G/L, F/S PER G/L& TRIAL BAL/FSADJUSTMENTS CLAIMED
G&A Pool 280,502$ (9,479)$ 271,023$
G & A Base:Contract Labor 633,012$ Contract Travel 34,563 Contract Material 842,981 Other Direct Costs 172,105 Subcontracts 944,841 Subtotal = DIRECT COSTS 2,627,502$
General Ledger Overhead (before adjustments) 543,522 Less: IR&D/B&P O/H transferred to G & A pool. IR &D O/H (at G/L rate) (11,822) B&P O/H (at G/L rate) (7,882) Other Misc Adjustments to G&A Base (provide detailed support) - G&A Base - Total Cost Input (exludes IR&D/B&P and COM) 3,151,320$
G&A Rate 8.60%
Schedule F—Facilities Cost of Money
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Computing COM Rate:Treasury
Rate Mos. COM RateApr - Jun 08 4.750% 3.00 1.188%Jul - Dec 08 5.125% 6.00 2.563%Jan - Mar 09 5.625% 3.00 1.406%
5.157%
NBV BASES
1. Applicable 2. Accumulation 3. Allocation of 4. Total Net 5. COM for Cost 6. Allocation 7. FacilitiesCompany 1 Cost of Money & Distribution of Undistributed Book Value Accounting Base For Capital COMCost Accounting Period 20xx Rate NBV Period Period Factors
Recorded 5.16% 69,761 (Basis Of Allocation)(Column 2+3) (Column 1*4) In units (Column 5/6)Business Leased Property 162,290 of measure
Unit Corporate/Group (Note 1)Facilities Total 232,051 Capital Undistributed 193,290
Distributed 38,761
Overhead Cost of Money Overhead 30,345 168,162 198,507 10,237 656,824 0.01559
Pools Unused - - - - - 0.00000
Unused - - - - - 0.00000
Unused - - - - - 0.00000
Unused - - - - - 0.00000
Unused - - - - - 0.00000
LESS: COM on IR&D/B&P Labor:
Cost of Money Overhead (371) (23,812) 0.01559
Unused - - 0.00000
Unused - - 0.00000
Unused - - 0.00000
Unused - - 0.00000
Unused - - 0.00000
Subtotal 9,866
G&A G & A 8,416 25,128 33,544 1,730
Expense Pools ADD: COM on IR&D/B&P Labor 371
Subtotal: 2,101 3,151,320 0.00067
TOTAL 38,761 193,290 232,051 11,967
Note 1 Allocation Bases (Refer to Schedule E for details) Overhead COM: Straight time direct labor dollars of all contracts and projects including labor costs of IR&D/B&P projects. G&A COM: Total cost input (excluding G&A, B&P, and Cost of Money)
Months percentage added for demonstration purposes - adjust as needed
Schedule G—Booked and Claimed Direct Costs
110
Schedule H—Direct Costs by Contract at Claimed Rates
111
Total Claimed Direct G&A Claimed O/H G & AJOB Prime SUBCONTRACT Labor Total Sub- Direct O/H Costs Plus Base G &A Total COM COM Total Grand
ORDER CONTRACT NUMBER NUMBER O/H Labor Travel Material ODC Contracts Costs O/H O/H (TCI) Applied Costs Applied Applied COM TotalA. COST TYPE(no entry on title line)
1201 N00039-90-C-0873 - - - - - - - - - - - Claimed 122,113 122,113 5,231 115,068 43,630 87,912 373,954 94,931 468,885 468,885 40,324 509,209 1,904 314 2,218 511,427 Not Claimed (note 1) - 1,687 3,183 4,870 - 4,870 4,870 419 5,289 - 3 3 5,292
1203 N00040-90-C-0874 16,387 16,387 836 312 1,212 15,341 34,088 12,739 46,827 46,827 4,027 50,854 255 31 286 51,140 1204 Subcontract-Clark Inc. 8,973 8,973 87 9,687 632 7,888 27,267 6,976 34,243 34,243 2,945 37,188 (Note 2) (Note 2) - 37,188
A. TOTAL COST TYPE: 147,473 147,473 7,841 125,067 48,657 111,141 440,179 114,646 554,825 554,825 47,715 602,540 2,159 348 2,507 605,047
B. OTHER FLEXIBLY PRICED (Note 3)1205 N000060-90-C-0913 210,312 210,312 8,932 38,643 59,613 89,732 407,232 163,497 570,729 570,729 49,083 619,812 3,279 382 3,661 623,473
- - - - - - - - - - - - - - - - - - - - - -
B. TOTAL OTHER FLEXIBLY PRICED 210,312 210,312 8,932 38,643 59,613 89,732 407,232 163,497 570,729 570,729 49,083 619,812 3,279 382 3,661 623,473
C.. VAR. TIME & MAT'L1301 N00022-96-D-0111 - - - - - - - - - - -
Task Order No. 1 5,300 5,300 382 1,000 6,682 4,120 10,802 10,802 929 11,731 83 7 90 11,821 Task Order No. 2 2,882 2,882 421 500 3,803 2,240 6,043 6,043 520 6,563 45 4 49 6,612
1305 F66777-97-D-0112 - - - - - - - - - - - Task Order No. 1 2,911 2,911 171 750 3,832 2,263 6,095 6,095 524 6,619 45 4 49 6,668
C.. TOTAL VAR. TIME & MAT'L 11,093 11,093 974 2,250 - - 14,317 8,623 22,940 22,940 1,973 24,913 173 15 188 25,101
D. VAR-FIXED PRICE99,819 99,819 5,338 16,724 12,914 147,318 282,113 77,599 359,712 359,712 30,935 390,647 1,556 241 1,797 392,444
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
D. TOTAL VAR-FIXED PRICE 99,819 99,819 5,338 16,724 12,914 147,318 282,113 77,599 359,712 359,712 30,935 390,647 1,556 241 1,797 392,444
E. VARIOUS COMMERCIAL WORK164,315 164,315 11,478 660,297 50,921 596,650 1,483,661 127,738 1,611,399 1,611,399 138,580 1,749,979 - - - 1,749,979
- - - - - - - - - - - - - - - - - -
E. TOTAL VARIOUS COMMERCIAL WORK 164,315 164,315 11,478 660,297 50,921 596,650 1,483,661 127,738 1,611,399 1,611,399 138,580 1,749,979 - - - 1,749,979
TOTAL CONTRACT COSTS 633,012 633,012 34,563 842,981 172,105 944,841 2,627,502 492,103 3,119,605 3,119,605 268,286 3,387,891 7,167 986 8,153 3,396,044
IR & D 14,287 14,287 366 126 9,232 24,011 11,107 35,118 B& P 9,525 9,525 244 85 6,156 16,010 7,405 23,415
TOTAL IR & D/B & P 23,812 23,812 610 211 15,388 - 40,021 18,512 58,533
GRAND TOTAL 656,824 656,824 35,173 843,192 187,493 944,841 2,667,523 510,615
Schedule H-1—Government Participation
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Overhead G&AContract Type Base Amount % Base Amount %Cost-Type 147,473 22.5% 554,825 17.8%Flexibly Priced 210,312 32.0% 570,729 18.3%T&M 11,093 1.7% 22,940 0.7%Fixed Price 99,819 15.2% 359,712 11.5%Commercial 164,315 25.0% 1,611,399 51.7%IR&D/B&P 23,812 3.6% - 0.0%Total 656,824 100.0% 3,119,605 100.0%
Note: The purpose of this schedule is to present a general overview of the extent that cost-type and flexibly priced contracts participate in the absorption of indirect expenses
Overhead
Schedule I—CACWS
113
Unsettled/Claimed DirectPrior And Indirect Costs Using
Subject Years Total Less NetTo Settled Prior Year Current Year Cumulative Contract Cumulative Date Cost Over Physically
Penalty Total Costs Costs Settled or Limitations Settled or Billed (Under) CompleteOrder Clause Costs FYE FYE Claimed Rebates/Credits Claimed PV No. Through Amount Billing
Contract No. Subcontract No. No. Note (2) Note (3) Note (4) Note (4) Note (5) Note (6) (Note 7)SCHED H SCHED HCost Type & Flexibly Priced: (note 1)N00039-90-C-0873 1201 Yes 126,821 511,427 638,248 638,248 18 2/28/2009 640,110 1,862 N00040-90-C-0874 1203 Yes 382,595 2,867,500 51,140 3,301,235 3,301,235 30 3/31/2009 3,295,110 (6,125)
Subcontract-Clark Inc. 1204 359,626 555,311 37,188 952,125 952,125 24 1/31/2009 960,100 7,975 YesN000060-90-C-0913 1205 Yes 591,362 443,916 623,473 1,658,751 1,658,751 33 3/31/2009 1,640,426 (18,325) Yes
Subtotal-Cost & Flexibly Priced Contracts 6,550,359 6,550,359 6,535,746 (14,613)
SCHED K SCHED KTime & MaterialN00022-96-D-0111 001 10,601 10,601 10,601 6 12/31/2008 10,848 247 YesN00022-96-D-0111 002 5,950 5,950 5,950 6 12/31/2008 5,000 (950) F66777-97-D-0112 001 6,000 6,000 6,000 2 12/31/2008 5,750 (250)
- - - - - - - -
Subtotal-Time & Material Contracts 22,551 22,551 21,598 (953)
Total- Cost/Flexibly Priced and Time & Material Contracts 6,572,910 6,572,910 6,557,344 (15,566)
Cumulative Billed (Manual Entry)Claimed
Schedule J—Subcontract Information
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Cost-type subcontracts issued under flexibly priced prime contracts – Yes _X__ No ___SUBCO NTRACTO R'S PO INT O F CO NTACT SUBCO NTRACT INCURRED AWARD
SUBCO NTRACT NO . PRIME CO NTRACT NO . NAME & ADDRESS AND PHO NE NO . VALUE From To IN FY 2009 TYPE
Subcontracts Issued:
P.O . #XYZ0998R N00039-05-C-0873 Small Company Ms. Donna Charleston $110,500 3/16/2006 6/30/2009 $87,912 CPFF
1445 Southpark Blvd. Marketing Manager
Buffalo, NY 14206 (716) 883-8700 X317
P.O . #XYZ0776R N00040-05-C-0874 Tanza Enterprises Mr. Mike Tanza $895,000 4/20/2006 12/2//2010 $15,341 CPFF
87B Executive Park President
Fairfax, VA 22033 (703) 983-5640
P.O . #XYZ01032R Subcontract to Clark Inc. Argonautics, Inc. Mr. Ted Kessel $152,500 7/25/2008 10/16/2011 $7,888 CPFF
Prime N00039-05-C-0875 555 O cean Parkway Marketing Manager
Anaheim, CA 92803 (714) 998-2000 X12
P.O . #XYZ1213R N00060-05-C-0913 DSK Corporation Ms. Jane Matthews $236,135 10/12/2008 3/15/2009 $49,732 CPFF
3559 Vaulting Road Marketing
York, PA 17405 (717) 992-7800
P.O . #XYZ0822R N00060-05-C-0913 Aristeo Associates Mr.Vince Aristeo $100,000 5/14/2007 5/14/2008 $40,000 CPFF
546 Arroyo Drive President
Carlsbad, NM 87112 (504) 535-1600
Performance Period
Schedule K—Hours and Amounts on Time and Material (T&M) Contracts
115
This Schedule is linked to schedule A for the G&A rate. SCHEDULE K
Any changes in data will affect Schedule I. ICE (version 2.0.1c)Other than G&A rate, only manual or externally imported entriesSchedule A - Applied Overhead, G&A, & COM RatesNOTE: Hidden rows have been inserted that will allow for automatic adjustment of the column totals when additional rows are inserted
Contract Labor Contract No.N00022-96-D-0111 Contract No.N00022-96-D-0111 Contract No.F66777-97-D-0112 Contract No. Contract No.
Category (1) Task: 001 Task: 002 Task: 001 Task: Task:
LABOR Rate (2) Hrs Amount Rate (2) Hrs Amount Rate (2) Hrs Amount Rate (2) Hrs Amount Rate (2) Hrs Amount
Program Manager 25.00$ 100 2,500 $25.00 50 1,250 $22.50 100 2,250 - -
Senior Engineer 20.00$ 100 2,000 $17.50 100 1,750 $17.50 100 1,750 - -
Engineer 15.00$ 200 3,000 $12.50 100 1,250 $16.00 50 800 - -
Analyst 12.50$ 100 1,250 $12.50 - - $10.00 20 200 - -
Technical Typist 7.00$ 50 350 $7.00 100 700 $0.00 - - - -
TOTAL 550 9,100 350 4,950 270 5,000 - - - -
OTHER COSTS
Material Costs (3) 1,000 500 750 - -
Travel Costs (3) 382 421 171 - -
Sched AG&A @: 8.60% (4) 119 79 79 - -
Subtotal 1,501 1,000 1,000 - -
TOTAL 10,601 5,950 6,000 - -
Task Ceilings 25,000 12,500 7,500
Explanatory Notes
(1) Represents effort performed by the company. Any subcontract effort should be identified separately.
(2) Represents rates specified in the contract which may be higher or lower than actual rates incurred.
(3) Represents actual costs recorded in the cost records.
(4) G&A applied at the claimed rate to Material (if not Value-added base) and Travel Costs.
XYZ Corporation
Schedule L—Payroll Reconciliation
116
NOTE: Hidden rows have been inserted that will allow for automatic adjustment of the column totals when additional rows are inserted
NOTE: Links not established for indirect costs because they have to be linked to account numbers inserted by contractor.
General
Description Ledger Reference
Direct Labor 656,824 Summary SCHED H
General & Administrative: SCHED B Salaries 90,007
Holiday Wages 2,321
Vacation Wages 5,812
S ick Leave 987
Personal Absence 1,082
Overhead Pools: SCHED C (x) Wages 33,060
Holiday Wages 20,181
Vacation 25,440
S ick Leave 14,318
Severance Pay (in full) 32,419
Intermediate Pools:Occupancy Wages 23,280 SCHED D (x)Overtime Premium (in ODCs) 270
Overtime Premium -
-
TOTAL LABOR DISTRIBUTION 906,001
Other Adjustment to arrive at Total Payroll Distributed (Provide detailed support)
Fiscal Year End - 3/31/2009
to Total Labor Costs DistributionReconciliation of Total Payroll per IRS form 941
Schedule M—Accounting/Organization Changes, etc.
This schedule provides information to the auditor related to the following:
Significant decisions, agreements or approvals (e.g. pension plan, billing rates or contract ceilings)
Significant accounting or organization changes (e.g. changes to indirect pool structure or mergers and acquisitions)
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Schedule N—Certificate of Indirect Costs
118
Certificate of Final Indirect CostsFiscal Year End - 3/31/2009
This is to certify that I have reviewed this proposal to establish final indirect cost rates and to the best of my knowledge and belief:
1. All costs included in the proposal __(identify proposal and date] ____________________________________ to establish final indirect cost rates for ______(identify period covered by rate)
are allowable in accordance with the cost principles of the Federal Acquisition Regulation (FAR) and its supplements applicable to the contracts to which the final indirect cost rates will apply; and
2. This proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR or its supplements.
Firm:_____________________________________________________________
Signature:________________________________________________________
Name of Certifying Official:_________________________________________
Title:_____________________________________________________________
Date of Execution:_________________________________________________
FAR Part 52.242-4-- Certification of Final Indirect Costs.As prescribed in 42.703-2(f), insert the following clause: Certification of Final Indirect Costs (Jan 1997)(a) The Contractor shall --(1) Certify any proposal to establish or modify final indirect cost rates;(2) Use the format in paragraph (c) of this clause to certify; and(3) Have the certificate signed by an individual of the Contractor's organizationat a level no lower than a vice president or chief financial officer of the businesssegment of the Contractor that submits the proposal.(b) Failure by the Contractor to submit a signed certificate, as described in this clause, may result in final indirect costs at rates unilaterally established by theContracting Officer.(c) The certificate of final indirect costs shall read as follows: (see above)
Schedule O—Contract Closing Info
119
Ready Performance Period To Contract Ceiling
Contract No. Order No. From To Close(1)Amount (2) Fee(3) Required Actual Notes
Cost Type:Subcontract-Clark Inc. 2/16/05 2/28/09 Yes 1,000,000 60,000 15,000 14,588 N00060-95-C-0913 10/16/06 12/28/08 Yes 1,750,000 112,000 27,500 28,950
Time & MaterialN00022-96-D-0111 001 7/1/06 12/31/08 Yes 25,000
Preparation Notes:(1) Indicate whether the contract is ready to close based on all information available. If the contract is not ready to close (e.g., a contract modification is being pursued), the reasons why should be stated in a footnote:
(2) Provide the overall contract ceiling amount before fee, for the type of contract.
(3) Provide fee amount as provided by the contract. Include details of the fee computation for all flexiblypriced incentive fee and level of effort type contracts, along with the contract modification used, in a footnote.
Level of EffortCumulative Hours
EXPLORING ICE MODEL
ICE MANUAL.DOC
Complete Instructions for Using the ICE Model
121
EXPLORING ICE MODELIncludes Two Excel Files :
ICE_Model(2.0.1c).xls - Template for Use
in Preparing Incurred Cost Proposal
ICE_Demo(2.0.1c).xls – Sample File with Data
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Other Schedules Provided by ICE
The ICE program provides the following additional Schedules:
Computation of Allowable IR&D/B&P costs (usually only applicable to major contractors)
Comparative Analysis by pool and account
Reconciliation of claim to corporate income tax return
Contract Brief
Executive Compensation form
123
Penalties (FAR 42.709):Penalties will be assessed if a contractor claims an expressly unallowable indirect costs (as noted in FAR 31.2) in an incurred cost submission
Two levels of penalties
124
Common Deficiencies:
Signed certification not included or not signed by at least a Vice President or CFO (schedule N)
Lack of subcontractor information (schedule J)
Not all intermediate allocations disclosed (sch. D)
Unallowable costs not included in G&A base (sch. E)
IR&D/B&P not fully burdened (sch. B)
Physically complete contracts not shown on sch. I & O
Government participation not calculated for all final indirect rates (schedule H-1)
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Frequently Asked Questions:Do I have to use the ICE model?
No, contractor may use any format; However, the ICE model does provide all the schedules required per FAR 52.216-7
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Frequently Asked Questions:Can DCAA grant an extension for submitting my final incurred cost rate proposal?
No. Extensions for submitting final rate proposals can only be granted by the administrative contracting officer per FAR 42.302 and FAR 42.705-1(b)(1)(ii). To locate your responsible administrative contracting officer, please contact the Defense Contract Management Agency (DCMA).
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Frequently Asked Questions:When will DCAA determine adequacy of my incurred cost submission and perform the incurred cost audit?
Auditors should evaluate a contractor’s incurred cost proposal upon receipt and immediately notify the contracting officer of significant deficiencies.
It is DCAA policy that indirect submissions will be audited as promptly as possible after receipt.
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Frequently Asked Questions:I’m preparing my submission(s) (e.g. contract pricing proposal, forward pricing rates, incurred cost, etc.) and would like to ask the DCAA auditor some specific questions on my submission to make sure I’m on the right track. Will the DCAA auditor give me some specific advice on how to prepare my submission?
Answer: A DCAA auditor can answer general questions related to the acquisition regulations. For example, if a contractor asked advice on what the FAR requires in certain situations, a DCAA auditor would be able to provide that information. Auditors may also provide general advice on what constitutes an adequate submission. However, auditors are precluded from assisting contractors in preparing and developing the contractor’s submission because doing so would create a significant threat to the auditor’s independence. Contractors should look under the “Guidance” and “Checklist and Tools” tabs on DCAA’s website for guidance about the adequacy of their specific submission.
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Questions?
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