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July 20, 2017 By AMK

ASBCA throws DCAA another brushback pitch

In an April 2017 decision, the Armed Services Board of Contract Appeals (ASBCA) once again rejected the position of the Defense Contract Audit Agency (DCAA) that a cost or type of cost for which allowability depends on the circumstances or Contracting Officer discretion can nonetheless be “expressly unallowable” and subject to penalties under FAR 42.709-1(a). 

Although the law is clear that penalties are appropriate only when such costs are named and stated to be unallowable in a cost principle such that a counter position is unreasonable, the DCAA has continued to assert its erroneous position in its audit guidance and findings.

A contractor is subject to penalties if it includes in its indirect cost submission an indirect cost that is “expressly unallowable under a cost principle in the FAR, or an executive agency supplement to the FAR.”  FAR 42.709-1(a)(1).

The ASBCA has explained the standard for whether a cost is expressly unallowable is “objective.”  General Dynamics Corp., ASBCA No. 49732, 02-2 BCA ¶ 31,888, reversed on other grounds, Rumsfeld v. General Dynamics Corp., 365 F.3d 1380 (Fed. Cir. 2004).  An item of cost is expressly unallowable if it is “specifically named and stated as unallowable….”  Raytheon Company, ASBCA Nos. 57576, 57679, 58290, June 26, 2015.  Moreover, “the Government must show that it was unreasonable under all the circumstances for a person in the contractor’s position to conclude that the costs were allowable.”  General Dynamics Corp.

In twin Memoranda for Regional Directors (MRDs) dated December 18, 2014 and January 7, 2015, the DCAA provided its audit teams with guidance concerning the identification of expressly unallowable costs that contradicted these clear rules.  14-PAC-021(R); 14-PAC-022(R).  Relying on an ASBCA case from the 1980s, Emerson Electric Co., ASBCA No. 30090, 87-1 BCA ¶ 19,478, November 19, 1986, the DCAA opined that “a cost can be unallowable even though the cost principle does not explicitly state that the cost is unallowable or not allowable.”  14-PAC-022(R).  “[I]n situations where a cost principle does not specifically state that the applicable cost is unallowable or not allowable, the audit team will have to employ critical thinking when determining whether the cost principle identifies expressly unallowable costs” and “whether the cost principle identifies a cost or type of cost clearly enough that there cannot be a reasonable difference of opinion as to whether a questioned cost meets the criteria specified.”  Id.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=601112

Filed Under: Government Contracting News Tagged With: allowability, ASBCA, DCAA, indirect costs, unallowable costs

March 17, 2017 By AMK

DCMA’s capability working groups help streamline business processes

Thirteen working groups have been implemented and kicked off under the Defense Contract Management Agency’s Business Capabilities Framework initiative.

According to the capability framework’s website, “DCMA’s capability framework is a set of high level contract management functions that underpin the agency’s strategic plan and capture the results of the daily, multi-functional activities of our personnel in order to provide actionable insight to the Defense Acquisition Enterprise.”

Pam Sutton, the director of the Strategic Analysis Division, said the initiative will allow everyone across the agency to communicate with a similar message the value of DCMA’s mission of providing acquisition insight and oversight.

“We wanted a means to communicate to the undersecretary of defense for acquisition, technology and logistics, and to the Department of Defense as a whole, the value that DCMA brings to the department and communicate in dollars the return on investment,” said Sutton, whose team is responsible for providing support by helping the capability working groups achieve their goals.

One of the major milestones each group is tasked with is to separate policy from procedure, with an emphasis on producing agency manuals and streamlining policies in their respective area to make sure everyone around the agency follows the same guidelines.

The five primary capability working groups include: Product Acceptance and Proper Payment; Indirect Cost Control; Contractor Effectiveness; Negotiation Intelligence; and Contract Maintenance. The three integrating working groups include: Program Support; Corporate Assessment; and Mission Assurance and Industrial Base Viability Assessment. The five enabling working groups include: Facilities Management; Talent Management and Skills Development; Stewardship; Information Technology Management; and Planning and Programming.

Primary Focus: Administering Contracts

The primary groups focus on administering existing or future contracts, while the integrating groups will take the information gleaned from the primary groups, analyzing and repackaging the data to help the agency’s other stakeholders, especially its customers. The enabling working groups were established to provide support to DCMA’s workforce so employees can do their jobs even better.

“Employees from around the agency are a part of these working groups,” said Sutton. “Each working group is comprised of employees from various job series and different grade levels because we wanted to make sure each group was integrated and multifaceted, just as the capabilities are. These groups are purposefully designed to have different specialists working together to problem solve and create better solutions.”

Each working group is led by a manager with two team leaders who reached out to the regions and contract management offices for volunteers to serve on the team. All of the working groups have met and are in the process of working to achieve a set of five milestones. The groups choose how often they meet and can meet face to face or via teleconference or videoconference. There isn’t a minimum or maximum number of employees who can participate in a group.

“This is a great opportunity to participate in creating a framework to make the agency even better,” said Sutton.

Technology Interests Represented

In addition, an IT representative serves on each team.

“It’s important to have someone from IT on each working group to help build a business architecture and provide expertise such as document flow and making sure the data is accurate,” said Sutton.

Sutton said the managers and team leaders meet every Thursday with Marie Greening, DCMA’s chief operations officer, on the status of their group and to discuss topics that affect all of the teams, such as risk assessment. She said she has already started receiving positive feedback about the new working groups.

“People are beginning to understand the benefit of using the capability framework,” said Sutton. “By working in an integrated manner, this will help us to get to one team, one voice.”

Nathan Scoggin, director of the Enterprise Performance Advocacy Division in the Technical Directorate, is a co-team leader with Seay Anne Sheley, the director of the Corporate/Divisional Administrative Contracting Officer Group in the Cost and Pricing Center, for the Indirect Cost Control group. They met with their working group for three days in February at Fort Lee to establish baseline goals and start working on a strategic gap analysis. The group’s capability manager is Tim Callahan, the Contract Directorate’s executive director.

Cost Savings Linked to Suppliers’ Indirect Costs

“It was critical to pull everyone together to establish a working relationship and a capability baseline,” said Scoggin. “Indirect Cost Control offers the Department of Defense an opportunity to realize substantial cost savings by ensuring the supplier’s indirect costs accurately reflect their projected business base and allowable expenses per the Federal Acquisition Regulation. This area has been emphasized by (the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics) in the Better Buying Power initiative.”

Scoggin said the working group accomplished a lot during the initial meeting.

“We are coordinating a holistic approach to documenting instructions, processes and procedures as agency doctrine,” Scoggin explained. “The working group collaborated on defining Indirect Cost Control and split into smaller groups to optimize the interaction of members. We analyzed existing agency instructions, reviewed draft instructions created by the Integrated Policy Office, and collected data on the activities, processes and tasks for alignment with personnel roles. There was also the identification of areas that presented opportunities for a return on investment, which created a baseline for estimates of the agency’s direct impact in this critical area.

“The level of interest from the field and the eagerness of the participants to help advance the agency’s ICC capability was gratifying,” added Scoggin. “This solid foundation will be critical to our work ahead.”

Jose Ortiz, who is a systems engineer on the Integrated Cost Analysis Team at DCMA Lockheed Martin Denver, said he is excited about participating on the ICC working group. His skillset is in technical analysis, including Forward Rate Pricing Proposals and Cost Estimating Relationships.

“Indirect Cost Control is a key component in the dynamic business world we live in,” he said. “DCMA has an advantage by establishing a team that genuinely knows the processes involved in Indirect Cost Control and can use that knowledge and experience to improve the way business is performed.

“Our initial meeting was significant because of the different skillsets that were represented by each of the attendees,” he added. “This is a great opportunity to work as a change agent in DCMA and a learning experience for everybody in the group. I will use what I learned from this group to orient my peers on the significance that Indirect Cost Control has for the agency and the initiatives that are currently in place or are being set up.”

Read more about the Business Capabilities Framework on DCMA 360 (login required) at https://360.dcma.mil/directorate/PH-DC/DCA/BCF/SitePages/Home.aspx

Source: http://www.dcma.mil/News/Article-View/Article/1106563/dcmas-capability-working-groups-help-streamline-business-processes/

Filed Under: Government Contracting News Tagged With: business systems, contract administration, contract management, cost savings, DCMA, indirect costs, integrated product team, IPT, technology

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