"Cost Corner" for September 2008
The Case of the Missing CAS Disclosure Statement
NASA has terminated for convenience a $750 million cost plus award fee contract because the awardee failed to submit the required Cost Accounting Standards Disclosure Statement and because, as a result, NASA could not, and did not, evaluate the purportedly winning proposal against the missing Statement. NASA’s announcement came in response to a GAO bid protest over the space agency’s handling of the procurement for “next-generation” space suits. NASA’s corrective action, which is being challenged by the protester, would reopen discussions and permit “limited proposal revisions.” The nature and scope of those “limited proposal revisions” remain undefined as of this date. It remains to be seen whether NASA will attempt to limit the reopening of the competition to the retroactive submission of a disclosure statement by the previous awardee. See Wall Street Journal, NASA Seeks to Reopen Spacesuit Contest, August 16, 2008; Page B5.
Sheppard Mullin represents the protester in the above-referenced proceedings.
Auditing the Auditors
On July 23, 2008, the GAO issued a report finding that the DCAA had failed to follow generally accepted government auditing standards when audit opinions were revised by supervisors despite indications of contrary evidence or significant deficiencies. In response to the report, the DoD is establishing an independent advisory panel to review the activities of the audit agency. The advisory panel is to evaluate DCAA procedures and make recommendations for improvement. Also, DCAA has asked the DOD IG to review issues noted by the GAO and has implemented changes outlined in a memorandum by the DCAA Director, April Stephenson, including a reassessment of staffing and metrics across the agency, the cessation of participation in integrated product teams, and designation of August as “Audit Quality Month.” In this latter regard, we can hear the echoes of President Ford’s esteemed “Whip Inflation Now” Program reverberating across the audit landscape.
Click here for the GAO report, “DCAA Audits: Allegations That Certain Audits at Three Locations Did Not Meet Professional Standards Were Substantiated.” The DCAA Director’s memo is at www.governmentexecutive.com/pdfs/081408rb1b.pdf.
Southwest Marine Upheld
The 9th Circuit has affirmed the district court’s decision that legal costs incurred in the unsuccessful defense of a Clean Water Act action brought by a private entity are unallowable. In the appellate court’s view, these costs are similar to costs specifically disallowed under FAR 31.205-47(b), which addresses proceedings brought by government entities or on their behalf by third parties such as FCA relators -- the Clean Water Act authorizes suits by both private citizens and the Government, permits the Government to intervene in a suit brought by a private citizen, and mandates that any penalties for violating the statute are paid to the US Treasury. Southwest Marine Inc. v. United States, 9th Cir., No. 07-55229.
Authored by:
(202) 218-6878
jchierichella@sheppardmullin.com
and
(202) 218-0006
