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By David S. Gallacher and Kerry O’Neill

Last April, we wrote about proposed changes to Department of Defense ("DoD") reporting requirements for independent research and development ("IR&D"), raising concerns about how the proposed change would tie recoverability of IR&D costs to new reporting and disclosure requirements. Recently, Defense Federal Acquisition Regulation Supplement ("DFARS") 231.205-18(c) was finalized, with changes. See 77 Fed. Reg. 4632 (Jan. 30, 2012). This final rule is a mixed bag that got some things right, but also leaves some of the most serious issues unresolved.…

Continue Reading Final Rule for IR&D Reports Fails to Address Most Serious Questions

By Jonathan S. Aronie

So there I was, just sitting there minding my own business. It was the third day of the GSA OIG’s site visit being conducted as part of a routine pre-award audit (or as the OIG called it, a pre-award “attestation review”), and all was going well. The auditor, who was quite a nice guy frankly, had had many questions, as was to be expected, but nothing for which this particular mid-sized GSA Schedule contractor did not have a reasonable response. No Price Reductions Clause violations. No overbillings. No resume qualification issues. Overall, a pretty darn good preliminary report if you ask me. But then, out of the blue, he says, “okay, I’d like to interview your personnel now.” Interview my personnel?! Come again!?
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Continue Reading From Attestation Reviews To Examinations: The GSA OIG Expands The Scope Of Its Pre-Award Audits

By David S. Gallacher

Those familiar with Government contracting know at least a little bit about the elusive and fickle regulatory requirements for Independent Research and Development (“IR&D” or “IRAD”) costs. IR&D is a means by which the U.S. Government supports a Contractor’s independent R&D efforts. By reimbursing a Contractor’s independent R&D costs, the Government long has hoped to advance the state of the art without stifling a contractor’s innovation under the weight of a federal bureaucracy, while simultaneously banking on the fact that the U.S. Government also will benefit from the technology advancements. But two recent developments may change the essential nature of IR&D, making it less “independent” and more “dependent” on Government rights and oversight. To quote Bob Dylan – “the times they are a changin’.” 
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Continue Reading The Times They Are A Changin’ – Independent Research and Development May Not Be So “Independent” Any More

By David S. Gallacher

While Vice President Biden was busy touting Summer 2010 as the “Summer of Recovery” and the economic effects of the February 2009 Stimulus Act (a.k.a. the American Recovery and Reinvestment Act, the Recovery Act, ARRA, the Stimulus Act, etc.), the gears of the regulatory process ground steadily onward. Throughout the summer, the White House Office of Management and Budget (“OMB”) issued updated policy guidance implementing the ARRA requirements, and the rule-makers in the FAR Councils remained hard at work updating and (hopefully) finalizing the regulations implementing the finer details of the Recovery Act. Despite the fact that the ARRA funding officially expired on September 30, 2010 (meaning that any unobligated ARRA funds will now revert to the federal treasury to be saved or spent another day), the Government spent its summer fine-tuning the regulations. As the sun begins to set on the Recovery Act, and as the Summer of Recovery fades into the past, we summarize here some of the key features of the final Recovery Act rules promulgated over the last few months. 
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Continue Reading Bidding Adieu To The “Summer of Recovery”: Changes To ARRA Buy American And Reporting Requirements

By Christopher Noon

On July 22, 2010, President Obama signed into law the Improper Payments Elimination and Recovery Act of 2010 (the “Act”). The Act significantly modifies and expands the Improper Payments Information Act of 2002 by placing a greater obligation on the federal government to reduce the amount of improper payments made every year. The President estimated that approximately $110 billion was improperly paid by the government last year, including improper payments made to government contractors. The new legislation will now require executive agencies to conduct recovery audits in an effort to reduce this figure by $50 billion by 2012.
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Continue Reading Improper Payments Elimination Act Provides Opportunities For Contractors

On January 15, 2010, the Department of Defense announced plans to amend the Defense Federal Acquisition Regulation Supplement (“DFARS”) to allow contracting officers to withhold payments from companies with “deficient” business systems in an effort to prevent “unallowable and unreasonable costs on government contracts.” 75 Fed. Reg. 2457. Contracting officers would have the authority to withhold payments on cost reimbursement, incentive, time-and-materials, and labor-hour contracts. 
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Continue Reading DoD Acts To Rein In DCAA (Again)

Not so long ago, we called your attention to a troubling trend in the natural order of Government contracting. First, we recounted how DCAA has initiated itself into the dark art of intimidation. Then we described how a contracting officer’s mere disagreement with the DCAA could result in an IG referral for a poor CO who comes out on the other side of a DCAA recommendation. And when last we resumed our chronicle, we recalled that a call for an end to these frontal assaults on CO independence was issued – not only by us in the last several months – but by an ABA Ad Hoc Committee some 22 years ago.
Continue Reading Top Ten Reasons DCAA Should Let COs Do Their Bloody Job

In an attempt to promote "protection" and "provide transparency," the FAR Councils recently issued a final rule formally mandating Government Accountability Office ("GAO") auditor access to interview contractor personnel during an audit of the contractor’s records.  This final rule published on October 14, 2009 adopted, without change, an interim rule issued March 31, 2009, implementing section 871 of the Duncan Hunter National Defense Authorization Act for 2009 ("Section 871"), as codified at 41 U.S.C. 254d(c)(1) and 10 U.S.C. 2313(c)(1)."   The American Recovery and Reinvestment Act of 2009 (the "Recovery Act") provides a similar interview right, but the Recovery Act provision extends that right to agency inspector generals.  Congress limited Section 871 interview rights to the GAO.
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Continue Reading GAO Allowed to Interview Current Contractor Employees During the Audit of the Contractor’s Records

If you are a company that has received funds under the American Recovery and Reinvestment Act of 2009 (also known as “ARRA,” “the Recovery Act” or “the Stimulus Act”) and that has a requirement to report the data required under the Act (under FAR 52.204-11 and Section 1512 of the Act), you have until the end of this week (October 10, 2009) to report this data through the new website www.federalreporting.gov.
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Continue Reading It’s Time to Report That Stimulus Information That You’ve Been Collecting — Are You Ready?