As a follow-up to the L2 Federal Resources webinar on “Attributes of an Adequate Accounting System,” Aronson LLC government contracting specialists Nicole Mitchell and Brian Bender have prepared answers to several attendee questions:
Is my contract covered by the Cost Accounting Standards (CAS), and how do I determine the level of CAS coverage (e.g., Full, Modified, Not CAS Covered)?
Click here to download a flowchart that illustrates the method for determining CAS coverage and whether or not your company should be submitting a Disclosure Statement.
Does my company have a robust set of policies and procedures?
At a minimum, your business should have the following written policies and procedures (P&P) in place prior to DCAA review/audit:
We also suggest having the following forms/processes in place:
Please contact us to discuss options for customizing a P&P manual to match your business needs. An engagement setup where we can understand your business, contract mix, accounting system, and future endeavors would allow for adequate P&P customization.
Can my business delay payment to our subcontractors until after we are paid?
No. According to Federal Acquisition Regulation (FAR) 52.216-7(b)(ii), subcontractor costs which are submitted to the Government must be paid “[i]n accordance with the terms and conditions of a subcontract or invoice” and “[o]rdinarily within 30 days of the submission of the Contractor’s payment request to the Government.”
Can our prime contractor delay payment to us until after they are paid?
No. For the same reasons noted above, FAR 52.216-7(b)(ii) states that subcontractors must be paid within 30 days of when their cost is invoiced to the Government. This does not mean 30 days from when you submit your invoice to your Prime, or 30 days from when your Prime receives your invoice, rather your company must be paid 30 days from when your Prime includes your cost on their invoice to the Government.
What should my policy and procedure manual state in relation to payment of subcontractors?
Your written policy for subcontractor payments CANNOT include language such as: “Subcontractors will be paid under the terms and conditions of the applicable subcontract after COMPANY is paid.” Rather, appropriate language should be: “COMPANY will request the reimbursement of subcontractor costs only to the extent those costs have been paid or will be paid in accordance with the payment terms of the subcontract and ordinarily with thirty (30) days of the date the prime contract invoice was submitted to the Government.”
Where can I download the DCAA workprograms noted in your presentation?
The DCAA workprograms noted in the presentation, and others utilized by the DCAA, can be found at www.dcaa.mil under the Standard Audit Programs link (menu on the left). As a reminder, the workprograms noted were:
Visit and bookmark these valuable Aronson links for continuing information and resources for government contractors:
Please contact us with any project questions or if you want additional information about any government contracting topics.