DCAA Compliance Blog

In the world of government contracting, the pricing of a proposal can be the section of the proposal taken too lightly by many bidders.  Here at ReliAscent, one of the most difficult things to see is a client “win” a proposal (Grant or Contract), that has several “losing” features built into the cost & pricing section.    At ReliAscent, our passion is helping companies that have exciting technologies or services succeed.   We can relieve the pressure of government regulations so the company can concentrate on their core expertise, providing the best chance for success.

While government contract accounting certainly presents its share of challenges, contractors should not overlook the government property clause at FAR 52.245-1. Depending on your contract type and contracting environment, you may be exposed to parts or all of this clause with the resulting administrative costs to comply. It is fair to say that government property management in many respects is as confusing and fraught with potential missteps as government contract accounting.

The DCAA and DCMA

The answer to this question depends on your perspective as either a government acquisition/grant professional or a government contractor or grantee. Negotiating or directing capped indirect rates on cost reimbursable contracts and in the grant environment may at first appear to be an effective risk mitigation tool for buyers and grant managers. On the other hand, a case can be made that the use of this technique may not necessarily produce the intended results. To be sure, there are plenty of opportunities to reduce a buyer’s risk without resorting to what could be considered “piling on.”

At ReliAscent, we routinely see contractors and grantees that have submitted indirect rates that don’t adequately reflect their operations, don’t align with their accounting systems, and frustrate their billing processes. We find many factors contribute to this chaos, but one that consistently comes up is the confusion surrounding government or prime contractor-supplied bid instructions, math models, and on-line bid templates.

Indirect Rates, Huh? What are They Good For?

With apologies to the 1970’s Motown hit, one of the most common questions we get at ReliAscent® surrounds development and utility of indirect cost rates. Indirect costs are those that cannot easily be allocated discretely to a single project or across a number of projects. An indirect rate describes a mathematical ratio and its logical relation of indirect costs (the numerator) divided by the “base” (the denominator). In this manner, one or more “pools” of indirect costs can be allocated mathematically to all projects.