The historic snowstorm over the weekend in the Washington DC area resulted in the Federal Government closing early on February 5, 2010, and again Monday, February 8, 2010.  If you are a Federal Contractor with employess working at DC area Federal Goverment sites, what do these closings mean to you?

 Considerations:

1. What is stated in the contractor’s individual contract clauses regarding leave?

2. Are the employees covered by the Service Contract Act (SCA)?

3. Did your Contracting Officer issue a modification permitting invoicing for the federal closure?

4. What are the Contractor’s own leave and pay policies?

Possible Outcomes:

1. Check the leave clauses in your contract to see if they address handling of this situation.

2. Federal closing leave payments pay qualify as a fringe benefit for SCA health & welfare benefit calculation.

3. Check with your Contract Officers to request contract modification allowing for invoicing for closings.  Under Department of State’s DOSAR 652.237-72 “Observance of Legal Holidays and Administrative Leave” - a contract is allowed to be reimbursed all direct and indirect cost but not fee.

4. Follow the contractor leave and pay policies for federal closings or paid time off.

There is no single solutions or easy answer to these issues.  The affected employees may: 1) work at alternate location, if available, or 2) take the day off as leave with pay.

For more information contact Hope Lane at 301-231-6266 or hlane@aronsoncompany.com.

Failure to maintain an adequate accounting system may preclude a contractor from award of a federal contract.  Your next government contract award, as a prime or sub, may be dependent on having a compliant accounting system and small businesses are NOT exempt.  Don’t waste your valuable time and money submitting proposals in pursuit of government contracts if your accounting system isn’t “ready for prime time.”

Join Aronson & Company’s Nicole Mitchell for a complimentary breakfast briefing on February 24th where she will guide you through the world of accounting for federal contracts. Attendees will get a look at basic accounting requirements for federal contractors and what you can expect from an audit. Topics will include: Read all »

Whether you are a current Deltek user or just interested in learning more about Customer Care, Deltek’s exceptional global support program, join Aronson Technology Services on February 9th for this complimentary, interactive breakfast event.  The first part of the session will be led by Jeff Book, Deltek’s Vice President of Customer Care.  He will present practical information for maximizing your technology investment.  Topics will include:

• Optimizing your investment in your Deltek product
• Understanding the Deltek Customer Care relationship
• Customer Care tools available to you
• Using best practices to get information quickly

During the second part of the session, Aronson & Company’s government contracting systems specialists will be on hand to answer any questions you may have and allow you to work one-on-one with our technical consultants at no charge!  Current Deltek users can come pick up some new tricks and, those that are in the browsing stage, can come for a software test drive. Read all »

We all know the names of the largest prime contractors doing business with the federal government, but seldom do we get to analyze the market share of separate reporting units of those large organizations. To get such an idea, we separated out large prime contractors such as Lockheed, SAIC, Northrop Grumman, and Raytheon (to name a few) by their individual reporting units.

The Fedmine report we prepared (Top 100 Individual Prime Contracting Entities by Market Share at the Dept of Army) compares single whole corporations or the individual subsidiaries / reporting units of large parent organizations (as indicated by distinct DUNS numbers; aggregate parent entities were not included). The report covers a 7 year period at the Department of the Army, including the current fiscal year as of January 26, 2010. The top contractor may come as a shock, because it is an entity not among the large organizations named above. This top contractor is not entirely unknown, but it is a name one might use as a “lifeline” to “phone a friend” in a quiz contest such as “Who Wants To Be A Millionaire”. Read all »

According to the statistics recently released by the General Accounting Office (GAO), 1,989 protests were filed in calendar year 2009, a 20% increase over 2008.  Some have conjectured that the economy has motivated more losing bidders to file protests.  However a significant part of the increase is due to changes in the regulations which allow different types of procurements to be protested to GAO.  Protests involving task order awards, A-76 outsourcing decisions, and Transportation Security Administration procurements accounted for a large percentage of the increase.

Though the number of protests are up, the percentage of protests sustained by GAO actually decreased.  GAO decided 18% of the protests in favor of the protested, compared to 21% in 2008.   This is a sign the increase in protests is not attributable to an increase in poorly conducted procurements.  Of course, a protest can be beneficial to contractors even if they don’t technically win.  Often incumbent contractors protest and are able to continue work on their contract while the protest is being decided.  That can result in months of additional revenue and profit even if they ultimately lose the protest.

On January 12, 2010 the District of Columbia’s Office of Tax and Revenue (DC OTR) announced that individuals who are registered domestic partners in the District or are in similar relationships from other jurisdictions or will be able to file jointly, or married filing separately, on a combined return for the tax year 2009. Further, subject to approval by the U.S. Congress, expected by March 2, 2010, same-sex individuals who were married in other jurisdictions will be able to file jointly, or married filing separately, on a combined form for the tax year 2009. To avoid having to file amended returns later, same-sex spouses are advised to defer filing their DC personal income returns until after March 2, 2010 . Read all »

President Obama is expected to announce a three-year freeze on non-security, discretionary spending in the State of the Union address this Wednesday, January 26th, according to CNN. The three-year freeze will hold discretionary spending at the current level of $447 billion, about one-sixth of the federal budget, with a goal of creating savings of $250 billion.  The freeze does not include defense, homeland security or the so-called “entitlement” programs such as Medicaid and Social Security.  Congress will be able to shift funding from one program to another within that amount.

Aronson predicted such a drop in discretionary spending in our January 15th, New Year’s Resolution’s post: Resolution #10: We Will Prepare for the Inevitable Government Contracting Economic Crisis. Combined with the federal deficit, a drop in discretionary funding  means an economic crisis in the government contracting industry.  As noted previously, it is critical that you start to develop a contingency plan now as very few areas will be immune from the shrinking pool of money. See the key areas to incorporate in your contingency plan here. Aronson’s Government Contracts Services Group can provide  information and assistance succeeding in these tough times - contact Lexy Kessler, Lead Officer via email or at 301.231.6218.

President Obama continues to target tax delinquent Government contractors.  In December 2008 the FAR was modified to require offerors to certify whether or not they owed any delinquent taxes.  See FAR 52.209-5.  On January 20, 2010, the President ordered the IRS to review the contractor tax payment certifications for accuracy.  The IRS and OMB as well as other Federal agencies were further tasked to develop a mechanism to prevent tax delinquent contractors from receiving federal contracts.  Contractors can already be debarred or suspended for failure to pay taxes.  See FAR 9.406-2 (b) (5) (v).  To improve both compliance and enforcement, the President wants the IRS to be able to share tax information with other Federal agencies, perhaps in a shared database.

The bottom line is that if you dance to the music, you should pay the piper.  It seems axiomatic to say that if you make your living off of tax payer dollars, you should pay your own taxes.  And definitely don’t certify that you owe back taxes if in fact you do.

Aronson & Company’s Tax Services Group is pleased to share with you these two important tax alerts to help you remain informed and up-to-date!

The Temporary 2010 Federal Estate Tax Repeal
Do you need to make changes to your existing estate plan? Thanks to delays in Congress, the temporary federal estate tax repeal for 2010 has actually happened, at least for now. The failure of Congress to act in a timely manner has created an unprecedented uncertainty in the world of estate planning. Although many believe that Congress will reinstate the estate tax in early 2010 and make it retroactive to January 1, 2010, nothing is definite.

New Roth IRA Conversion Opportunities
Many individuals will have a significant new retirement and estate planning opportunity beginning in 2010. Previously, individuals with modified adjustable gross income of more than $100,000 were not permitted to make Roth IRA conversions. The May of 2006, Tax Increase Prevention and Reconciliation Act (TIPRA), however, changed the Roth IRA conversion rules. Read all »

A proposed rule released by the Department of Defense (DoD) on January 15, 2010 will provide contracting officers the authority to withhold payments on cost reimbursable type and time and materials type contracts as a response to address business system deficiencies.  The draft rule adds a clause to contracts requiring contractors to certify that they have no major defects in their contractor business systems defined as: accounting systems, estimating systems, purchasing systems (CPS), earned value management systems (EVMS), material management and accounting systems (MMAS), and property management systems. This DoD’s proposal to amend the Defense Federal Acquisition Regulation Supplement (DFARS), continues the crack-down on contractors increasing regulations and potential penalties for contractors with deficient business systems.

The draft rule identifies contractor business systems and internal controls as the first line of defense against waste, fraud, and abuse of tax dollars. The objective of the rule is to improve the effectiveness of Defense Contract Management Agency (DCMA) and Defense Contract Audit Agency (DCAA) oversight of contractor business systems. The requirements of the rule will apply to entities contractually required to maintain one or more of the defined contractor business systems listed above. If deficiencies are identified in the systems and the contractor does not implement corrective action within 45 days, the proposed rule allows contracting officers to withhold up to 10% of each of the Contractor’s payments on cost reimbursement, time and materials, and labor hour type contracts for each system up to a maximum of 50%. Read all »