Effective June 22, 2010, the prevailing health and welfare fringe benefits required by the McNamara-O’Hara Service Contract Act (SCA) increased to $3.50 per hour. The Department of Labor (DoL) issued a memorandum on June 9, 2010, announcing the change. The new benefit rate is derived from the latest DoL Bureau of Labor Statistics, Employment Cost Index, summary of Employer Cost for Employee Compensation.
Don’t let the increase impact your bottom line – know your rights as a Federal contractor. – “Fair Labor Standards Act and Service Contract Act-Price Adjustment (Multiple Year and Option Contracts)” as well as FAR 52.222-44 “Fair Labor Standards Act and Service Contract Act-Price Adjustment” authorize adjustment of fixed price SCA-covered contracts when SCA wage determinations require an increase to the minimum wage or fringe benefits. Contractors are allowed an hourly adjustment equal to the new hourly fringe benefit rate less the hourly cost of the actual benefits provided by the contractor.
Do not delay; the FAR clauses also stipulate that the claim must be submitted within 30 days of the effective modification incorporating a new wage determination.
Conquering Federal Acquisition Regulations (July 14th, 2010, 8:30am, Aronson & Company, Rockville)
Join Aronson & Company and ABC of Metro Washington for a seminar on July 14th where our contracting experts will explain how the government and contractors use the FAR and describe some of the most pertinent provisions. This installment in ABC’s management series will provide a basic understanding of the FAR for companies just entering the federal market. Don’t let the FAR intimidate you. Approach your federal opportunities with the confidence that comes from knowing the “rules of the road!” Details
Succeeding When Government Contracting Dollars Shrink (July 14th, 2010, 7:30am, Tower Club, Tysons Corner)
Federal contracting dollars have been plentiful during the current economic downturn, but all good things come to an end. Control your destiny and create your federal roadmap for success! Join Aronson & Company, Information Experts, Venable and our distinguished guest panelists for an informative breakfast briefing on July 14th where the panelists will provide the “coordinates” for building your roadmap to future success. Using your leverage now will allow you to sustain and grow in the leaner times ahead. Whether your current contracts were the result of deliberate efforts or accidental circumstances, only intentional actions will ensure your future success. If you are new to the federal marketplace, an experienced player trying to diversify, or struggling to achieve a growth milestone, this program will help you design your own federal roadmap. Details
The Federal Acquisition Regulations have been revised to significantly expand the requirements to conduct market research for both contracting officers and contractors. Specifically, contracting officers will now be required to conduct market research prior to awarding any IDIQ contract for non-commercial items that exceeds the simplified acquisition threshold. Also, contractors with prime contracts that exceed $5 million will now be required to conduct market research prior to the award of any subcontracts exceeding the simplified acquisition threshold.
These revisions are contained in FAR CASE 2008-007 published in the Federal Register, Volume 75, Number 115 dated June 16, 2010. The new requirements will apply to any contract awarded after that date. Though the new requirements are already effective, the FAR Counsel will accept public comments until August 16, 2010.
This change is especially important to contractors that maintain or desire to acquire an approved purchasing system. The requirement to conduct market research will undoubtedly become an element of the Contractor Purchasing System Review or CPSR. Thus most contractors will need to revised their purchasing policies and procedures to ensure the required market research is conducted and documented in the file. The “rules” for when and how to conduct market research are contained in FAR Part 10.
As part of Phase II of its Goldstar Initiative, GSA will be issuing mandatory modifications to ALL Schedule Contracts on June 24th to baseline its contractors’ current terms and conditions, along with negotiated exceptions. This process will be much more onerous then a standard mandatory modification. It is extremely important to read the instructions and complete the modification carefully. Continue reading »
Most GSA Schedule Contract holders are now required to adhere to additional compliance requirements due to new FAR clause 52.203-13 “Contractor Code of Business Ethics and Conduct”. This FAR clause has been added to most GSA Schedule Contracts and requires affected contractors to a adopt a Code of Conduct for all employees, implement a compliance program and self-report certain ethical violations of the Code to the Government. Large businesses are also required to implement a robust set of internal controls.
The “Contractor Code of Business Ethics and Conduct” FAR clause is not required to be added to pre-existing contracts nor is it required for contracts of less than $5 million. So the addition to GSA Schedule contracts has generated some controversy. For more information on the nature of this clause and the issues involved in applying it to GSA Schedule contracts please read Tom Marcinko’s latest article: A Marriage of Inconvenience: GSA Schedule Contracts & The Contractor Code of Business Ethics & Conduct Clause. Continue reading »
Beware, you may be overbilling for airfare costs if you haven’t been closely watching the travel regulations lately. A regulation revision, FAR 31.205-46(b), related to the recoverability of airfare costs aimed to resolve certain ambiguities and may result in lower recoverable amounts. The new rule provides that airfare costs in general, only are allowable to the extent the costs do not exceed “the lowest priced airfare available to the contractor.” Thus, under the new rule when contractors have obtained discounted airfare prices not available to the general public, only the discounted airfare only is allowable. The revision goes on to state that increased costs for refundable, versus non-refundable, airfare generally are unallowable.
Contractors therefore should update travel policies and procedures to reflect both the new limit of the lowest priced airfare available to the contractor and that increased costs for refundable tickets are unallowable. Contractors also should ensure that travel policies and procedures are followed when scheduling travel.
A likely result of this revision is increased focus by the DCAA and other government auditors on both allowability of airfare and contractor policies and procedures for scheduling travel. A&C can provide assistance in initiating or updating your travel policies. Contact Hope Lane at firstname.lastname@example.org or call at 301-231-6266.
Do you ever feel that dealing with DCAA is like walking through an enormous maze? Once you complete an audit you feel a sense of victory and you vow to NEVER step back into the maze again. Well here is a great resource, published by the seemingly last place you would think to look for assistance www.dcaa.mil- DCAA’s “Information Guide for Contractors”. Although the guide was published in 2005 it still proves to be a great resource today. This guide will help you navigate the maze to be prepared for your next audit.
The guide is designed to address compliance requirements in terms easily understood by contractors and removes a lot of the “legal” language of the Federal Acquisition Regulations. The Information guides the contractors through key areas and identifies DCAA’s major areas of emphasis: Internal Control Systems; Management Policies; Accuracy and Reasonableness of cost representations; Financial Capabilities; and Contractors compliance with contractual provisions.
The most informative chapter for a basic review of government contracting is Chapter 2 Pre-award Surveys of Prospective Contractor Accounting Systems. Take a moment to review the information before your next accounting system review.
Contact Nicole Mitchell (301) 222-8231, email@example.com the next time you need assistance navigating the maze of DCAA.
Per Section 8116 of the 2010 Defense Appropriations Act, as a condition of receiving Appropriation Act funded contracts in excess of $1 million, contractors can not require employees or independent contractors to submit civil rights claims or claims of sexual assault or harassment to binding arbitration. The prohibition even applies retroactively to existing employees and independent contractors who may have already signed employment contracts requiring mandatory arbitration. The law also requires prime contractors to certify by June 17, 2010 that all of their covered subcontractors are in compliance with the requirement.
This provision is known as the “Franken amendment” after Senator Al Franken (D-MN) who sponsored the legislation and became effective on February 17, 2010. In a memorandumof the same date, Shay Assad, Undersecretary of Defense for Procurement and Acquisition Policy instructed all Contracting Officers to modify existing contracts that are expected to receive 2010 appropriations by adding a new DFARS clause 252.222-7999. The clause will be required in both contracts and task orders including GSA schedule task orders, though contracts for commercial items are exempt.
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 have paid your taxes if in fact you have not.
If you have delinquent taxes or tax return filings, it is important to get them current before it costs you your contract. For help in these matters, please contact Aronson & Company’s Tax Group directly: Mark Gossart, Officer: (301) 231-6278.
Resolution #1: We Will Avoid Jeopardizing Contract Awards by Getting Our Accounting System Approval–Ready
Valuable time and money are spent submitting proposals in pursuit of Government contracts. Those $s may be wasted if your accounting system isn’t “ready for prime time”. 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. Many contractor system requirements are triggered based on the size of a contractor; BUT the requirement for an approved accounting system considers the type of contract awarded, not contractor size. The issuance of time and materials and cost reimbursement contracts typically require contractors to meet prescribed accounting system requirements such as DCAA’s “Preaward Survey of Prospective Contractor Accounting System” (SF 1408).
Don’t miss out on contract awards! Make sure your accounting system adequately performs the following required elements! Continue reading »
What We Are Writing
- A Marriage of Inconvenience: GSA Schedule Contracts & The Contractor Code of Business Ethics & Conduct Clause
- Emerging Small Businesses: To Grow Your Business, You Must Plan For Growth
- Government Contracting: Look Before You Leap!
- GSA Schedules – Strategies for Success
- New Employee vs. Independent Contractor Considerations
- Pay on Display – Understanding the Executive Compensation and Subcontractor Data Reporting Requirements & Ramifications
- The GSA Schedule: Your Ticket to the Federal Market (May 2010)
- The New FAR Codes of Conduct and Compliance Program Provisions
- The Seven Deadly Sins (of contract compliance)