Frequently Asked Questions

The Federal Acquisition Regulations (FAR) are the principal set of rules in the Federal Acquisition Regulation System, which governs the entire process of government procurement in the United States. These regulations are designed to ensure that the government's procurement procedures are standard and consistent, and that they follow fair and equitable treatment of suppliers and contractors.

The Defense Federal Acquisition Regulation Supplement (DFARS) is a set of regulations issued by the Department of Defense (DoD) that supplements the Federal Acquisition Regulation (FAR). It provides specific guidelines and requirements for acquiring goods and services for defense purposes. DFARS is designed to ensure that defense-related contracts comply with federal law, policy, and national security objectives. It primarily applies to DoD contractors and subcontractors who are involved in the procurement process for defense projects.

The NASA Federal Acquisition Regulations Supplement (NFS) is a set of specific regulations that NASA uses to supplement the Federal Acquisition Regulation (FAR), which governs the general acquisition process for all executive agencies in the U.S. government. The NFS provides NASA-specific procurement guidelines and policies that are tailored to meet the unique needs and missions of NASA.

Condition: Describes the specific issue or deficiency observed. This is the current state that does not comply with standards, regulations, or contracts.

Criteria: Refers to the standards, regulations, or contract terms that are not being met. It provides the benchmark against which the condition was measured.

Cause: Explains why the condition exists. This could include root causes such as procedural deficiencies, lack of training, or inadequate controls.

Effect: Describes the impact of the condition. This might cover potential financial losses, increased risk, inefficiencies, or non-compliance consequences.

Recommendation: Suggests corrective actions to address the condition. Recommendations aim to resolve the issue and prevent future occurrences.

Management Response: This section typically includes the contractor's response to the finding. Often, it contains agreements, disagreements, or actions planned by the contractor to correct the identified issues.

The Truth in Negotiations Act (TINA) is a federal law that requires contractors to disclose cost and pricing data when negotiating government contracts. TINA's purpose is to ensure that government price negotiations are fair and reasonable, and to give government negotiators the same cost information as contractors. TINA protects the government from being overcharged by contractors. Under the Act's provisions, any firm that sends the government a contract proposal must back it up with certified cost and pricing data if the procurement process enters the negotiation phase.

TINA applies to pricing actions over $2 million, with some exceptions

Contractors must disclose cost and pricing data, certify its accuracy, and agree to price reductions if data is inaccurate

TINA covers data such as vendor quotations, nonrecurring costs, and production method changes

TINA applies to contractors and subcontractors who submit non-competitive bids to the government

Step 1: Initial Review

Step 2: Cost or Pricing Data Collection

Step 3: Accuracy Verification

Step 4: Current Data Verification

Step 5: Certification

Step 6: Historical Comparison

Step 7: Audit Trail

Step 8: Risk Assessment

Step 9: Company Discussions

Step 10: Final Review

Step 11: Approval Process

Step 12: Record Keeping

Step 13: Post-Award Monitoring

Under the Federal Acquisition Regulation (FAR), cost or pricing data is defined in FAR 2.101 as follows:

Cost or pricing data means all facts that, as of the date of agreement on the price of a contract (or another date agreed upon between the parties), a prudent buyer or seller would reasonably expect to significantly affect price negotiations. This data is factual, not judgmental, and is used to establish price reasonableness and to negotiate fair and reasonable contract prices.

A Forward Pricing Rate Agreement (FPRA) per the Federal Acquisition Regulations (FAR) is an agreement between a contractor and a government contracting officer. This agreement determines specific labor and overhead rates, or other rates such as material handling or subcontracting, which are used for pricing contracts and contract modifications during the period covered by the agreement.

These rates are determined in advance and are used to provide consistency and predictability in costing future contracts, modifications, and other cost determinations. The rates are negotiated based on historical cost data, forecasts of future costs, and analysis of cost trends, and are used to expedite and simplify the negotiation process for both parties.

The FPRA is particularly valuable in situations where a contractor has multiple ongoing contracts with the government or expects to engage in several contract negotiations in the near future. It helps to reduce administrative burdens and facilitates quicker decision-making. The specific regulations concerning FPRAs can be found in FAR Subpart 42.17, "Contractor Performance Information."

The Cost Accounting Standards (CAS) are a set of standards and rules promulgated by the Cost Accounting Standards Board (CASB) that are intended to achieve uniformity and consistency in the cost accounting practices used by contractors on government contracts. These standards are specified under the Federal Acquisition Regulations (FAR), particularly in FAR Part 30, "Cost Accounting Standards Administration."

Contractors required to follow CAS must submit a CAS Disclosure Statement, which is a formal statement detailing their cost accounting practices. This statement must be kept current and reflects the contractor's practices as they are actually applied to government contracts.

The CAS covers various aspects of cost accounting, including the allocation of costs, determination of direct and indirect costs, measurement of pension costs, and accounting for unallowable expenses. There are 19 standards that cover different areas of cost accounting.

Modified Cost Accounting Standards (CAS) coverage applies to certain government contracts that do not meet the criteria for full CAS coverage but are still significant enough to require compliance with a subset of the CAS requirements. This form of coverage is designed to provide a middle ground between full CAS coverage, which applies to larger contracts, and the total exemption from CAS.

Under Modified CAS coverage, contractors are required to comply with specific, less burdensome CAS standards rather than the full set of 19 standards. Typically, this includes:

• CAS 401 – Consistency in Estimating, Accumulating, and Reporting Costs
• CAS 402 – Consistency in Allocating Costs Incurred for the Same Purpose
• CAS 405 – Accounting for Unallowable Costs
• CAS 406 – Cost Accounting Period

The Defense Contract Audit Agency (DCAA) operates within a specific regulatory and operational context, primarily auditing the financial services of contractors doing business with the United States Department of Defense (DoD).

The Final Indirect Cost Rate submission, often referred to as the "incurred cost submission," is a requirement for contractors who have government contracts subject to cost reimbursement, and it plays a crucial role in the contract closeout process under the Federal Acquisition Regulations (FAR). This submission is necessary for the determination of final indirect cost rates, which are used to adjust the indirect costs billed to the government and to settle the amounts that should have been paid under the terms of the flexible pricing contracts.

When discussing how the DCAA calculates Auditable Dollar Volume (ADV), it's important to note that the DCAA's approach might not be publicly detailed as a single, straightforward formula due to the varied nature of contracts and the complexities involved in defense contracting. However, some general principles can be inferred based on standard audit practices and the objectives of the DCAA.

1. Identification of Auditable Contracts: Identifying the pool of contracts that are subject to audit under DCAA guidelines. This includes contracts awarded to defense contractors by the DoD that are of a significant value or complexity, requiring oversight.
2. Assessment of Contract Values: For each auditable contract, the DCAA assesses the total value of the contract, including any modifications, adjustments, and other relevant financial factors that contribute to the total cost to the government.
3. Adjustments for Audit Scope and Objectives: The DCAA may adjust the aggregate value of contracts based on specific audit objectives. For example, certain audits may focus only on high-risk areas or on contracts above a certain dollar threshold to ensure efficient use of auditing resources.
4. Compliance and Risk Factors: The DCAA may consider the historical performance, compliance history, and risk profile of contractors to prioritize audits. Contracts with entities that have a history of compliance issues or that pose a higher risk of financial misstatement or fraud might be given higher priority, thus affecting the ADV calculation by prioritizing certain dollar volumes over others.
5. Annual and Periodic Adjustments: The ADV calculation is not a static figure but is reassessed periodically to reflect new contracts, completed audits, changes in contract values, and shifts in auditing priorities based on strategic objectives and regulatory changes.

Generally, if extended hours for exempt employees are directly attributable to the contract work and are in accordance with contract terms, CAS, and FAR, the costs may be billable. However, double-charging or billing for the same labor hours to multiple contracts could be a violation.

When a government contractor fails to adhere to the terms and conditions outlined in the Federal Acquisition Regulation (FAR), they may be subject to penalties or consequences specified in the FAR penalty clause. FAR 15.407-1Defective Certified Costs or Pricing Data clause, specifically addresses the consequences of defective pricing, detailing the rights of the government to a price adjustment and the calculation methods for any necessary corrections.