Financial Aspects of Contract Management · 52.230-1 Cost Accounting Standards Notices And...
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16 October 2018 1 Financial Aspects of Contract Management Working Together for the Company’s Financial Success! Presented by National Contract Management Association and Association of Government Accountants
Transcript of Financial Aspects of Contract Management · 52.230-1 Cost Accounting Standards Notices And...
16 October 20181
Financial Aspects of Contract ManagementWorking Together for the Company’s Financial Success!
Presented by
National Contract Management Association
and
Association of Government Accountants
16 October 20182
PRESENTERS:
NCMA: Brian Greenberg
Contracts Director
AGA: Trish Carlin, CPACarlin Consulting GroupConsultants Specializing in Government Contract
Accounting
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Agenda 8:30 – NCMA/AGA Announcements
8:35 – Introduction
– Pre-RFP Phase
– Proposal Phase
9:45 – Break
10:00 – Award Phase
– Closeout Phase
– Q&A
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• Why are we here today?
Government Contracting
• What makes Contracts and Finance/
Accounting Dependent on each other?
So Many Clauses …So Much to do!
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Contract Cover Page
Effective Date
Invoice Instructions
Administration Office
Section B - CLINs
Unit Prices
Unit of Issue
Cost
Fee
Type Contract
Incremental Funding
Discount Range Pricing
Section E - Inspection/Acceptance Terms
Revenue Recognition
FOB Terms
Section F - Delivery Information
Revenue Forecasting
Section G - Invoicing Instructions
WAWF
Incremental Funding
Section H – Special Clauses
Liquidated Damages
Small Business Reporting
Cumulative Ordering
Section I – Contract Clauses
52.203-3 Gratuities
52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity
52.203-10 Price Or Fee Adjustment For Illegal Or Improper Activity
52.203-12 Limitation On Payments To Influence Certain Federal Transactions
52.215-11 Price Reduction for Defective Certified Cost or Pricing Data—Modifications
52.215-13 Subcontractor Certified Cost or Pricing Data--Modifications
52.215-14 Integrity of Unit Prices
52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits (PRB)
52.215-20 Requirements for Certified Cost or Pricing Data or Information Other Than Certified
Cost or Pricing Data
52.215-21 Requirements for Certified Cost or Pricing Data and Data Other Than Certified
Cost or Pricing Data – Modifications
52.215-23 Limitations on Pass-Through Charges
52.216-7 Allowable Cost And Payment
52.216-8 Fixed Fee
52.217-7 Option For Increased Quantity-Separately Priced Line Item
52.217-8 Option To Extend Services (Dev) Small Business Subcontracting Plan
52.219-16 Liquidated Damages-Subcontracting Plan
52.219-28 Post-Award Small Business Program Rerepresentation
Financial Aspects of Contract ManagementContract Terms Impacting Financials
52.222-60 Paycheck Transparency (Executive Order 13673)
52.227-1 Authorization and Consent
52.229-3 Federal, State And Local Taxes
52.230-1 Cost Accounting Standards Notices And Certification
52.230-2 Cost Accounting Standards
52.230-3 Disclosure and Consistency of Cost Accounting Practices
52.230-6 Administration of Cost Accounting Standards
52.232-1 Payments
52.232-8 Discounts For Prompt Payment
52.232-9 Limitation On Withholding Of Payments
52.232-11 Extras
52.232-17 Interest
52.232-23 Assignment Of Claims
52.232-25 Prompt Payment
52.232-33 Payment by Electronic Funds Transfer--System for Award Management
52.232-40 Providing Accelerated Payments to Small Business
52.234-4 Earned Value Management System
52.242-3 Penalties for Unallowable Costs
52.242-5 Payments to Small Business Subcontractors
52.242-13 Bankruptcy
52.245-10 Price Reduction for Defective Certified Cost or Pricing Data – Truthful Cost
or Pricing Data (formerly TINA)
52.246-17 Warranty of Supplies of a Noncomplex Nature
52.247-36 F.o.b. - Destination
252.203-7000 Requirements Relating to Compensation of Former DoD Officials
252.203-7005 Representation Relating to Compensation of Former DoD Officials
252.204-0007 Contract-wide: Sequential ACRN Order
252.204-7006 Billing Instructions
252.211-7007 Reporting of Government-Furnished Property
252.215-7000 Pricing Adjustments
252.215-7002 Cost Estimating System Requirements
252.215-7009 Proposal Adequacy Checklist
252.216-7006 Ordering
252.219-7003 (Dev) Small Business Subcontracting Plan (DOD Contracts)--Basic
252.232-7010 Levies on Contract Payments
252.234-7001 (Dev) Notice of Earned Value System (Deviation 2015-O0017)
252.243-7001 Pricing Of Contract Modifications
252.243-7002 Requests for Equitable Adjustment
252.245-7002 Reporting Loss of Government Property
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THE CONTRACT &
FINANCEMANAGER
IR&D
SubcontractsPurchasingLogistics
Government Compliance
Legal
Program Manager
CorporateManagement
Product Development
Accounting&
Finance
Human Relations
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Finance/Accounting Relationship with Contracts
• Is there a close Partnership?
• Most accountants work with FAR Part 31
and rely on their Contracts Department for FAR Part 52
• Rely on Contracts interpretations
• Rely on Contracts to communicate potential contract risk that represents potential financial risk
• Rely on Contracts to “get things done or changed” with respect to the contract or solicitation to mitigate or eliminate financial risk
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At each Phase, Whose Job is it to Manage? Contract Management, Financial Management or Both?
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Pre-RFP Phase
Pre Contract Costs Capital Requirements to support
the Contract IR&D – Concurrent or not Award Forecast – Impact on
Rates Labor Qualifications Cash Flow – Line of Credit
Currency Exchange Special Facilities Requirements SCA Compliance OCONUS - Field Service Reps Sales Rep Commissions Performance Bonds Information Bank Guarantees Special Insurance Requirements
Bid-
No-bid
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Proposal Phase
Understand requirements – READ the Solicitation
• Contracts Manager (CM) should know/understand all that applies
to Finance/Accounting
• Cost Volume Preparation/Management – what is the CM’s role
Should understand what is in the Cost Volume or any
proposal
• Solicitation Terms/Conditions
Identify/understand Key clauses affecting cost, price
Identify/Submit questions for clarifications/shaping
Understand/Draft needed clauses/clarifications/assumptions
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Proposal Phase
52.216-1 Type of Contract. Factors in Selecting
Contract Type, Financial Risk Considerations
• Cost-Reimbursement
Level-of-Effort (LOE)
Completion
Cost Sharing
• Fixed-Price
• Time & Material & Labor-Hour
16 October 201812
Proposal Phase
52.216-1 Type of Contract. Factors in Selecting
Contract Type, Financial Risk Considerations
Continued…
• Indefinite-Delivery
• Incentives
Award Fee
Target Fee
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What does Contracts need from Finance/Accounting? Proposal Phase
Pricing Support Forecasted Direct Labor & Indirect Rates
FPRA FPRR PBR Actuals Commercial
Service Contract Act – Wage Determination Rates Escalation Rate Forecasts Direct vs Indirect Charges Onsite vs Offsite Pre-Contract Costs B&P Costs
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What does Contracts need from Finance/Accounting? Proposal Phase Material vs ODC applications Travel Estimates Field Service Rep Incentives – Commission Profit Analysis Cash Flow Analysis for Milestone Payments Subcontract Payment Terms Termination Liability Schedule CLIN Structure
Labor vs ODC vs Material vs Product Performance Bond Costs Bank Guarantee Costs Insurance Costs Currency Exchange
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What does Contracts need from Finance/Accounting? Proposal Phase
Field Service Rep Incentives – Bonus/Commission Incentive Clauses – Run the scenarios given different level of
incentives Base vs Incentive Fee %
Discount Pricing? Lot Buy vs Cumulative-Retroactive Sale vs Lease New Product Prices FAR Part 12 Pricing Support
Previous Sales Similar Sales
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What does Finance/Accounting need from Contracts? Proposal Phase
Solicitation & Modifications Proposal Timeline & Due Dates Period of Performance Expected Date of Award Place of Performance Labor Category Qualifications Travel Requirements Insurance Requirements Payment Milestones for Working Capital Weighted Guidelines Structure for Revenue Recognition Capital Requirements Incentive Structure Performance Bond Information
This Photo by Unknown Author is licensed under CC BY-NC-ND
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Award Phase
Contract Cover Page
Effective Date
Payment Office
Administration Office
Section B - CLINs
Unit Prices
Unit of Issue
Cost
Fee
Type Contract
Incremental Funding
Discount Range Pricing
Section C – SOW
Cost CDRL’s
Section E - Inspection/Acceptance Terms
FOB Terms
Section F - Delivery Information
Section G - Invoicing Instructions
WAWF
Incremental Funding
Section H – Special Clauses
Liquidated Damages
Small Business Reporting
Incentive Fee
LOE Clauses
Section I – Contract Clauses
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What does Contracts need from Finance/Accounting? Award Phase
Limitation of Funds Notice - % Expended + EAC Audit Support Interdivisional Transfers Performance Bonds Bank Guarantees Insurance Compliance Travel Approvals Invoicing – DD 250 EVM – Monthly Cost Reports GSA Sales Reports – IFF Fee Manpower Reporting
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What does Finance/Accounting need from Contracts? Award Phase
Invoicing Instructions Labor Category Qualifications for T&M Travel Approvals Incentive Structure Sales Rep Commissions Bank Guarantees Shipping Arrangements Fee Earned/Billed
% of Cost (Completion) $Rate/Hour (LOE/Term)
Non-Fee Bearing CLINS Profit/Fee Restrictions & Withholding Rate Ceilings Shipment Dates for Warranty Reserves
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Award Phase
52.232-22 -- Limitation of Funds.
As prescribed in 32.706-2(b), insert the following clause. The 60-day period may be varied from 30 to 90 days and the 75 percent from 75 to 85 percent.
52.216-7 Allowable Cost and Payment.
(a) Invoicing.
(1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable
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Award Phase52.216-8 Fixed Fee.
(b) Payment of the fee shall be made…provided the Contracting Officer (KO):
• withholds a reserve not to exceed 15 percent of the total fixed fee or $100,000, whichever is less
• KO shall release 75 percent of all fee withholds … after receipt of …final indirect cost rate proposal covering the year of physical completion of this contract, ….and Contractor is not delinquent in submitting final vouchers on prior years’ settlements
• KO may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals
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Award Phase
52.215-10 Price Reduction for Defective Certified Cost or Pricing Data – Truthful Cost or Pricing Data (formerly TINA)
52.230-1 thru 7 Cost Accounting Standards (CAS) Compliance
19 CAS Standards – Modified or Full Coverage
CAS 401 Consistency in Estimating, Accumulating,
and Reporting Costs
Disclosure Statement
52.234-4 Earned Value Management System (EVMS)
16 October 201823
Award Phase
Transportation/Shipping Terms – Cost, Liability & Revenue Recognition Considerations
52.247-7 Freight Excluded
52.247-29 thru 33 FOB Origin
52.247-34 thru 39 FOB Destination
Warranty
52.246-17 thru 21 Warranty clauses
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Award Phase
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Award PhaseRevenue Recognition
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Award Phase
Wage & Benefit Considerations
52.222-6 Construction Wage Rate Requirements. Davis-Bacon Act
52.222-41 Service Contract Labor Standards & 52.222-43 Fair Labor Standards Act and Service Contract Labor Standards – Price Adjustment, SCA prevailing wage determinations
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Award Phase
• Ability to Invoice/Bill
• Revenue Recognition
• Getting Paid
• Timely Receipt of Payments
• Keep Expenses within Budget
• Reduce or Eliminate Risk/Liability
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Award Phase
• LOE Price Adjustments Clauses
• Fixed Fee Withhold %
• Limitation of Funds 75% Notice
• Milestone Acceptance for Invoicing
• Advance Payments
• Managing Subcontract Invoicing
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Award Phase
Invoicing
52.216-7 Allowable Cost and Payment. Cost-reimbursement, Standard Form 1034
252.232-7006 Wide Area Work Flow (WAWF) – iRAPT. Invoices/Vouchers can get rejected
Special Contract Provisions:
Indirect Rate Ceiling
Cost Pre-Approval (material, travel, etc)
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Award Phase
Payment Terms/Contract Financing
52.232-8 Discounts for Prompt Payment.
52.232-16 Progress Payments. Fixed-Price, Based on Costs
52.232-32 Performance-Based Payments. Fixed-price, Milestones
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Award
Fee & Cost Withholds
52.216-8 Fee. Cost-reimbursement – up to 15% or $100K. Withhold % throughout the period of performance or last 15%
52.232-16 Progress Payments Based on Costs
Customary 80% & Small Business 85%
252.232-7004 DoD Progress Payment Rates
Small Business 90%
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Award
52.232-25 Prompt Payment
52.232-20 Limitation of Cost & 52.232-22 Limitation of Funds
52.242-3 Penalties for Unallowable Costs
552.238-74 Industrial Funding Fee and Sales Reporting. GSA IFF
16 October 201833
Closeout Phase
Is the Contract complete? Have Subcontractors been closed out? CPFF - Incurred Cost Claim Finalized? Final Invoice/Voucher Assignment and Rebates/Credits Forms All internal paperwork completed?
16 October 201834
Closeout Phase
42.708 Quick-Closeout Procedure
52.216-7 Allowable Cost and Payment. Final Indirect Rates, Voucher & Certifications
Final Material Inspection and Receiving Report & Invoice
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Eight Actions to Take: Walk-the-Talk
1. Visit each other. Find out what each of you do and how you do it
2. Teach each other about roles and responsibilities and communication
3. Hold each other accountable for your actions/ inactions and results
4. Take appropriate actions to help your team members and customers, respectively achieve their needs and desires
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Eight Actions to Take: Walk-the-Talk…
5. Conduct frequent team meetings with all of your program team: in-person, teleconference, or web-meetings.
6. Insert yourself into the process, even when you are not invited.
7. Get out from behind your desk.
8. Think and act like you are on the same team!
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Overall
Contract and Finance/Accounting Manager’s role is to Understand, Communicate, and Help throughout the Contract Process to
Mitigate/Eliminate Financial Risk and insure Contract Compliance
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Questions?
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Acronyms & Reference MaterialB&P Bid & ProposalCLIN Contract Line Item NumberCM Contract ManagerCPFF Cost Plus Fixed FeeDFARS Defense Federal Acquisition Regulation SupplementDoD Department of DefenseEAC Estimate At CompletionEVM Earned Value ManagementFAR Federal Acquisition RegulationFPRA Forward Pricing Rate AgreementFPRR Forward Pricing Rate RecommendationGSA General Services AdministrationIFF-Fee Industrial Funding FeeIR&D Internal Research & DevelopmentiRAPT Invoicing, Receipt, Acceptance and Property Transfer
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Acronyms & Reference MaterialLOE Level of EffortOCONUS Outside the Continental United StatesODC Other Direct CostPBR Provisional Billing RateRFP Request for ProposalSCA Service Contract ActT&M Time & Material (type of contract/subcontract)TINA Truth in Negotiations ActWAWF Wide Area Work Flow
FAR 52.3 Solicitation provisions and contract clauses (Matrix)
DAU Provision and Clause Matrix:
https://www.dau.mil/tools/t/FAR,-DFARS,-VAAR,-DEAR-Provision-and-Clause-Matrix
