In Lockheed Martin Integrated Systems, Inc. (ASBCA Dec. 20, 2016), a case involving a $100 million breach of contract claim stemming from purportedly unallowable direct subcontractor costs, the Board granted Lockheed Martin’s motion to dismiss the Army’s untenable claim “for failure to state a claim on which relief could be granted,” concluding that the government
Proposed Rule Would Nix Allowability of Congressional Investigation Costs
On February 17, the Federal Register published a proposed rule that would amend the FAR to implement section 857 of the National Defense Authorization Act, making unallowable any “costs incurred by a contractor in connection with a Congressional investigation or inquiry into an issue that is the subject of a proceeding resulting in a disposition
DoD’s Guerilla War on IR&D
In a notice published in the Federal Register on February 8 that will almost certainly be unpopular with contractors and their customers, DoD asked for comments on its consideration of adding a requirement to the DFARS that would “require offerors to describe in detail the nature and value of prospective IR&D projects on which the
New Guidance Allows Limited Role for DCAA Audit of Non-DOD Contracts
The 2016 National Defense Authorization Act prohibits the Defense Contract Audit Agency from providing “audit support” to any non-DOD agency until the Secretary of Defense certifies that DCAA has reduced its backlog of incurred cost audits to 18 months or less, a restriction that could cause some disruption for contractors when DOD contracts are not
IG Report Whacks DCMA’s Oversight of Contractors’ Business Systems
On October 1, the DoD IG released a report titled “Evaluation of Defense Contract Management Agency Actions on Reported DoD Contractor Business System Deficiencies,” asserting that DCMA contracting officers “repeatedly” failed to comply with DFARS requirements involving reported business system deficiencies. The report, which is similar to a report issued on June 29, 2015 regarding
DoD White Paper Takes Aim at IR&D Costs
While DOD’s August 26 white paper “Enhancing the Effectiveness of Independent Research and Development” explains that the intent of new requirements announced in the white paper is “not to reduce the independence of IR&D investment selection, nor to establish a bureaucratic requirement for government approval prior to initiating an IR&D project,” contactors have good reason
Bad News for Contractors: ASBCA Decision Bars Offsets of Simultaneous Accounting Changes Under FAR 30.606
In Raytheon Co., ASBCA Nos. 57801 et al. (May 7, 2015), the Board held that under FAR 30.606 contractors may not offset cost impacts from simultaneous accounting changes within the same business segment, which if not reversed on appeal will cause major disruptions when contractors make multiple changes in cost accounting practices made after 2005
DCAA Issues (Mis)Guidance on Expressly Unallowable Costs
On January 7, 2015, DCAA issued guidance to auditors for determining whether certain costs are “expressly unallowable” – and therefore subject to penalties – even when the regulations “do not state in direct terms that the cost is unallowable.” This guidance, which is intended to “enhance” the equally troubling December 18 guidance to similar
Interim Business Systems Rule Issued
On May 18, 2011, the DoD released an interim Business Systems rule with request for comments. 76 Fed. Reg. 28856. Comments are due July 18, 2011. The current version of the rule reflects comments received on the prior two proposed Business Systems rules (published January 15, 2010 and December 3, 2010), requirements in the National
Shutdown Suspicions? Crowell & Moring Identifies the Questions You Should Be Asking
As the press reports about delays in the appropriations process have multiplied in recent days, we have received a number of calls from clients about the contractual issues that might arise if there is a government shutdown this Friday. Although the issues that might arise in connection with a shutdown will likely be specific to