FEDERAL ACQUISITION REGULATIONS

The Federal Acquisition Regulation (FAR) is the body of regulation governing federal acquisition. It contains uniform policies and procedures governing acquisition (including acquisition for services and construction), whether the government obtains these through purchase or lease and regardless of whether the supplies or services already exist or whether they must be developed. In the laymen’s term, the FAR contains “the rules of the game.” Each federal agency is required to adhere to the rules of the FAR when acquiring supplies and services with congressionally appropriated funds.

Accounting Systems
A preaward survey is an evaluation usually made by the cognizant contract administration office, of the prospective contractor’s ability to perform a proposed contract. Such surveys may cover technical, production, quality assurance, financial capability, accounting system and other considerations. Normally, there are two categories of information that DCAA may request to be furnished.  One deals with the contractor’s financial capability to perform the contract and the other category focuses on  the adequacy of the accounting system to accumulate the type of cost information required by the contract.

Incurred Cost Proposal
The submission of incurred cost proposal includes the various indirect overhead and General and Administrative (G&A) rates incurred by the contractor during it fiscal year.  The incurred cost proposal encompasses both the indirect cost pool and base cost applicable to submitted rates.

The “Allowable Cost and Payment”  clause (FAR 520217.6) requires the contractor submit an adequate final incurred cost proposal together with supporting data, within 6 month after the end of it fiscal year. The receipt of a proposal by the audit office stated the audit process. This proposal should include a signed “Certificate of Indirect Cost” in accordance with FAR 42.703-2.  An adequate proposal should reduce the time required for the audit because numerous preliminary steps can t performed before the auditor arrives at the field location.

Computation of Indirect Rates
Indirect costs are expenses incurred by a contractor that cannot be attributed tot any one particular contract. Indirect costs are classified further as either overhead (O/H) expenses or general and administrative (G&A) expenses. O/H expense describes general costs, such as indirect labor, rent, supplies, insurance, and depreciation. G&A expenses is any management, financial, or other expenses that is incurred by or allocated to business unit and is for general management and administration of the business unit as a whole.

Policy and Procedures Development
Federal government contractor are required to have written policies and procedures that documents their cost accounting, estimating and other related government contracting activities. The policies and procedures will be developed to comply with the requirements of the Federal Acquisition Regulation (FAR) and other regulatory requirement as well as the objectives of company management.

Preparation of Provisional Billing and Forward Pricing Rates
Most businesses establish temporary or proposed rates at the beginning of each business of each business year. These rates are commonly referred to as billing or provisional rates. By establishing these provisional rates at the beginning of each business year, a contractor can seek government reimbursement using these rats at interim dates. These rates are then adjusted as necessary by the contractor as indirect costs are finalized.

Accounting Services