CAS 412 and 413 have been revised to include the recognition of a “Minimum actuarial liability” and “minimum normal cost,” which are measured on a basis consistent with the liability measurement used to determine the Pension Protection Act (PPA) minimum required contribution. The rule also accelerates recognition of actuarial gains and losses and makes other changes to harmonize the CAS standards with the minimum required contributions established by the PPA amendments to the Employee Retirement Income Security Act.

The last issue of this newsletter reported that the ASBCA disallowed meals incurred locally to discuss recruiting with professional colleagues. A complete reading of that decision indicates only $500 were involved. The contractor did not provide DCAA with any documentation. Instead, new documentation and rationale were presented in court. Although alleged to be for  recruiting when finally revealed in court, the list of attendees indicated no recruiting candidates were  involved. Details on other issues in this decision may have added to the Board’s suspicions on the legitimacy of the costs. [SplashNote Systems, Inc. ASBCA No. 57403]


Courtesy of:
Darrell Oyer & Company
Government Contract Specialists
PO Box 11484
Milwaukee, WI  53211
414-446-8133
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

After several years of effort, the CAS Board has issued revisions to CAS 412 and 413 to harmonize the rules with the Pension Reform Act. This action only impacts defined benefit plans, which have become rarer because the harmonization is late and not considered extremely favorable.

Courtesy of:
Darrell Oyer & Company
Government Contract Specialists
PO Box 11484
Milwaukee, WI  53211
414-446-8133
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The Armed Services Board of Contract Appeals has ruled a contractor must pay the government nearly $6.8 million in interest related to the sale of two business segments. [Raytheon Co., ASBCA, No. 54907]  The Board concluded the government should receive interest, compounded daily, on unpaid Cost Accounting Standards (CAS) noncompliance interest through the government's receipt of that interest.  The contractor sold two business units in 1998. Each sale constituted a segment closing under CAS 413.50(c)(12), but the contractor did not pay the government interest on the pension surpluses.  The Federal Circuit held that this action violated CAS 413, resulted in increased costs and entitled the government to interest, compounded daily,  However, the court left it for the Board to decide over what period the compound interest would be measured.  The Board added that interest, compounded daily, would continue to accrue until the contractor fully paid the CAS noncompliance interest. 

A GAO reports that DOD will close relatively few of its contingency contracts within required time frames due to poor contract administration and other problems. DOD does not know how many Iraq contracts are eligible for closeout; however, data indicate at least 58,000 contracts were awarded there between fiscal years 2003 through 2010. Another 42,000 Afghanistan contracts also need to be closed.

The GAO has denied a protest challenging the agency's determination that the protestor was ineligible for award because it lacked an approved cost accounting system. The solicitation required offerors to have a an accounting system that had been approved by the DCAA within the past two years. 

An offeror filed a protest when notified that its proposal had been rejected for lack of an adequate system on the basis that DCAA had not updated its audit findings to reflect the protestor's responses and the contracting officer was required under the terms of the solicitation to seek such an update. In response the agency took corrective action and requested a DCAA audit the protestor's accounting system.

DCAA did so and agreed the prior deficiencies had been properly addressed; however, DCAA identified several new issues. In response to these new issues the protestor indicated it would adopt policies compliant with the FAR to address five of the six new deficiencies.  For the remaining issue, the protestor argued it already was compliant with the FAR. DCAA disagreed and in its final report withheld system approval and recommended further review and revisions to the protestor's practices.