Intermediate Post Award Contracting Jennifer Alves Administrative Contracting Officer 8 March 2017 Unclassified//For Official Use Only

Agenda Introduction Business Systems Overhead Rates and Incurred Cost Proposals Contract Audit Follow-Up and Claims Novations and Name Changes Canceling Funds Closeout

Business Systems Accounting Estimating Purchasing Property Earned Value Management Material Management and Accounting System

Overhead Rates & Incurred Cost Proposals Obligation for Cost Contracts Due 6 months after Fiscal Year end FAR Part 31 Allowable/Unallowable Costs DCAA Audit Settled rates Questioned costs Adjustment Vouchers

Contract Audit Follow-up & Claims What is a CAFU? How do they work? Goals Deadlines Results Claims

Novations/Name Changes Common examples Stock sales Conversions (Corporation to LLC and vice versa) Transfer to subsidiary Transfer from subsidiary to parent Transfer between sister entities Mergers Bankruptcy

Contractor’s Responsibility Something is happening with the Company Notify the ACO of the upcoming transaction/event Written request to responsible ACO Written notification to PCOs Documentation outlined in FAR 42.12 to include but not limited to Novation/Name change agreement Document describing the transaction List of all affected contracts Legal Counsel opinion Statement of Security from DSS

Legal Opinion Needs to be submitted for each party involved in the transaction Can both parties have the same Legal Counsel? The Novation/Change of Name was properly effected under applicable law on the effective date of the transaction

Lessons Learned Provide all the details of the transaction up front Don’t argue about the agreement type Originals are essential – not optional ACO has the final decision on paperwork No paperwork – process stops Quick turnaround yields faster results DCMA Legal Counsel has their own queue Calling often will not speed up the process

Canceling Funds Cancel as of September 30th Billing De-obligating Importance for all parties

Vertical Visibility in the Supply Chain The Cost of Subcontracting Tier 1 Supplier Proposal at Price Tier 2 Supplier Proposal at Price Tier 3+ Supplier Proposal at Price Typical Development, Production Contract Supply Base Insight & Impact Supplier 1 Supplier 1-1 Prime Proposal Prime Supplier Supplier 1-2 2% Supplier 2 15% For all of these Suppliers we have little or no visibility in Performance Metrics Supplier 3 43% 32% Supplier 4 8% Decreasing Visibility Limited Visibility No Visibility Financial metrics are driving outsourcing, but maximizing shareholder value also occurs at lower tiers

A Changing Landscape DoD Acquisition – Have We Adapted? Broad Examples for Consideration Should DoD Acquisition / PMs even Focus on or Worry About the Extended Supply Chain? Follow the Money – Where are Costs? Where is the Intellectual Heavy Lifting? Data? Who is Designing & Building the Product? Do we Think the Primes have Fully Adapted? Traveled Work…. Do We Share the Same Objectives? Are Primes Incentivized for Low Cost Best Value? Don’t We Pay the Primes to Do This? Do Sub-Tier Suppliers get 80% of the Focus? Contractual Language for Supplier Insight? Consent to Subcontract, Right of Entry, Make or Buy Plans, Sub-Contractor Management Plan, Cost Reporting Does the DoD Negotiate & Contract for Effective Supplier Management? Understand Supplier’s Costs? Tiered Profits? Direct Technical Communications & Support? Where DoD Program Fits in Sub’s Pecking Order? Do Our Program Teams / PEOs Know Their Suppliers ? Understand Supplier Management Strategies? Metrics Include Prime’s SCM Performance? On Schedule POs, Supplier Request Backlog, Procurement Staffing, Technical Support Turn Times… How … Assuring our Prime’s are Effectively Selecting, Managing & Supporting our Sub-tier Suppliers? What‘ is the Supplier Network & Management Structure / Expertise on Your Team?

Contracts - Other Issues First step in preventing payment issues – Read the Contract! When inputting invoices into iRAPT (formerly WAWF) follow the contract Validate ship-to, inspect, and accept DoDDACs Validate CLIN, unit of issue, quantity, and price Non-resident QARs need 5 days notice (2 days if QAR is in residence) for inspecting and accepting Issues cause delays in payments to contracts and can affect on-time delivery rates for contractors Understand your responsibilities If you don’t know ask (ACO or PCO) Only the ACO and PCO can direct the contractor to do anything, be wary of perceived authority as you may not be reimbursed for costs incurred Patent requirements (different clauses have different submission requirements) Patents developed with Government funds gives the Government certain rights to the invention Signing the Certificate of Indirect Costs is the company stating that all costs are current, accurate, and complete and that all costs are allowable in accordance with FAR Part 31 Expressly unallowable costs will result in a penalty

Discussion Unclassified//For Official Use Only

One team, one voice delivering global acquisition insight that matters Contract Closeout DCMA, as a whole, has identified 43,000 contracts that are overage (>3 years past physically complete date) with a cumulative obligated value of nearly $145 Billion. Why should you care Administrative burden tracking physically complete contracts when those efforts can be expended on other uses Money A lot of these contracts still contain unliquidated obligations If rates are not settled use FPRAs, provisional billing rates, or historical rates to determine what you can invoice Because you have to It is in the contract To facilitate contract closeout contractors should understand what is required of them FAR 52.216-7 (Allowable Cost and Payment) gives you the rules Incurred Cost Submissions shall be submitted within 6 months of the end of the company’s FY DCAA has great tools to assist in building your IC submission Generate a Cumulative Allowable Cost Work Sheet (CACWS) When rates have been settled the contractor has 120 days to submit the final voucher for all contracts that are physically complete Final voucher shall include settled subcontract amounts and rates. Contracting Officer may make a unilateral determination on the amounts due if final voucher is not received in time Release of Claims must be signed by senior management One team, one voice delivering global acquisition insight that matters