Contracting Officer Podcast Slides Knowledge & Insights From Contracting Officers

Episode 070 Original Air Date: 23 March 2016 What is an ACRN Original Air Date: 23 March 2016 Hosts: Kevin Jans & Paul Schauer

Formatting notes Hyperlinks: Blue font indicates hyperlinks – presentation must be in ‘Slide Show’ mode to activate the link Red bold font indicates a point of emphasis Green bold font indicates CO’s personal comment or perspective

Introduction The purpose of this podcast is to explain what an ACRN is: ACRN is a acronymized word It stands for Accounting Classification Reference Number In short, it is how the money is tracked on contracts And that’s kind of important.

What is an ACRN? Accounting Classification Reference Number DFARS 204.7107: Means any combination of a two position alpha/numeric code used as a method of relating the accounting classification citation to detailed line item information contained in the schedule This is how the government allocates funding for government contracts It is one of the ways that we track the "Color of Money" in contracts Color of Money = how we track the funding sources (see Episode 019) Contract may have one, several, or a LOT of ACRNs because they have one, many or a LOT of funding sources

What is an ACRN? “Long Line Accounting” Classification Data: Comprised of seven to twelve fields of data Each service may be a little different, but the idea is the same They use two letters only How do other agencies do it? Appears to be DoD only Good news: rather than using the “long line of accounting”, ACRN is usually only two letters AA, AB, AC, AD, ….BA, BB, BC…and so on ACRNs cannot repeat, so we can end up with a LOT of them I’ve gotten as high as CD, for those of you counting, that’s 55

When do ACRNs happen? Acquisition Time Zones (from Podcast Episode 003) Requirements Zone Market Research Zone RFP Zone Source Selection Zone (or sole source) Execution Zones: Kick Off, Transition (Ramp Up), Performance, Re-compete

Why are ACRNs important? It is how the money is segregated on the contract Remember CLINs? Brief explanation: Contract Type = foundation of contract CLINs = frame of the house ACRNs = the plumbing and electricity

Why are ACRNs important? ACRNs = the plumbing and electricity Without them, the building can STAND, but it will not WORK! If you have more than one ACRN, everyone needs to understand the expectations for billing FIFO (First-In, First-Out)? Proportional? CHECK THE PAYMENT INSTRUCTIONS! (Section G)

Why are ACRNs important? More ACRNs = more insight into how money is obligated & expended Which seems good, BUT... More ACRNs = more administrative effort unrelated to the actual work or mission Which is bad, unless you are an administrator This will create a lot of extra administrative work if done later, or incorrectly

Why Should Government Care? If a CO signs the contract without it, it is a violation of the Anti-Deficiency Act In short, it is like writing a check that will bounce ACRNs are the details that can create lots of modifications to the contract The plumbing needs to work: Leaks are bad (Ex. Funding sources dry up, money expires) Stopped up pipes are bad (Ex. wrong funding source, ACRN does not match year) Frozen pipes are bad (Ex. Money is not obligated to the right CLIN)

Why Should Government Care? Do not expect the contractor, or maybe even your customer, to understand them ACRNs are the contract’s way of accommodating the needs of accounting folks Use them to manage funds OUTSIDE the contract It’s also how the money is ‘managed’ on the contract THIS IS A SLIPPERY SLOPE… More ACRNs means more administrative effort

Why Should Government Care? Recent (horrifying) development: Creating "informational SubCLINs" for each ACRN Back to CLINs: use them to segregate work that requires a different contract type or is otherwise different Every CLIN creates work for both sides, “administrivia” Orchard, Rows, Trees, Apples, Seeds

Why Should Industry Care? Describes how contractors prepare and submit invoices This is how the money is bucketed on the contract In most cases, you will have to track funding by ACRN and identify the ACRN when you bill It was not always like this: You used to just send a bill by CLIN The Government was responsible for deciding which money to use (commonly, pay using oldest funds first) If you understand how it works, your government customer will find you easier to deal with

Why Should Industry Care? Little secret: Government team also thinks ACRNs are a byzantine quagmire of codes and complexity But it’s the system we have… Understand how your customer uses ACRNs – it will drive how much administrative support your contract requires It pays to know how this works, BECAUSE….

Why Should Industry Care? If you screw this up: You will not get paid in a timely manner Or not at all if you never figure it out It will cost you money for administrative time It will frustrate you and your customer It will PREVENT YOU FROM GETTING FUTURE CONTRACTS!

Summary ACRNs may be out of control as the Government struggles to create auditable books Like plumbing, no one likes it (except plumbers), but we all want it to work Expect this to get worse before it gets better Once again, communication is key Both sides understanding what ACRNs are (and are NOT) makes contract management much easier

Contact us We are on LinkedIn, Twitter and Facebook We also started the Government Contracting Network Group on Facebook. Join us there! Send your topics to paul@Contractingofficerpodcast.com For Community support, contact Shelley Hall at shelley.hall@skywayacquisition.com