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Double Take: The DoD OIG Recommends Attempting to Recoup $43 Million in Purportedly Expressly Unallowable Costs Not Previously Disallowed

Client Alert | 1 min read | 02.13.20

On January 14, 2020, the Department of Defense (DoD) Office of Inspector General (OIG) released a report examining whether Defense Contract Management Agency (DCMA) contracting officer (CO) rejections of recommendations by the Defense Contract Audit Agency (DCAA) to assess penalties on $43 million in unallowable costs identified in 18 DCAA audit reports complied with the Federal Acquisition Regulation (FAR), DoD Instructions, and agency policy. The OIG did not take issue with the fact of the COs’ disagreements, nor did it take a position on the merits of the COs’ determinations. But the OIG did conclude that the COs did not adequately document their reasons for rejecting DCAA’s penalty recommendations. Accordingly, the OIG recommended that DCMA reevaluate the COs’ decisions not to assess penalties on the $43 million, take actions to reclaim any expressly unallowable costs not previously disallowed, and collect from the contractors any penalties due to the Government. DCMA stated that it would review the audit reports and attempt to recoup costs and/or penalties and interest that DCMA COs previously decided not to pursue, as appropriate.

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Client Alert | 1 min read | 07.08.26

CAS Board Publishes Final Rule Rescinding CAS 404, 408, 409, and 4117

As part of its ongoing effort to conform the Cost Accounting Standards (“CAS”) to generally accepted accounting principles (“GAAP”), the CAS Board published a final rule rescinding CAS 408 (Accounting for costs of compensated personal absence) and CAS 411 (Accounting for acquisition costs of material).  The CAS Board also rescinded CAS 404 (Capitalization of tangible assets) and CAS 409 (Depreciation of tangible capital assets) but retained certain requirements of CAS 404 and 409, which will be located in new paragraphs of CAS 405 (Accounting for unallowable costs).  Specifically, the CAS Board retained the requirements currently located at CAS 404-50(d)(1), CAS 409-50(e)(5), CAS 409-50(j)(1), and CAS 409-50(j)(4), which the CAS Board explained are necessary to protect the Government’s interests.  Otherwise, the CAS Board determined that the requirements of CAS 404, 408, 409, and 411 overlapped with GAAP such that GAAP “may be applied reasonably as a substitute for CAS to support contract cost and pricing.”...

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