Insights

Washington – February 22, 2019: Crowell & Moring LLP is pleased to announce that its Government Contracts Group has been recognized as one of Law360’s “Practice Groups of the Year” for government contracts. This is the ninth consecutive year that the group has earned this honor.

On August 7, 2025, President Trump issued an Executive Order (EO) titled, “Improving Oversight of Federal Grantmaking,” setting out the framework for sweeping changes to the grantmaking process.  The order purports to address the Administration’s concerns about federal grants supporting controversial or ineffective programs and incurring excessive administrative costs.  The EO implements three key changes to federal grant requirements. 

A recent decision by the Armed Services Board of Contract Appeals (ASBCA) reinforces the FAR part 49 provisions governing terminations for convenience, which provide that contractors are entitled to fair compensation and that settlements for such terminations should not rigidly rely on cost and accounting data. In D-STAR Eng’g Corp., ASBCA Nos. 62075, 62780 (Apr. 28, 2025), the government had terminated the contractor’s cost-plus-fixed-fee research and development contract for convenience. Following the contractor’s submission of its termination settlement proposal (TSP), the government questioned certain costs claimed, disputed the fee owed to the contractor, determined it had overpaid the contractor, and issued a debt demand claim for disallowed costs. The contractor then submitted its own, affirmative claim incorporating its TSP and seeking additional costs and interest. The most interesting portion of the ASBCA’s decision is its discussion of the methods available to the parties to calculate the amount of fee to which the contractor was entitled following the termination for convenience, which we describe below. However, the ASBCA also addressed the allowability and allocability of various cost types that may be of interest, including termination settlement costs, direct labor, engineering overhead, and G&A.

On April 7, 2025, the Defense Contract Audit Agency (DCAA) announced agency reorganization plans aimed at reducing the number of field offices and centralizing audit operations. DCAA plans to close 40 smaller audit suboffices around the country, many staffed with fewer than 10 personnel, to reduce the costs of associated leases. The agency will also consolidate the existing Region Audit Directorates for the Eastern, Central and Western Regions and four Corporate Audit Directorates (CADs), located proximate to large contractors, into three new Directorates—Land, Sea, and Air. The audit offices of the CADs will be merged into the new Directorate that most closely aligns with a contractor’s product. DCAA’s announcement states that the organizational restructuring will be completed by September 30, 2025. The full text of the announcement is available here.

Crowell & Moring is pleased to announce the launch of our Government Contracts Breakfast Series. All of the sessions will be held in Northern Virginia and focus on issues most important to government contractors. Our September session is described below. 

In this episode, host Nicole Owren-Wiest talks with Elizabeth Buehler, Charles Baek, Michael Gruden, and Catherine Shames about DCAA’s incurred cost audit backlog and its IPA initiative. “It All Adds Up” is Crowell & Moring’s podcast covering the latest government contract accounting, cost, and pricing developments.