DCAA

In Honeywell International, Inc., the ASBCA declined to dismiss a roughly $151 million claim by DCMA alleging a violation of CAS 410, holding that the government’s allegations were sufficient to state a claim for improper treatment of G&A expenses.  The Board’s decision provides guidance on how to interpret CAS 410 — a topic that is often addressed by auditors, but has rarely been the subject of written opinions by the courts or boards of contract appeals.…

Continue Reading ASBCA: Government Can Pursue $151 Million Claim Under CAS 410

If a contractor is working on a fixed-price contract, can it charge the government for attorney’s fees to defend a False Claim Act (“FCA”) case related to the contract?

In The Tolliver Group, Inc. v. United States (Fed. Cl. Jan. 22, 2020), the Court of Federal Claims (“COFC”) said the answer was “yes,” if the government was liable for an equitable adjustment under the circumstances.  The decision was welcomed by contractors facing meritless FCA suits, which are often costly to defend even when the relator plainly does not have a case.

But the Federal Circuit has thrown cold water on Tolliver — at least for now.  In a decision last week, the court of appeals vacated Tolliver on jurisdictional grounds, concluding that the legal theory of the COFC’s decision was never presented to the contracting officer for a final decision under the Contract Disputes Act of 1978 (“CDA”), and that the COFC therefore lacked jurisdiction over the contractor’s claim.  The Tolliver Group, Inc. v. United States (Fed. Cir. Dec. 13, 2021).…

Continue Reading FCA Defendants May Be Able to Recover Attorney Fees Under Their Fixed-Price Contracts, At Least For Now

On May 4, 2018, the Department of Defense (“DoD”) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (“DFARS”) to state that, in the interest of promoting voluntary disclosures of defective pricing identified by contractors after contract award, DoD contracting officers have more discretion to determine the scope of the involvement of the Defense Contract Audit Agency (“DCAA”) in assessing such a disclosure. 83 Fed. Reg. 19645. This is a change from DoD’s November 2015 proposed rule, which required contracting officers to request at least a limited-scope audit when a contractor voluntarily discloses defective pricing. While arguably a step in the right direction, the permissive language of the final rule continues to provide only limited information to defense contractors about what to expect following a voluntary defective pricing disclosure. Nonetheless, by listing the types of information that the contracting officer must consider when deciding whether to request an audit, the rule arms contractors with potentially impactful information.
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Continue Reading DoD Final Rule to Promote Post-Award Disclosure of Defective Pricing Arms Contractors with Potentially Impactful Information

Section 820 of the National Defense Authorization Act for Fiscal Year 2017, Pub. L. No. 114-238, 130 Stat. 2000 (NDAA), makes three significant changes to the federal government’s future method of conducting audits and implementation of Cost Accounting Standards (CAS).  First, it empowers contractors to avoid Defense Contract Audit Agency (DCAA) audits by employing private auditors to audit their indirect rates.  Second, it provides new requirements intended to reinvigorate the federal government’s existing CAS Board.  Finally, it creates a new and independent Defense Cost Accounting Standards (DCAS) Board to implement the Cost Accounting Standards across the Department of Defense (DoD).  All of these provisions are due to take effect on October 1, 2018.
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Continue Reading 2017 NDAA’s Impact on Audits and Cost Accounting Standards