What Do You Know about GovCon?

Companies with contracts and subcontracts funded by the federal government survive more administrative hoops than suppliers in a competitive-only market. To meet Terms and Conditions of your awards, you learned a lot of rules – some of them, counter-intuitive. Think you know the administrative protocols? Tickle your brain by testing yourself! 

(Answers are at the end of this article. …Don’t cheat!)

 

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1. Which of the following is allowable, while on travel:

a. Alcohol
b. In-room movie rental
c. Business meeting meal in excess of M&IE per diem
d. Three bottles of water at $2 each, per day

2. Which of the following is not allowable as a direct (COGS) or indirect (G&A, etc.) charge:

a. Intranet for employees (i.e., company newsletter, announcement of new awards, and other internal communications)
b. Employment advertisements for new-hires
c. Employee bonuses calculated on a written and approved, objective basis
d. Company website to attract new business

3. Which of the following is not usually allowable as a direct (COGS) or indirect (G&A, etc.) charge:

a. Expenses for the business as a whole, without any direct relationship to any specific Job or award
b. Labor to present products/services and answer questions at a sales booth during a conference or trade show
c. Costs that are ordinary and necessary, result from arm’s-length bargaining, and follow the contractor’s established practices
d. Cost of Direct Material net of a rebate received

4. Which of the following is not required in a buyer’s (pre-award) negotiation memo:

a. The current status of any contractor systems (e.g., purchasing, estimating, accounting, and compensation) to the extent they affected and were considered in the negotiation
b. That certified cost or pricing data were not required in the case of any price negotiation exceeding the certified cost or pricing data threshold, the exception used, and the basis for it
c. The basis for the profit or fee prenegotiation objective and the profit or fee negotiated
d. The name, Social Security Number, and organization of each person representing the seller in the negotiation

5. Which of the following expenses, with adequate supporting documentation, is generally allowable:

a. Fees to an unrelated party for borrowed cash-flow
b. Bonds required by contractor management in accordance with sound business practice – not required by any contract – when the rates and premiums are reasonable under the circumstances
c. Donations to the Wounded Warrior Project
d. On-site recreation for breaks during high-production and lunches/snacks to encourage unbroken, on-site work

If you got all 5 correct, you’re a GovCon pro! If you got 3 correct, you might verify solutions as day-to-day questions arise. Hopefully, you enjoyed tickling your brain! If you got fewer than 3 correct, consider hiring an “as needed” consultant for concerns that are unique to awards funded by the federal government. An error could cost much more than a GovCon administration Subject Matter Expert!

ANSWERS:

1. c. – Bottled water is considered in the $5 incidentals portion of the per diem rate. Alcohol (FAR 31.205-51) and entertainment (FAR 31.205-14) are unallowable. The business meeting would take place, whether or not on travel, and is reported separately from the travel expense report.

2. d. – The federal government (Government) solicits without regard to company websites, which it considers advertising (and, generally, not allocable to Government awards). See FAR 31.205-1.

3. b. – The Government solicits without regard to marketing booths, which it considers advertising (and, generally, not allocable to Government awards). See FAR 31.205-1.

4. d. – Social Security Numbers are not required (FAR 15.406-3).

5. b. – The “fees” are interest (FAR 31.205-20), which along with donations (FAR 31.205-8) and food (FAR 31.205-13) are unallowable. The described bonds (FAR 31.205-4[c]) are allowable.