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KLCC provides contract consulting services to companies involved (or wanting to be involved) in Government contracting. Our menu of services is listed below.  Click on a service to read about it more in detail.  A printable copy link is included next to each service description.  In addition, specific services may be tailored by mutual agreement to satisfy desired client needs.

KLCC Service Menu

1. Accounting System Review

2. Business Systems Regulatory Compliance Review

3. Contractor Purchasing System Review (CPSR)

4. Cost Accounting Standards (CAS) Compliance Review

5. Cost Accounting Standards Disclosure Statement (CAS/DS) Preparation and Update

6. Cost Accounting Practices - Processing Changes

7. Cost Allowability and Allocability Review

8. Estimating System Review

9. Material Management and Accounting System (MMAS) Review

10. Overhead Rate Developtment and Verification

11. Property Management System Review

12. Request for Equitable Adjustment (REA) and Claim Preparation

13. Soliciatation Review and Proposal Strategy, Including Risk Assessment

14. Other Services Offered

 

Accounting System Review print

 

 

The first contractor business system of concern today is a contractor’s accounting system. DFARS clause 252.242-7006, Accounting System Administration, sets forth 18 systems criteria against which an accounting system is measured for “acceptability.”

 

Objective

Obtain and keep an “acceptable accounting system” through self-assessment and action as necessary to provide a reliable, consistent, compliant, and accurate accounting system.

Approach

Evaluate information on organization structure, products/services, contract awards, sales, business plans, etc. to determine needs of company accounting system.


Review accounting manuals, policies, procedures, and system support software for adequacy.


Evaluate third-party audit reports and response actions to enhance and improve the accounting system.


Perform transaction tests, as mutually agreed upon, to measure the degree to which practices mirror procedural expectations.

 

Analyze above, discuss with appropriate company personnel, identify any compliance and/or improvement issues, and assess alternative courses of action.

 

Output

Oral and/or written report to identify findings, recommendations, and observations for corrective actions and/or enhancement.

 

Benefits

Obtain and keep an “acceptable accounting system,” thus avoiding payment withholds and related administrative burden and risk.


Determine compliant accounting practices that also enhance cost recovery and profitability of Government and commercial contracts.


Benefit from third party, independent assessment of accounting system and related indirect insight into accounting “best practices” to enhance competitiveness and reduce risk.

 

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Business Systems Regulatory Compliance Reviewprint

General program management, contractual, and management systems review of Government contracts to identify and eliminate areas that could expose the company to adverse findings through Government audit or investigation.

Objective

Identify improvements to internal controls and achieve compliance with applicable laws, regulations, and contract terms.

Approach

The review starts at corporate headquarters and proceeds to one or more operating units, using a functional/organizational approach that permits scheduling the review to achieve enhanced efficiency while limiting interruptions to ongoing operations. The review includes:

  • Authority and Responsibility Delegation

  • Bid and Proposal Development and Negotiation Practices

  • Accounting System

  • Estimating System

  • Contract Management

  • Contract Performance

  • Government Contract Cost Accounting

  • Government Interface and Access Control

  • Contractor Purchasing System Reviews (CPSR)

  • Property Management System

  • Material Management and Accounting System (MMAS)

  • Internal Audit and Continuing Compliance Assurance

Output

Report of recommendations and compliance review procedures that can be implemented and maintained by client personnel.

Benefits

The identification and correction of items such as:


Cash flow and profit shortfalls.


Undercoverage of allowable costs.


Lack of formal risk mitigation procedures.


Reduce exposure to payment withholds related to DFARS clause 252.242-7005, Contractor Business Systems.

 

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Contractor Purchasing System Review (CPSR) print

Government contractors are subject to a review of their purchasing systems pursuant to FAR Part 44. This review is intended to assure the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting. DFARS clause 252.244-7001, Contractor Purchasing System Administration, sets forth 24 criteria against which a purchasing system is measured for "acceptability."

   

Objective

Obtain and keep an “acceptable purchasing system” through analysis and correction, as required, of current purchasing policies, procedures, and practices.

   

Approach

Analyze information related to company management policies and purchasing manual; purchasing policies and procedures; subcontract clauses; management of purchase operations; development of purchase requirements; source selection; pricing; and subcontract award and administration.

   

Output

Written report of findings, recommendations for correction and improvements. Suggested revisions to procurement policies and procedures, as appropriate. Related training for changed procedures can also be developed and presented.

   

Benefits

Obtain an “acceptable purchasing system,” thus avoiding payment withhold and Government’s participation in, and adverse effect on, cost effectiveness of the purchasing process.


Increase competitiveness by decreasing material costs through improved cost/price analysis techniques.   

        
Reduce exposure  to risk by avoiding improper terms and conditions in subcontracts.


Reduce exposure to fraud or defective pricing caused by purchasing process.


Achieve proper flow down of prime contract provisions.


Assure compliance with Public Law 87-653, “Truth in Negotiations,” and Public Law 91-379, “Cost Accounting Standards.”


Satisfy requirements of DFARS clause 252.244-7001, Contractor Purchasing System Administration.

 

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Cost Accounting Standards (CAS) Compliance Reviewprint

Many U.S. Government contractors (except qualified small businesses) are subject to the promulgated Cost Accounting Standards (CAS).  Contractors are required to follow disclosed or established cost accounting practices consistently and to comply with individual standards.  Findings of non-compliance can be costly and time consuming and may result in reduction of contract prices and assessment of interest penalties.

 

Objective

Determine whether CAS applies, and identify significant areas of actual or potential non-compliance.  Determine the requirements and timing for filing the Disclosure Statement, and evaluate alternative accounting practices allowed by CAS.

   

Approach

Evaluate information on organization structure, contract awards, sales, headcount, pricing  and collection procedures, etc. to determine CAS and Disclosure Statement applicability.


Review accounting manuals, policies, procedures, and system support software.


Evaluate third-party audit reports on estimating and cost accounting practices.


Analyze above and discuss with appropriate personnel to identify compliance issues and to assess alternative courses of action.

Output

Report on non-compliance matters, and recommend enhancement actions.

   

Benefits

Select allocation methods that enhance allowable cost recovery.


Achieve consistency in estimating, collecting, and reporting costs.


Limit potential financial risks by acceptance of inappropriate CAS clauses in proposals and contracts.


Reduce exposure to price adjustments and related interest for “voluntary” cost accounting changes and non-compliance with CAS.


Effect compliance with the Disclosure Statement filing requirement.


Identify areas of potential CAS non-compliance.


Provide alternative CAS interpretations.


Reduce implementation cost of conformance with CAS while enhancing the benefits of compliance.


Avoid defective pricing allegations and potential false claims indictments related to CAS 401 non-compliance.

 

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Cost Accounting Standards Disclosure Statement print (CAS/DS)

Preparation and/or Update

A contractor (including subsidiaries and affiliates) receiving CAS-covered national defense contract awards aggregating $50 million or more in any one fiscal year must file the CAS Disclosure Statement. Without proper guidance, the process can be costly, time consuming, and risky.

Objective

Determine if and when the Statement is required to be filed and assure filing that best meets client’s needs. Services range from a desk review to complete preparation and filing of the CAS Disclosure Statement and assisting the client during the Government review process.

Approach

The approach will be tailored to the specific needs of the client.  A typical complete program includes:

  • Complete preparation or a desk review (“pre-Government audit”) of the company- prepared draft Statement, including interviewing appropriate personnel and reviewing supporting documentation of the cost accounting and estimating systems.

  • Comparing conformity of Disclosure Statement to accounting manuals, policies, and procedures.

  • Conferring with client to resolve significant accounting and related compliance matters, and reviewing revised Disclosure Statement drafts.

  • Participating in meetings to resolve issues raised by the Government.

  • Consulting, as needed, throughout the preparation-submittal-negotiation process.

Output

Final draft of Disclosure Statement or report on review of client’s final Statement draft, including key compliance issues and recommendations for enhancement and/or corrective action.

Benefits

Filing of Disclosure Statement that meets both management needs and regulatory provision only when required.

 

Implementing beneficial cost accounting changes before Disclosure Statement is filed.  Reducing cost and time associated with preparation, filing, and negotiation of the Disclosure Statement; and realizing long-term cost savings by avoiding subsequent “voluntary” changes.


Resolving of Government findings of inadequate disclosure or CAS non-compliance.


Filing an accurate, complete, and internally consistent Disclosure Statement. 

 

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Cost Accounting Practices - Processing Changes print

Contractors are required to follow disclosed and established cost accounting practices consistently or be subject to non-compliance penalties. Changes to cost accounting practices under the Cost Accounting Standards (CAS) occur in two ways: (1) when a new standard is promulgated by the CAS Board or required by legislation, and (2) after becoming subject to and complying with CAS, the business unit changes its cost accounting practices.

Objective

Evaluate the impact of proposed changes, and/or implement necessary changes for compliance, preparation of cost impact proposals, and revision of the CAS Disclosure Statement.

Approach

Evaluate the proposed change through discussions with client personnel and examination of cost data, records, and regulations.


Review the change in light of current CAS applicability and Disclosure Statement provisions.


Determine contract-by-contract effect and potential price impact resulting from implementation of changes to cost accounting practices.

 

Output

Report of issues and alternatives, including advantages, disadvantages, and recommendations.

Benefits

Select optimum cost accounting practices to enhance allowable cost recovery over the long term.


Reduce financial impact of CAS-imposed changes.


Reduce implementation cost of changes.


Assure compliance with the regulatory requirement for notification of cost accounting changes.


Obtain independently reviewed cost impact statement for submission to the Government.

 

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Cost Allowability and Allocability Review print

Allowability and allocability are important factors in evaluation of what constitutes “unallowable cost.”  Contractors may not receive reimbursement in any form for a cost that is expressly unallowable by the Federal Acquisition Regulation (FAR). If a contractor subject to Cost Accounting Standards (CAS) receives payment for costs that are determined by Government audit to be unallowable, the Government is entitled to recover such costs plus interest.

Objective

Identify unallowable costs and maintain or improve profit by enhancing allowable cost recoveries.

Approach

Review chart and text of accounts for indications of unallowable costs.


Review accounting policies, procedures and CAS/DS (if applicable and available) used to identify and account for unallowable costs.


Review historical data, including DCAA audit reports, bid packages, and financial information.


Interview appropriate personnel regarding treatment of specific cost items for potential non-compliance with FAR and CAS.

Output

Report of potential exposures, recommended corrective actions, and cost recovery strategies

Benefits

Improve productivity of resources employed in the business, overall effectiveness, and credibility with customers, lenders, and shareholders.


Enhance recovery of allowable direct and indirect costs and identify allowable costs that are not included in cost proposals and invoices relating to U.S. Government contracts.


Resolve open cost allowability issues and develop negotiation alternatives.


Determine the cost accounting system’s effectiveness in complying with the fundamental requirement for collecting costs by contract.


Prevent inclusion of expressly unallowable costs in cost proposals and invoices for Government contracts.


Assure consistency of cost accumulating and cost estimating practices.

 

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Estimating System Review print

The second contractor business system of concern today is a contractor’s estimating system. DFARS clause 252.215-7002 Cost Estimating System Requirements, sets forth 17 systems criteria against which an estimating system is measured for “acceptability.”

Objective

Obtain and keep an “acceptable estimating system” through self-assessment and action as necessary to provide a reliable, consistent, compliant, and accurate estimating system.

Approach

Evaluate information on organization structure, products/services, contract awards, sales, business plans, etc. to determine needs of company estimating system.


Review estimating manuals, policies, procedures, and system support software for adequacy.


Evaluate third-party audit reports and responsive actions to enhance and improve the estimating system.


Perform transaction tests, as mutually agreed upon, to measure the degree to which practices mirror procedural expectations.


Analyze above, discuss with appropriate company personnel, identify and compliance and/or improvement issues, and asses alternative courses of action.

Output

Oral and/or written report to identify findings, observations, and recommendations for corrective actions and/or enhancement.

Benefits

Obtain and keep an “acceptable estimating system,” thus avoiding payment withhold and related administrative burden and risk.


Determine compliant estimating practices that also enhance cost recovery and profitability of Government and commercial contracts.


Benefits from third party, independent assessment of estimating system and related indirect insight into estimating “best practices” to enhance competitiveness and reduce risk.

 

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Material Management and Accounting System print

(MMAS) Review

 

Businesses have used a material management and accounting system (MMAS) effectively for many years as a means of forecasting and time phasing material requirements for production. The unique requirements of Government contract cost accounting systems in an ERP MMAS environment have caused enforcement agencies to focus more on the adequacy of those systems. 


For contractors to minimize risks of non-compliance, while not jeopardizing schedule and cost in the production cycle, they must thoroughly understand the implementation and documentation of the operational, administrative, accuracy measurement, and financial aspects of an MMAS system.

Objective

An independent evaluation of the MMAS system to identify potential non-compliance issues and/or concerns related to the Federal Acquisition Regulation (FAR), Cost Accounting Standards (CAS), the Truth in Negotiations Act, and contract terms, as well as applicable American Production and Inventory Control Society (APICS) accuracy measurement guidelines.

Approach

Specific evaluation procedures will be agreed upon with the client before the engagement begins.


A team of specialists with extensive manufacturing, systems, and defense contract compliance experience will conduct the review, following a system overview by client personnel.


Management provides review of key system transaction flow documentation (including data collection documents and computer system reports) in storyboard, audit trail, or system flow diagram fashion.  System control points and weaknesses will be identified. (Optionally, if the client provides no flow diagrams, system flow diagrams will be prepared and documented with control points and weaknesses indicated.)


Key functional personnel will be interviewed to obtain system design information, system features and application procedures, and identify internal control points in the process.


Cross functional work sessions will be conducted to highlight the interrelationship among the various functions.


Transaction testing will be performed, as required and agreed upon, to validate system application procedures to actual practices

Output

Oral and/or written reports will be provided of observations/findings, assessments of systems and procedures for compliance, the nature of the findings, and recommendations for corrective action or follow-up activities.

Benefits

An independent, objective, and cost-effective evaluation of the MMAS system against the requirement of DFARS clause 252.242-7004, MMAS.


A regulatory compliance risk analysis with recommendations that, if followed, should result in systems and procedures that comply with federal regulations.


The means for an effective response to ten MMAS Standards.


An independent evaluation for management of key MMAS issues, allowing management to continue focusing on other business issues without extensive interruption. .

 

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Overhead Rate Development and Verification print

Projecting appropriate overhead rates for future contracts or for the out-years of current contracts can have a significant impact on a contractor’s product pricing, competitive posture, current revenue recognition, and cost recovery.  Also, controlling overhead expenses during periods of business expansion or contraction presents management with one of its most significant challenges.

Objective

Develop a reliable procedure for projecting overhead rates in the context of the opportunities and limitations of the client’s specific business environment.

Approach

Review historical measures of business base and related overhead expenses.


Remove the obvious anomalies caused by changes in business environment.


Analyze the resulting data by overhead pool, using regression analysis that recognizes the nonlinear nature of overhead.


Project overhead rates for any specific business base, using the regression analysis model.


Compare the rates predicted by regression analysis with other estimates.  Determine whether variances reflect reasoned corporate decisions or are “unexplained.”  Estimates that fall outside the regression analysis predictions may represent unrecognized support requirements or opportunities to control overhead growth.

Output

Estimates of future overhead rates as a function of predicted business volume. Graphs and charts that relate overhead rates to business volume for individual overhead pool and sub-pools along with appropriate statistics and correlations.

Benefits

Determine and support forward pricing rates.


Improve strategic planning.


Identify excesses in planned overhead expenses.


Determine appropriate overhead rates for total program and long-term contract estimates-to-complete.


Analyze alternative proposals at various business volume levels.


Assist in preparing bids for multiyear procurements.


Evaluate supplier cost proposals.

 

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Property Management System Review print

The existence of, and continuing adherence to, an adequate Government property management system is a condition precedent to being awarded most negotiated U.S. Government contracts, to receiving and using Government-owned property, and to indemnifying the Government against losses of or damage to Government property.

 

FAR clause 52.245-1, Government Property, sets forth ten outcomes expected from an "acceptable property management system."  DFARS clause 252.245-7003, Contract Property Management System Administration, refers to the system criteria of the above FAR clause and outlines the process for withholding payments if a contractor's property management system is disapproved by a Contracting Officer

Objective

Improve Government property management and avoid losses through identifying areas of potential non-compliance and assuring that use of such property is contractually authorized and properly controlled.

Approach

Review existing policies and procedures for adequacy.


Analyze reports and corrective actions relative to customer reviews.


Interview cognizant personnel to ascertain whether current practices are in accordance with Government regulations and company procedures.


On-site sampling to confirm proper treatment and control of Government-owned and contractor acquired property.

Output

A verbal and/or written report identifying  areas of non-compliance and recommendations for corrective and/or enhancement actions.

Benefits

A fully “acceptable” property management system that satisfies the expectations of FAR clause 52.245-1, Government Property, and DFARS 252.245-7003, Contractors Property Management System Administration.


A cost-effective property management system.


Avoidance of system disapproval by the customer that could result in monetary withhold and/or loss of contract award status.


Re-approval where system has been disapproved.

 

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Request for Equitable Adjustment (REA) and Claimprint Preparation

Changes to, or the termination of, a government contract triggers the application of a unique set of rules (FAR Part 43 and/or 49), including different costing techniques and payment procedures that may be foreign to even the most experienced government contracting financial and contracts personnel. Enhancing cost recoveries, profits, and cash flows requires a thorough understanding of the regulations and application of successfully tested entitlement rationale and quantum techniques.

Objective

Enhance recoveries and improve cash flows through timely, regulatory-compliant preparation and negotiation of REAs and/or claims, as appropriate.

Approach

Apply special pricing methods and cost principles applicable to REA proposals and/or claims.


Work with cognizant personnel to assure full recovery of both direct and indirect costs, with special emphasis on prior years’ costs, loss of useful value of assets, settlement expenses, and unabsorbed overhead.


Analyze and coordinate contractor’s data with cost principles and pricing methods to develop a REA and/or claim containing optimum cost recovery and profit elements.

Output

REA and/or termination settlement proposal, partial payment requests, and support through negotiations.

Benefits

Choose best approach by analyzing alternative methods for preparing REAs and/or claims.


Enhance recovery and cash flow through proposal content.


Assure compliance with contract and regulatory requirements.


Avoid cost of adding special capabilities to staff as consulting for proposal preparation is frequently recoverable as part of the REA and termination settlement expenses.

 

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Solicitation Review and Proposal Strategy, print

Including Risk Assessment

Responding successfully to Requests for Proposal (RFP) requires knowledge of applicable laws and regulations, as well as experience in the structuring of contracts and negotiating with the Government. Negotiating successfully requires a thorough understanding of which provisions are negotiable and which elements of the scope of work can be modified.

Objective

Assist clients in understanding the solicitation requirements and in preparing responsive, winning proposals containing optimum profit potential and minimum risk.

   

Approach

Conduct a meeting to review the purpose and history of the solicitation in light of the company’s strategic plans, market position, and competitive factors.


Review and analyze the solicitation to determine fixed versus flexible provisions and critical proposal requirements.


Meet with the proposal team to review solicitation requirements, perform strength/weakness assessments, identify areas requiring clarification or emphasis, and develop proposal strategy, including suggested proposal modifications.


Prepare an assessment of the solicitation and provide proposal strategy recommendations.

Output

Verbal and/or written report of solicitation assessment, including detailed findings and recommendations.

Benefits

Select appropriate contract type based on the nature of the solicitation.


Avoid undesirable terms and conditions.


Limit risks by passing back to the Government in special clauses those risks over which contractor has no control, and modifying terms and conditions for those which exceed “prudent business risks.”


Achieve compliance with applicable laws and regulations.


Develop credible estimates, bases of estimates, and substantiation data.


Enhance profit for risks taken using a “structured” method.


Submit timely, complete, and accurate proposals.


Improve win probability

 

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Other Services Offered print

 

The industry and Government trained specialists of KLCC are experienced in providing a wide range of services you need to operate successfully in the regulatory-intensive Government contract environment. Additional critical services KLCC can provide include the folllowing:

  • Acquisition Candidate Evaluation

  • Incurred Cost Proposal Preparation and Submission Support

  • In-House Training and Educational Seminars

  • Inventory Systems Evaluation

  • Expert Witness Litigation Support

  • Proposal Terms and Conditions Preparation and Red Team Review

  • Proposal Pricing Assistance

 

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