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.
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
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
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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.” |
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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.
Analyze above, discuss with appropriate company personnel, identify any compliance and/or improvement issues, and assess alternative courses of action. |
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Output |
Oral and/or written report to identify findings, recommendations, and observations for corrective actions and/or enhancement. |
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Benefits |
Obtain and keep an “acceptable accounting system,” thus avoiding payment withholds and related administrative burden and risk.
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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. |
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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:
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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:
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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." |
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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.
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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. |
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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.
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Output |
Report on non-compliance matters, and recommend enhancement actions. |
Benefits |
Select allocation methods that enhance allowable cost recovery.
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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. |
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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:
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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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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. |
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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.
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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.
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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. |
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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.
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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.
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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.” |
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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.
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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.
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Material Management and Accounting System
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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. |
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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.
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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.
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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. |
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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.
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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.
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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 |
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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.
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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.
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Request for Equitable Adjustment (REA) and Claim |
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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. |
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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.
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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.
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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. |
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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.
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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.
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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:
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