Cough…cough…ahem…cough… Any contractor who has had the misfortune of dealing with the Defense Contract Audit Agency (DCAA) likely knows all too well that the agency is the Will Rogers of costs – it never met a cost it didn’t question.  Indeed, DCAA auditors typically question costs with reckless abandon and based often on a patent misreading of applicable regulations.  The net effect, of course, is that contractors have to expend significant time and money trying to explain to boards and courts why DCAA’s auditors are…uh…incorrect as a matter of fact and law.  A recent Memorandum for Regional Directors (MRD) provides some transparency into why this sort of thing happens with unfortunate regularity. Issued on May 14, 2019, the MRD (No. 19-PAC-002(R)), corrects…er…“revises” internal guidance issued in 2014 and 2015 relating to the identification of expressly unallowable costs.  The newly issued memo sets out DCAA’s current stance on identifying expressly unallowable costs under the cost principles codified at Federal Acquisition Regulation (FAR) Part 31 and Defense Federal Acquisition Regulation Supplement (DFARS) Part 231.  This MRD – like all MRDs – is intended to be used as a tool by well-meaning (but often overzealous) auditors when reviewing a contractor’s compliance with federal cost principles.  Contractors should, thus, pay careful attention to this MRD in order to be prepared for questions that may arise during DCAA-led frolics and detours.

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Cybersecurity. It’s never over, is it? In what can only be described as a “soft” release, the Department of Defense (DoD) has slowly and quietly begun to reveal its intent to provide federal contractors with formal cybersecurity certification as early as next year. The program, known as the Cybersecurity Maturity Model Certification (CMMC), is an effort to streamline the acquisition process by providing acquiring agencies and consenting contractors with more exacting cybersecurity requirements for forthcoming acquisitions.

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The Demon: What an excellent day for an exorcism.
Father Karras: You would like that?
The Demon: Intensely.

Honestly, it was challenging finding an all-audiences quote from William Peter Blatty’s “The Exorcist,” but we believe that this quote is exactly what federal contractors need to know. Today is indeed an excellent day for an information system exorcism and, unlike Father Karras, federal contractors know the name of that which they must purge: Kaspersky Lab.


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