Tuesday, March 20, 2012

Dual Noncompliances

It is possible for a single contract issue to be noncompliant with both the Federal Acquisition Regulations (FAR) and similar provisions in the Cost Accounting Standards (CAS). For example costs dealing with pensions (CAS 412 and 413), insurance (CAS 415), and Independent Research and Development (CAS 420) all have counterparts in FAR. Similarly, the CAS Standard on Accounting for Unallowable Costs (CAS 405) has a parallel in FAR 31.201-6, Accounting for Unallowable Costs.

The Government will always process noncompliances that violate both FAR and similar provisions in CAS, as CAS noncompliances under the Cost Accounting Standards clause 52.230-2(a)(5). This clause requires contractors to (i) correct the noncompliant practice,  (ii) to pay the Government back for any resulting cost impact, and (iii) pay the Government interest on any overpayment that resulted from the noncompliance.

CAS is tougher than FAR when noncompliances are disclosed. A FAR noncompliance does not require corrective actions nor does it allow the Government to recover interest on any overpayments that resulted from the noncompliance (although penalties for unallowable costs may apply).

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