Wednesday, January 15, 2014

"Purchased Labor" is Not "Consulting Costs"

Yesterday we highlighted new guidance to DCAA auditors that essentially told them to be reasonable and use common sense when evaluating whether professional and consultant services costs are adequately supported (if you missed that blog posting, you can read it here).

There is a related issue in that sometimes, auditors (and contracting officials) use the documentation criteria required in FAR 31.205-33 to evaluate costs that do not meet the definition of "professional and consulting services".

The definition of professional and consultant services, as defined in FAR 31.205-33 means those services rendered by persons who are members of a particular profession or possess a special skill. Examples include those services acquired by contractors (or subcontractors) in order to enhance their legal, economic, financial, or technical positions. Professional and consultant services are generally acquired to obtain information, advice, opinions, alternatives, conclusions, recommendations, training, or direct assistance, such as studies, analyses, evaluations, liaison with Government officials, or other forms of representation.

If the costs being evaluated do not meet this definition, we just quoted out of FAR, they are not "professional and consultant" costs and should not be evaluated using the criteria of FAR 31.205-33.

Here are some examples of costs that are not professional and consulting costs (according to DCAA's newly issued guidance):

1. Temporary accounting services to perform bookkeeping activities.
2. Program management activities for a contract (the individual works directly with contractor employees and contractor management to track and monitor progress on contract performance
3. Outside writers to augment their in-house staff in preparing technical publications.

Each of the foregoing examples represent purchased services or purchased labor. Allowability should be governed by the reasonableness criteria found in FAR 31.201-3, not by the consultant and professional services criteria.

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