We continue to invite you to visit our website where you can access previous issues of the GCNewletter, copies of our express notification bulletin GCAlert, and White Papers and presentations on various subjects of government contracting interest. It can be found at:

If you have any questions or comments relative to our website or the articles included in this GCNewsletter please contact us.

An Employee Stock Ownership Plan (ESOP) is a defined contribution employee benefit plan that allows employees to become owners of stock in the company where they work. As an equity based deferred compensation plan the ESOP is required by law to invest primarily in the securities of the employing company and has the ability to borrow money (e.g., leveraged ESOP)...

With year-end right around the corner many contractors are preparing to develop their annual indirect rate proposals or the actual billing rates to be used on cost reimbursable contracts. If your cost accounting system is not well suited to identify and segregate FAR Part 31 unallowable costs or those costs made expressly unallowable by contract you are open for the significant risk of penalties as specified in FAR 52.242-3, Penalties for Unallowable Costs...

Federal law requires all U.S. government contractors and subcontractors to secure worker’s compensation insurance for their employees working overseas. The Defense Base Act covers the following employment activities...

[READ MORE]

DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to add an exception to the requirement for a written determination before using a fixed-price type contract for a development program effort. The exception would apply to contracts for systems integration of commercial off-the-shelf information technology products under the DoD Enterprise Software Initiative. Comments on the proposed rule should be submitted in writing to the address shown below on or before January 8, 2007, to be considered in the formation of the final rule.

Federal Register: November 9, 2006
(Volume 71, Number 217)][Proposed Rules]
[Page 65768-65769]

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has issued a Request for Proposal to develop guidance designed to help organizations monitor the quality of their internal control systems in compliance with the Sarbanes-Oxley Act of 2002. To be completed in one year it is to meet the need for examples, guidance, and more information regarding the monitoring component of COSO’s Internal Control – Integrated Framework (IC Framework).

COSO Chairman Larry Rittenberg stated “There is a tremendous gap between the value good monitoring brings to a system of internal control and management’s understanding of that value. Not only does monitoring equip management with evidence of quality internal controls (or the lack thereof), but it also lays the groundwork for addressing SOX Section 404(a).”

For more information and to monitor the progress of this effort go to www.coso.org

Like a bouncing ball the mileage reimbursement rate utilized by the GSA may be going back to where it was in September – December 2005. The Internal Revenue Service has increased the mileage reimbursement rate effective January 1, 2007 to 48.5 cents per mile. Historically GSA has not been far behind in raising its rate to match that of the IRS. We will keep you informed via our GCAlert when and if it happens. In the meantime if you are bidding in contracts with significant mileage reimbursement requirements you may want to keep the impact of this potential claim in mind.

The Facilities Capital Cost of Money, Prompt Payment Act and Contract Disputes Act interest rate applicable for the period July 1, 2006 through December 31, 2006 is 5.75% per annum. It was published in the Federal Register, Volume 71, Number 126, Pages 37638-37639 on Friday, June 30, 2006. The previous rate applicable for the period January 1, 2006 through June 30, 2006 was 5.125% per annum. Sorry we missed it in our July issue and hope it did not cause too much of an inconvenience
to you.

The Small Business Administration (SBA) has issued a new rule that requires small businesses to recertify their size status at the end of the first five years of a contract, when a contract option is exercised or when the business is purchased or merged with another company.

This change was driven by the current system that allows the contract to continue as a “small business set-aside” even if the recipient outgrows the small business criteria or is acquired by a larger company.

This new rule will not require automatic contract termination but would require the company to reclassify itself as other than small and prohibit large companies from using these reclassified businesses to meet their small business contracting goals.