This is the June 2007 issue of the GCNewsletter from Gaffey & Associates Government Contracting Services Group. It is the last issue until we startup again in September. We hope that you will find the contents of this GCNewsletter and those in the future interesting, valuable and if nothing else thought provoking. As things develop of immediate importance between now and September we will issue GCAlerts to keep you informed.

We continue to ask you to visit our website at www.GaffeyCPA.com to learn more about the government contracting services that we provide and to gain access to previous issues of the GCNewsletter, the GCAlert and to review White Papers and presentations on various subjects of government contracting interest. We also urge you to contact our alliance members FedLinx and O'Riordan-Bethel Law.

The competition for obtaining government contracts work today is lucrative and fierce. Companies work hard putting together materials to submit to the government to get work. They wan to make sure they get a “fair shake” in the process and be treated fairly. However, a company pursuing government contracts work cannot fully protect its rights and business interests without knowing some of the basic rules governing federal government bid protests. Knowing the basics is all the more critical in view of the tight timeframes and deadlines associated with steps to be taken when losing out on a procurement opportunity. To assist in the process, we offer the following “Top Ten Tips” to help government contractors navigate through this lucrative yet tricky terrain...

The following information on employee benefits was obtained from Payroll Network, 4040 Nicholson Court , Kensington , MD 20895-1003 ( www.payrollnetwork.com ).

Employee benefit costs, on average, were more than 44 percent of payroll in 2005, according to the U.S. Chamber of Commerce.

Included in the total benefit costs are the cost of the traditional benefits and the legally-required benefits such as: paid vacation, paid holidays, paid sick leave, health insurance, dental insurance, life insurance, retirement plans, Social Security taxes, workers compensation insurance, and unemployment insurance payments...

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FAR Case 2005-036 proposes to amend the FAR to revise the definition of “cost or pricing data”; change the term “information other than cost or pricing data” to “data other than certified cost or pricing data”; add a definition of “certified cost or pricing data”; and to clarify the need to obtain data other than certified cost or pricing data when there is no means to determine fair and reasonable pricing during price analysis...

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The Department of Defense is giving contractors a chance to comment on contract financing and the process for the development of pre-negotiation profit or fee objectives...

A Federal Circuit Court appeal case decided February 6, 2006 (Information Systems & Networks Corporation/ICN v. United States) holds that under the FAR Cost Principle at FAR 31.205-41, Taxes, Subchapter "S" corporations are “exempt” from paying state income taxes on their earnings and therefore such state taxes are not allowable costs whether paid directly by the corporation or reimbursed by the corporation to the owner/shareholders.

On March 31, 2006, DCAA issued audit guidance instructing auditors to question claimed cost for individual shareholder income taxes assessed on contractor pass-through income no matter who pays the tax liability. It is their finding that since "S" corporations are not subject to or are exempt from state income taxes their recovery is unallowable.

Our goal is to build a firm of entrepreneurial minded individuals who “partner” with clients to provide creative solutions to achieve the desired goal. Our associates need to be good listeners, responsive, caring, knowledgeable, and committed to our client's success.

Gaffey & Associate's connections and opportunistic outlook enables continued firm growth at twice the industry average. We provide a friendly, collegial, family oriented environment that fosters individual and professional growth.

The Government Contracting Services Group of Gaffey & Associates is looking for individuals interested in becoming a part of our exciting and rapidly growing consulting practice. We need people who are detail-oriented, eager to learn and advance and would be good with clients. A college degree in accounting is required. Experience in government contract cost accounting, the Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS) is a positive. Defense Contract Audit Agency (DCAA) experience a definite plus but not required. Contact Sam Davidson at samuel.davidson@gaffeycpa.com .

The Government Contracting Services Group provides hands-on assistance and business advisory services in most areas of government contracting and government procurement regulation compliance. Areas where our experience, knowledge and innovative thinking puts us ahead of our competition include:

•  Design and preparation of indirect cost rate proposals and cost allocation plans that:

•  Facilitate the management decision making process

•  Maximize cost recovery and improve profitability

•  Improve your competitive position

•  Meet regulatory compliance requirements

•  Preparation, submission and negotiation of Requests for Equitable Adjustment to your contract pricing, schedule or both.

•  Establishment and maintenance of compliant business systems and effective internal controls.

•  Performance of business process analysis and operations improvement reviews to identify and prioritize key business risks.

We also provide specialized assistance in the areas of:

•  Accounting system design and assessment

•  Business system assessment (Labor Recording, Billing, Cost Estimating and etc.)

•  Compliance with the FAR, CAS and the OMB Circular requirements

•  Proposal pricing and “red team” reviews

•  Preparation, submission and negotiation of termination for convenience proposals

•  Subcontract management

•  Training seminars on an open-enrollment or in-house basis

Whatever your government contracting needs contact us and tap into a resource that can help you succeed in a very competitive marketplace.

We can be reached by contacting Sam Davidson at 703-748-5816 or via email at samuel.davidson@gaffeycpa.com