Join Government Contract Services Group experts Donna Dominguez and Tom Marcinko on November 14th for a discussion during IMA’s Government Contractor Breakfast entitled, “Cost Reimbursable Contracting—Managing Cost Type Contracts.”
Many government service contractors successfully enter the government market with relatively straightforward T&M (labor hour) contracts. Eventually an opportunity to bid and perform larger and more complex cost reimbursement contracts will present itself. The skills required to manage T&M contracts differ markedly from the skills required to manage a cost type contract. While the statements of work may be very similar, the administrative requirements associated with managing a cost type contract greatly exceed those required for T&M work.
Managing cost type contracts is a sophisticated undertaking. The contractor must understand what a “cost” is, have an adequate accounting system, establish both direct and indirect budgets and actively manage them, manage on an accrual basis with actual, not billing, rates.
Failure to comply with these requirements can have serious ramifications, including incurring a loss, a poor cash flow, inaccurate cost reporting, an inadequate accounting system, and possible false claims violations. An understanding of your obligations is essential to mitigating your risks, maximizing your cost recovery, and maintaining your bottom line.
Attendees of the event will walk away with a clear understanding of:
- The definition of an "adequate" accounting system and what it must include
- Costs that can and cannot be reimbursed
- Reimbursed direct costs
- Reimbursed indirect costs
- Invoices on cost-type contracts
- The "Paid-to Cost" rule
- The limitation of Cost-and-Funds clauses
- Practical tips that can be applied to their business