Managing Cost Type Contracts

On-Demand Webinar
February 22, 2017

Download: Managing Cost Type Contracts Slides

Watch Aronson Government Contract Service Group experts Donna Dominguez and Tom Marcinko as they give an informative webinar on how to recover costs, make a profit, and avoid enforcement action.

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, and 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 — essentially the difference between recovering your costs and making a profit or losing your shirt.

Learning Objectives:

  • What an “adequate” accounting system must include
  • Which costs can — and can’t — be reimbursed
  • How direct costs are reimbursed
  • How indirect costs are reimbursed
  • How to handle invoicing on cost-type contracts
  • The “Paid-to Cost” rule
  • The limitation of Cost-and-Funds clauses

View the DCAA ICE Model Contract Brief Template