January 14, 2025
By Paul Calabrese, Principal, Outsourced Accounting and Advisory Services
In the realm of government contracting, the complexity of agreements can significantly impact the success of a contract. Unlike commercial contracts, government contracts come with stringent requirements and regulations that demand a meticulous understanding for compliance. The practice of “briefing” these contracts is crucial for any government contractor aiming to mitigate risks, ensure compliance, and maintain profitability.
Components of Contract Briefing
As part of a government contractor’s annual incurred cost submission, the Defense Contract Audit Agency (DCAA) requires a contract brief to provide the financial and compliance aspects for cost reimbursable contracts. DCAA needs detailed contract information to perform their audit, and the contractor requires the same data to understand their obligations.
The DCAA contract brief form obtains critical information from sections of a standard government contract. It is important that government contractors understand the critical components of contract briefing and the specific areas that are relevant to accounting and compliance.
The contract components of an SF Form 26 include:
- Section A: Term sheet
- Section B: Pricing
- Section C: Statement of work
- Section F: Period of performance
- Section G: Administrative requirements such as invoicing and payments
- Section H: Special terms and conditions
- Section I: Standard Federal Acquisition Regulation (FAR) and agency-specific DFAR (Department of Defense) clauses.
Completing the DCAA Contract Brief Form (CBF)
The DCAA Contract Brief Form (CBF) is an important 4-page schedule in the annual incurred cost submission that DCAA calls ICE (Incurred Cost Electronic), an Excel file that includes over thirty tabs to calculate final indirect rates as well as background information to understand the contracts that recover indirect cost. Every cost reimbursable contract must have a CBF as supplementary information to the ICE submission. The CBF has the basic contract nomenclature that correlates the contract number to the contractor’s internal job number.
Since government contracts are multi-year and funded incrementally, the CBF manages current funding for contract performance to the total contract value. The CBF form provides for the contract type designation, such as Cost Plus Fixed Fee, Fixed Price, or Time and Material. The brief form includes the estimated cost ceiling, fixed fee, and total amount that covers the entire period of performance. This information is necessary to manage a contract, and advanced software will track this data on their Job Status Reports.
As a prime contractor the form includes contact information for the procurement and administrative offices as well as DCAA. There are designations as to FAR, DFAR, NASA, or other applicable regulations, as well as the Cost Accounting Standards (CAS) and defective pricing coverage. The CBF provides a brief statement of work and lists important requirements such as Time and Material schedule of billing rates, cost share, level of effort, indirect rate ceilings, allowable cost of money, FAR penalty for unallowable costs, precontract cost, restrictions on overtime premium, and any other impactful clauses.
The last page of the brief form provides a schedule of modifications as they impact the incremental and cumulative funding of the contract. This helps both the auditor and the contractor to understand the funding coverage during the performance period. For the contractor, it is about managing their costs, whereas the auditors ensure the contractor did not exceed the funding.
Staying Current on Your CBF Offers Key Advantages
Maintaining an updated CBF facilitates improved internal controls that reduce risk in the following areas for cost reimbursable contracts.
- Compliance with cost restrictions, funding, and payment requirements to assure allowability when invoicing cost reimbursable contracts via public vouchers.
- Determination of cumulative funding and contract value for contract backlog.
- Assurance that work performed is within the funding limits.
- High-level brief of FAR and DFAR clauses that impact the recovery of costs.
- Assessment of CAS-coverage by contract.
- Limits on indirect rate recovery, overtime premium, specific items of cost.
- Amount of fixed fee withholding and recovery.
Contact Us
GRF CPAs & Advisors offers a deep bench of expertise in the government contracting sector. With subject matter experts addressing all aspects of DCAA-FAR-CAS regulatory and oversight compliance, GRF provides tailored audit, tax and advisory services that address the unique challenges and opportunities faced by contractors.
Our team of seasoned professionals is committed to delivering comprehensive solutions. By leveraging GRF’s experience and local market knowledge, government contractors can confidently navigate the complexities of the acquisition process and achieve their strategic goals.
