Wednesday, August 24, 2011

Government Contracts

I sat through a two hour seminar on federal government contracts. It was mostly about how they determine which costs are allowable on cost-plus contracts and the ridiculous record keeping and auditing requirements. I guess the goal is to make sure contractors don't make too much profit on government contracts yet are able to recoup costs plus make a profit on special (non-commercial) projects. This just leads to all sorts of inefficiencies and waste in my opinion. Since the government only allow a small profit margin, the goal is then to categorize as much as you can into "allowable" costs, which then means lots of lots of audits. It's like a huge game of hide-and-seek except it's costing me and every taxpayer. The government infrastructure required for these DCAA audits and accounting resources at contractors to respond to audits can surely be put to more productive use. The entire process is so counter-intuitive to how business is done in the private sector that I sat there shaking my head multiple times throughout the seminar.

I just wish the federal government would apply the same financial rigors to themselves. How many jobs did TARP/Porkulus create again?

FAR 31 - Contract Cost Principles and Procedures
31.205-51 Costs of alcoholic beverages.
Costs of alcoholic beverages are unallowable.

Definitely not how business is done in China.

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