Mid Term Exam
• Essay Question #1:
You work with a Government agency managing several large defense contracts. On one of these contracts with a contractor named ATI, an issue has arisen concerning the allowability of certain ATI incurred and invoiced costs. ATI's contract is a cost plus award fee contract. The specific costs in question involve some $50,000 in costs running the ATI fitness center at the ATI main business campus. Additionally, ATI paid $500,000 to a political action committee (PAC) which supports legislative initiatives for defense contractors. Finally, ATI incurred and invoiced the Government $1.5 million for its legal fees associated with a proceeding brought against it by the local U.S. Attorney's Office for an alleged violation of the False Claims Act under 31 U.S.C. 3730. This False Claims act matter was ultimately resolved and settled through a consent decree between the parties. Before he visits the local DCAA auditor for guidance on what actions to take, your boss want you to prepare an essay advising him on whether any of these three sums are allowable under the FAR.
I would advise my boss of the regulations set forth in the FAR that he may use to his discretion.
1st Sum- Far part 31.205-13 Employee morale, health, welfare, food service, and dormitory costs and credits states that “(a) Aggregate costs incurred on activities designed to improve working conditions, employer-employee relations, employee morale, and employee performance (less income generated by these activities) are allowable, subject to the limitations contained in this subsection. Some examples of allowable activities are—
(1) House publications;
(2) Health clinics;
(3) Wellness/fitness centers;
(4) Employee counseling services; and
(5) Food and dormitory services for the contractor’s employees at or near the contractor’s facilities.
The fact that they are running a fitness center is completely authorized under the FAR.
2nd Sum- FAR 31.205-47 Costs related to legal and
You work with a Government agency managing several large defense contracts. On one of these contracts with a contractor named ATI, an issue has arisen concerning the allowability of certain ATI incurred and invoiced costs. ATI's contract is a cost plus award fee contract. The specific costs in question involve some $50,000 in costs running the ATI fitness center at the ATI main business campus. Additionally, ATI paid $500,000 to a political action committee (PAC) which supports legislative initiatives for defense contractors. Finally, ATI incurred and invoiced the Government $1.5 million for its legal fees associated with a proceeding brought against it by the local U.S. Attorney's Office for an alleged violation of the False Claims Act under 31 U.S.C. 3730. This False Claims act matter was ultimately resolved and settled through a consent decree between the parties. Before he visits the local DCAA auditor for guidance on what actions to take, your boss want you to prepare an essay advising him on whether any of these three sums are allowable under the FAR.
I would advise my boss of the regulations set forth in the FAR that he may use to his discretion.
1st Sum- Far part 31.205-13 Employee morale, health, welfare, food service, and dormitory costs and credits states that “(a) Aggregate costs incurred on activities designed to improve working conditions, employer-employee relations, employee morale, and employee performance (less income generated by these activities) are allowable, subject to the limitations contained in this subsection. Some examples of allowable activities are—
(1) House publications;
(2) Health clinics;
(3) Wellness/fitness centers;
(4) Employee counseling services; and
(5) Food and dormitory services for the contractor’s employees at or near the contractor’s facilities.
The fact that they are running a fitness center is completely authorized under the FAR.
2nd Sum- FAR 31.205-47 Costs related to legal and