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Dixon Hughes Goodman (DHG) issued a piece on the DCAA’s updated guidance related to allowability of professional and consulting services costs. DHG stated that “Consultant and professional service costs have long been considered a major risk area by government auditors and a source of frustration among contractors. Over the years, the Defense Contract Audit Agency (DCAA) has aggressively questioned or disallowed consultant and professional service costs for various documentation reasons.”

In this article, Dixon Hughes Goodman Government Contractor Practice expert Bill Walter (pictured right) and others, provide an update on DCAA’s guidance to its auditors on how to handle allowability of such costs. They stated, “DCAA auditors should assess whether or not the costs listed under a “consultant” or “professional services” account are, in fact, a consultant or professional services costs as defined in FAR 31.205-33(a) before performing audit steps and applying the documentation requirements in FAR 31.205-33(f) to these transactions. The guidance gives an example of hiring outside help to handle bookkeeping or contract administration would be viewed as purchased labor because the services provided do not enhance the contractor’s financial or technical position, and were to handle a function in the ordinary course of business and would not be considered consultant or professional services under FAR 31.205-33.”

Read the complete article here.