LaRC Office of Chief Financial Officer Presentation to LaRC Contractor Steering Council Contractor C

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LaRC Office of Chief Financial Officer
Presentation to LaRC Contractor Steering
CouncilContractor Cost Reporting and Cost in
Excess of Obligations
November 18, 2004 Lisa M. Oliver, Chief
Accountant
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Agenda

• Importance of timely and accurate contractor cost
  reporting
• Cost in excess of obligations
• Background
• Definition
• Current initiatives
• Questions

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Contractor Cost Reporting Why is it Important?

• Timeliness
• Facilitates our ability to report actual and
  estimated costs so program/project decisions can
  be made with the latest, most current information
• Out of LaRCs 73 active contracts subject to
  contractor cost reporting, 53 arrive after the
  contractual due date
• Accuracy
• Facilitates decision making based on reliable
  information
• Out of LaRCs 73 active contracts subject to
  contractor cost reporting, 79 report variances
  between estimated and actual costs in excess of
  10

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Cost in Excess of Obligations

• Background
• Cost in excess of obligations (CIEO) has existed
  in NASA for many years
• Since NASAs implementation of Core Financial
  (SAP R/3), CIEO has been recorded for internal
  reporting purposes only it has not been reported
  in the general ledger (this is a system design
  limitation within SAP)
• Recent audit findings have highlighted an area of
  concern due to the materiality of CIEO and
  unrecorded, unfunded liabilities
• Prior to closing FY 2004, LaRC had over 2M in
  CIEO, out of approximately 160M throughout NASA
• Complications
• Continuing resolutions
• Pace and prioritization of funds distribution and
  funding actions
• Understanding importance of contract funds
  management

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Cost in Excess of Obligations (cont.)

• Definition NASA defines cost in excess of
  obligations when the cumulative cost at the
  appropriate reporting level (task or contract)
  exceeds the amount funded at the same level
• Cumulative cost is calculated from actual costs
  for the reporting period plus the estimate for
  the current month
• For example Oct. 04 actual costs 1,000
• Nov. 04 est. costs 100
• Total cum. Costs 1,100
• Total funded 1,050
• CIEO 50
• NOTE Contractor cost reports provide a estimates
  for the 2 months following the month being
  reported.

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Cost in Excess of Obligations (cont.)

• Current initiatives
• Agency has mandated that NASA will not record
  CIEO, even for internal reporting purposes
• During FY 2004 closeout activities, Agency OCFO
  required all centers to actually record the
  obligation and cost for any true CIEO
  situations
• LaRC did not record any obligation or cost for
  our CIEO we worked with the Contracting
  Officers (CO) and Contracting Officers
  Technical Representatives (COTR) to resolve CIEO
  instances
• Obtained additional funding from appropriate
  sources
• Invoked funding limitation clauses on contracts
  to reduce cost to funding levels
• Notified contractors that they would be
  responsible for absorbing any additional costs
  they incur above the funding limits
• OCFO and Office of Procurement are jointly
  working short and long-term solutions
• Take a more proactive approach to funds
  management of our contracts
• Education for COs, COTRs, Contractors and
  others as appropriate

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Summary

• Submission of contractor cost reports timely and
  accurately will enable more effective and
  efficient management of NASAs programs
• Cost in excess of obligations will become a
  thing of the past as NASA performs more
  effective contract funds management
• Your assistance is needed if these objectives are
  to be realized!

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Questions