Finding Text
Federal Program: Research and Development Cluster ALN: 12.615, 12.U01, and 12.RD. Compliance Requirement: Cash Management. Awarding Agency: U.S. Department of Defense and National Aeronautics and Space Administration. Criteria or Specific Requirement: For cost-reimbursement contracts under the Federal Acquisition Regulations (FAR), 52.216-7(b)(1), with relation to supplies and services purchased for use on the contract, "ordinary course of business" would be in accordance with the terms and conditions of a subcontract or invoice, and ordinarily within 30 days of the request to the federal government. Condition: The Organization, specifically the entity Parallax Advanced Research ("Parallax"), did not have adequate documentation of extended payment terms in the ordinary course of business, and exceeded the typical 30 days. Cause: Parallax has been extending terms and conditions of payments of vendors beyond 30 days from the date of reimbursement request, as necessary for overall operations and its cash management needs. Additionally, Parallax has also experienced timing challenges pertaining to cash collections. Effect: Subset of vendors were paid later tan 30 days from the date of the request for reimbursement from the government. Questioned costs: None. Context: It was noted that the Organization requested reimbursement from the federal agency for 13 expenditures; however, the subsequent payment to the vendor for those expenditures was not within 30 days of the requested reimbursement. There may have been terms and conditions agreed to with the vendor, that exceed the 30 days of the request to the federal government for reimbursement, but we did not pursue that additional documentation. We did observe that payment was made within 30 days of receipt of the cash from the federal agency for six of the 13 expenditures. Of the seven expenditures that were paid more than 30 days from the reimbursement date, only one related to a reimbursement date after January 2024, which is when Parallax increased its line of credit. Recommendation: The Organization should review its procedures and update as necessary. Views of responsible officials: The Organization will consider the observation and the risks associated to determine action plan to address the finding. See corrective action plan.