Finding Text
Federal Agency: U.S. Department of Defense. Federal Program: Research and Development Cluster. AL Number: ALN: 12.615 and 12.RD. Pass-through: Not applicable. Award Number: FA8650-19-3-9341/FA8650-19-3-9342, FA8650-22-D-6401, 47QFCA22F0043, and one classified contract. Award Year: Various. Type of Finding: Significant Deficiency and Noncompliance. Criteria: 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 for reimbursement. 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. Context: It was noted that the Organization requested reimbursement from the federal agency for seven expenditures; however, the subsequent payment to the vendor for those expenditures was not made either within 30 days of the requested reimbursement or within the time period agreed-upon by the vendor. We did observe that payment was made within 30 days of receipt of the cash from the federal agency for six of the seven expenditures. Of those six expenditures, payments to vendors were made within two weeks of the required date, as described above, for five of them, indicating that they were included in the next pay run. 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 than either 30 days from the date of the request for reimbursement from the government or the date that was agreed upon by the vendor. Questioned costs: None. Identification of how questioned costs were computed: Not applicable. Repeat finding: 2024-001. 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.