Overview
FAR Subpart 42.6 establishes the policies and procedures for assigning a Corporate Administrative Contracting Officer (CACO) to contractors with multiple operating locations. The primary goal is to provide a single point of contact for corporate-wide policies and accounting practices, ensuring consistency and efficiency across various government contracts and administrative jurisdictions.
Key Rules
- Assignment Criteria: A CACO is typically assigned only when a contractor has at least two locations with resident Administrative Contracting Officers (ACOs). An ACO is considered "resident" if at least 75% of their effort is dedicated to a single contractor.
- Decision Factors: The government decides to initiate or discontinue a CACO based on the volume of government sales, the degree of control the corporate office has over its subsidiaries, and the potential benefits of centralized coordination.
- Inter-Agency Coordination: If a contractor works with multiple government agencies, those agencies must agree on which one will lead the CACO assignment (usually the agency with the largest dollar balance of affected contracts).
- Location Strategy: The CACO’s physical or organizational location is determined by factors such as the proximity to corporate records, major plants, and the cognizant government auditor to maximize cost-effectiveness.
Responsibilities
- Corporate Administrative Contracting Officer (CACO):
- Determining final indirect cost rates for cost-reimbursement contracts on a corporate-wide basis.
- Establishing advance agreements or recommendations regarding corporate/home office expense allocations.
- Administering Cost Accounting Standards (CAS) related to corporate-level accounting practices.
- Maintaining communication with local ACOs and auditors to keep them informed of corporate-level determinations.
- Contract Audit Agency (e.g., DCAA):
- Providing financial and advisory accounting services to the CACO.
- Issuing advisory audit reports and evaluating the acceptability of corporate-wide policies.
- Local ACOs:
- Providing advice and participation to the CACO regarding how corporate policies impact specific locations or plants.
Practical Implications
- Streamlined Negotiations: For large defense contractors or multi-national corporations, the CACO prevents the "duplication of effort" where multiple local ACOs might otherwise attempt to negotiate the same corporate overhead rates independently.
- Consistency in Compliance: By centralizing the administration of Cost Accounting Standards (CAS), the government ensures that a contractor’s accounting changes are applied uniformly across all divisions, preventing "forum shopping" or inconsistent application of rules.
- Strategic Interface: The CACO serves as the high-level interface between the government and a contractor's C-suite/corporate management, allowing local ACOs to focus on plant-specific production and performance issues rather than complex corporate financial structures.
- Efficiency for Contractors: Contractors benefit from having a single government official empowered to make binding decisions on corporate-wide issues, reducing the administrative burden of coordinating with dozens of different government representatives.