CR-001
May 14, 2026
Three-pool indirect rate model framed as regulatory mandate
Article: Fringe, Overhead, and G&A Rates Explained for Government Contractors
What changed:
Our article opened with the claim that DCAA treats indirect costs as three pools: fringe, overhead, and G&A. Two former DCAA auditors flagged this on May 6, 2026. The actual rule, FAR 31.203(c), requires logical cost groupings with no specific pool count. The three-pool model is common practice for cost-reimbursement contractors, not a regulatory requirement. CAS 9904.418-40 sets a beneficial or causal allocation standard, but only for contractors under full CAS coverage. We rewrote the opening, every section header that implied the mandate, and the closing summary.
Before
“DCAA treats indirect costs as three pools: fringe, overhead, and G&A. Every government contractor structures their accounting this way.”
After
FAR 31.203(c) requires logical cost groupings. Most cost-reimbursement contractors use three pools (fringe, overhead, G&A) in practice, but the rule does not name a pool count. A single-rate or two-tier structure can satisfy 31.203(c) when activities are homogeneous, and complex operations may need more than three pools.
Primary source
FAR 31.203(c); CAS 9904.418-40
Why it matters:
Treating common practice as a mandate is how brands lose credibility on the very rules they teach. A contractor with one contract type and one office does not need three pools to satisfy FAR 31.203(c). Forcing them into a structure that does not match their operations is the wrong advice.
CR-002
May 14, 2026
FAR 42.709 penalty structure inverted: default is 1x, not 2x
Article: 7 Costly Accounting Mistakes New Government Contractors Make
What changed:
Earlier drafts described the FAR 42.709 penalty for unallowable indirect costs as 2x by default. The actual rule under FAR 42.709-2 is 1x for the first occurrence. The 2x penalty applies only when the cost was previously determined unallowable in writing in a prior audit, claim, or proposal. We also corrected the citation chain: the $1,000,000 threshold lives in FAR 42.709-1, not in the penalty clause itself.
Before
“Including unallowable costs in your indirect rate proposal triggers a 2x penalty under FAR 52.242-3.”
After
Per FAR 42.709-2(a), the penalty for unallowable indirect costs is the amount of the unallowable cost (1x). Per FAR 42.709-2(b), the 2x penalty applies only when the same cost was previously determined to be unallowable in writing. The $1,000,000 threshold for the penalty clause lives in FAR 42.709-1.
Primary source
FAR 42.709-1; FAR 42.709-2(a) and (b)
Why it matters:
Doubling the perceived penalty scares small contractors out of indirect rate proposals entirely. The actual first-occurrence exposure is half what the article implied. Calibrated risk is the standard.
CR-003
May 15, 2026
DFARS 252.242-7005 and 252.242-7006 conflated: withholding vs system criteria
Article: DCAA Compliant Timekeeping: Setup Guide for Government Contractors
What changed:
Multiple articles attributed payment withholding authority to DFARS 252.242-7006. The actual withholding clause is DFARS 252.242-7005, which carries the 5 percent and 10 percent rates and the 45-day corrective action plan deadline. DFARS 252.242-7006 sets the 18 accounting system criteria. We also updated the "significant deficiency" framing to "material weakness" per DFARS Case 2021-D006 effective January 17, 2025.
Before
“DFARS 252.242-7006 authorizes the contracting officer to withhold up to 5 percent on flexibly-priced contracts.”
After
DFARS 252.242-7005 authorizes payment withholding (5 percent for one system deficiency, 10 percent for two or more, per (e)(1) through (e)(3)). DFARS 252.242-7006 sets the 18 accounting system criteria and the procedural framework for initial and final determinations. The terminology updated to "material weakness" under DFARS Case 2021-D006 effective January 17, 2025.
Primary source
DFARS 252.242-7005(e); DFARS 252.242-7006(c)
Why it matters:
Citing the wrong clause when explaining withholding risk lets the auditor refute the article on inspection. The two clauses do different work. Mixing them is the structural error we fixed across six articles in this sweep.
CR-004
May 18, 2026
FAR 31.201-4 verbatim allocation language misattributed
Article: How to Calculate Your Indirect Rate: A Step-by-Step Guide
What changed:
Earlier drafts attributed the phrase "beneficial or causal relationship" to FAR 31.201-4. That language is CAS 9904.418-40 wording, which applies only to fully CAS-covered contractors. FAR 31.201-4 itself reads "relative benefits received or other equitable relationship" and applies broadly. The distinction matters when explaining allocability to non-CAS-covered small businesses, who answer to FAR 31, not CAS.
Before
“Allocability requires a beneficial or causal relationship between the cost and the cost objective [FAR 31.201-4].”
After
Allocability under FAR 31.201-4 requires that the cost be incurred specifically for the contract, benefit both the contract and other work and be distributable in reasonable proportion to the benefits received, or be necessary to the overall operation of the business. The "beneficial or causal" language belongs to CAS 9904.418-40, which applies only to contractors under full CAS coverage.
Primary source
FAR 31.201-4; CAS 9904.418-40
Why it matters:
A small contractor reading the wrong allocation standard might assume CAS-grade allocation rigor applies when it does not. The article was advising contractors above their actual regulatory burden.
CR-005
May 18, 2026
Practitioner-curated audit findings list framed as DCAA-canonical
Article: Top 10 DCAA Audit Findings and How to Prevent Them
What changed:
The original article presented a Top 10 list as if DCAA publishes a canonical taxonomy of findings. DCAA does not. The DCAM (Defense Contract Audit Manual) lists audit procedures and risk areas; it does not rank a "top 10." We reframed the article as practitioner-curated based on engagement experience, with explicit citation to the DCAM sections that describe each finding type. We also corrected FAR 31.205-51 framing (the section exists and covers alcoholic beverages; an earlier audit had incorrectly flagged it as nonexistent) and added CAS 418 applicability gates throughout.
Before
“DCAA publishes its top 10 audit findings every year. Here is the FY2024 list.”
After
DCAA does not publish a ranked "top 10" findings list. The DCAM (Defense Contract Audit Manual) describes audit procedures by area. Based on our engagement experience and DCAM Chapters 5 through 10, the most common findings on small-contractor incurred cost audits include timekeeping deficiencies, unallowable cost inclusion, indirect rate calculation errors, and allocability documentation gaps.
Primary source
DCAM Chapters 5 through 10; FAR 31.205 (cost principles)
Why it matters:
Calling a practitioner list "DCAA-canonical" overstates what the agency has actually said. The list is still useful as practitioner experience. The framing was the error.
CR-006
May 18, 2026
FAR 31.205-6 subsection citations wrong in retirement and remuneration framing
Article: The 2026 Compensation Cap: What It Means for Your Indirect Rates
What changed:
Earlier drafts cited FAR 31.205-6(p)(2) for the retirement contribution rule. That subsection covers pre-June 24, 2014 senior executive caps. The applicable subsection for the general compensation definition is FAR 31.205-6(p)(1)(i). A separate paragraph cited FAR 31.205-6(a) for "all forms of remuneration"; subsection (a) covers reasonableness. The "all forms of payment" language lives in FAR 31.205-6(d). We corrected both. We also re-verified the CY2025 cap of $671,000 against the DCAA Memorandum for Regional Directors and the Aprio and Redstone GCI calculations.
Before
“The compensation cap under FAR 31.205-6(p)(2) limits all forms of remuneration under FAR 31.205-6(a).”
After
The compensation cap mechanism lives in FAR 31.205-6(p)(1)(i), which defines compensation for cap purposes. All forms of payment are addressed in FAR 31.205-6(d). The CY2025 cap is $671,000 per OFPP and DCAA Memorandum 24-PSP-009(R).
Primary source
FAR 31.205-6(d); FAR 31.205-6(p)(1)(i); DCAA Memorandum 24-PSP-009(R)
Why it matters:
Subsection-letter accuracy is the difference between an auditor agreeing with you and an auditor reading your article back to your face on Tuesday morning. We got it wrong. We fixed it.