(Editor’s Note.  The following should provide some insight into judgments on when it may not be appropriate to charge otherwise allowable costs to a contract.)  

The contractor asserted it had a fully compliant Earned Value Management System (EVMS) – a system required to track cost and scheduling performance data on large DOD contracts - in its proposal for a cost plus contract when, in fact, it had none.  After award, it subsequently developed a compliant EVMS and DCAA found that it had charged the contract more than $1.4 million to develop it.  The Air Force not only agreed the charges were improper but also took steps to file a claim under the False Claims Act.  The contractor agreed to settle the matter for $2.75 million with no acknowledgement of wrongdoing.   

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