Hurricane Florence and Administrative Leave

I spent years in North Carolina when I served in the 82nd Airborne and have family living there today. Thus, my thoughts are with the people facing the hurricane this week.

I post this guidance about Administrative Leave at such times as just a minor act in hopes of easing a bit of the path these folks amy find themselves on.

My clients often call about specific compliance issues and almost all the time hear that I will call them back. I learned during a disaster in North Carolina years ago to double check before I open my mouth and, unless I had just read about the issue that week, I double check on it before I call my client back.

The DCAA guidance on Administrative Leave is no longer in the DCAA Contract Audit Manual (CAM) but is found in their still incomplete Selected Areas of Cost Guidebook:

Chapter 74 – Administrative Leave Due to Weather Related Closures

Authoritative Sources
FAR 31.205-6(m), Fringe
Benefits

When contractor personnel receive paid administrative leave due to inclement weather, the allowability and accounting treatment of such payments should be evaluated on a case-by-case basis in accordance with FAR 31.205-6. Paid absences
are fringe benefits that, per FAR 31.205-6(m)(1), are allowable to the extent that they are reasonable in nature and amount and are required by law, employer-employee agreement, or an established policy of the contractor.
The reasonableness of the amount paid is generally not an issue. The issue is whether or not the circumstances warranted the payment of administrative leave.

Some factors to consider in determining reasonableness include the severity of the weather conditions and whether other businesses and organizations in the same geographical location were closed. The fact that the Federal Government suspended similar operations in the area due to the weather generally would support that it was reasonable for the contractor to incur the administrative leave costs. If the costs are determined to be allowable, they should be charged in accordance with the contractor’s disclosed or established cost accounting practice for charging paid
absences.

 

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