Have you heard the saying, “The good news is, you won a federal contract; the bad news is, you won a
federal contract”? As tongue-in-cheek as this
phrase may be, it is frequently quoted when
an organization takes that step to becoming a
government contractor. But why is this phrase
so accurate? The basis for this phrase can be
traced to unique and burdensome compliance
requirements a government contractor must
follow. And depending on function, compliance has different meanings.
Healthcare organizations provide a myriad
of goods and services, from pharmaceuticals
and equipment, to administrative services.
Many of the goods and services healthcare
organizations provide commercially are also
procured by the federal government and,
to grow revenue, organizations frequently
end up playing in the government’s
sandbox. Generally, compliance for
healthcare under a federal govern-
ment contract, grant, or cooperative
agreement requires specific con-
trols to address and comply with
Chapters I, IV, or V of Title 42 — Public
Health of the Code of Federal
Regulations ( 42 CFR).1
Because the scope of 42 CFR addresses
a spectrum of healthcare services and
oversight, ranging from patient safety
to the requirements of programs like
Medicare and Medicaid, and Office of
Inspector General (OIG) oversight, organizations gravitate to the 42 CFR compliance
requirements, as they should. However,
organizations frequently don’t adapt to
the administrative requirements unique
to the government contracting environment beyond those found in 42 CFR.
Unfortunately, organizations take a “we’ll
by Noah Leiden, CPA
A different perspective
» Contracting with the government requires complying with unique administrative terms and conditions not normally found when
contracting with a commercial entity.
» Compliance may be defined differently based on the perspective taken and specific compliance challenges associated with the
federal government’s expectations of its contractors.
» Many of the federal government’s administrative terms and conditions come with unique compliance requirements and entail a
level of internal controls normally not focused on by commercial organizations.
» The administrative terms and conditions incorporated into government contracts require an understanding of Acquisition
Regulations System ( 48 CFR), OMB Guidance for Grants and Agreements (2 CFR), Cost Accounting Standards, and
» Failure to comply with the federal government’s unique administrative terms and conditions can impact your organization’s
bottom line in the future as specific audits may occur several years after award or contract completion.
Noah Leiden ( Noah.firstname.lastname@example.org) is a Partner at Baker Tilly’s Government
Contractor Advisory Services Practice in Tysons, VA.