The PCI Network – Biggest Challenge and Important Consideration During an Audit

This episode of The PCI Network focuses on important considerations and challenges during an audit with Bill Walter, Director and Faculty at PCI. Bill Walter is a Partner with Dixon Hughes Goodman, LLP.  He holds a BS degree in Accounting from Penn State University and has more than 25 years of experience in cost accounting and financial management systems.  He has an extensive background in the application and interpretation of rules, regulations, and standards applicable to Government contractors, including the Federal Acquisition Regulation, individual agency supplements to the FAR, the Truth in Negotiations Act and the Cost Accounting Standards.  He began his career as an auditor for the Defense Contract Audit Agency (DCAA), where he was responsible for implementing micro-computers and training his fellow auditors and … Continue reading

Adding Value to the Company: Moving to Dismiss Claims Under the Contract Disputes Act for Statute of Limitation Violations

To say that there is a crisis surrounding the closing of government contracts, especially large cost-type contracts held by large government contractors, would certainly not be an understatement. [i]  Closing a contract essentially requires verification that the goods or services have been provided and that final payment has been made to the contractor. Audits are the tools the government uses to support contract closeouts.  However, the government is seemingly taking forever to perform various audits of government contracts.  To illustrate, the Defense Contract Audit Agency, the audit arm of the Department of Defense, had a backlog of 25,000 incurred cost audits at the end of Fiscal Year 2011, some dating as far back as 1996. GAO, Defense Contracting:  DOD Initiative to Address Audit Backlog Shows … Continue reading

DoD IG Critical of DCMA Proposal Audits

By Darrell Oyer, Darrell J. Oyer & Co.: In 2010 DOD issued guidance to contracting officers raising the contract value for requesting a proposal audit from $650,000 to $10 million for fixed-price contracts and from $10 million to $100 million for cost-type proposals. DOD transferred low-dollar proposal audits from the Defense Contract Audit Agency (DCAA) to the Defense Contract Management Agency (DCMA).  The change came in the wake of congressional criticism over the quality of DCAA’s audits. DCAA said this decision would allow it to redirect 132,133 audit hours to higher-dollar proposals [Editorial Note:  Sure]. A DOD Inspector General (IG) report has now concluded that this action could cost taxpayers as much as $249.1 million per year. According to the IG, DCMA’s Pricing and Negotiation … Continue reading

52.215-2 Audit and Records—Negotiation

Applicability: This FAR solicitation provision, which is incorporated into the contract and thus becomes a clause, is included in all solicitations and contracts unless the contract is  (a) at or below the simplified acquisition threshold, (b) for utility services at rates established by the general public plus a reasonable connection charge, and/or (c) for the acquisition of commercial items when such acquisitions are exempt from the requirements to submit certified cost or pricing data.  For cost-reimbursement contracts with State and local Governments, educational institutions, and other nonprofit organizations, the clause is included with its Alternate II.   Key Requirements: From a proposal standpoint, when the offeror is required to submit certified cost or pricing data in connection with any pricing action relating to the contract, the contracting officer … Continue reading

DCAA Touts Increased Quality of Audits

By Darrell Oyer, Darrell J. Oyer & Company: A canned DCAA presentation contends that the quality of audits has improved as evidence by the fact that in FY2003 DCAA examined $265b and questioned only $8b (3%); but in FY2011 DCAA examined only $128b but questioned $12b (9%).  So they are doing less but doing a better job! Don’t you believe it!  As most people will tell you, DCAA is questioning more costs, not because of better work, but because of a more outrageous questioning of costs.  For example, I have had one situation where DCAA would take credit for over $4m in corporate allocations but never did an audit—they merely rejected the entire allocation based on the wording in the company’s annual report.  In another … Continue reading