As we previously reported, DOD has moved to rectify the dysfunctional relationship between DCAA and its contracting officers—although we have opined that much of what has been published looks like window-dressing and fails to address fundamental problems. Regardless of our opinion(s) on the matter, any progress is better than the stalemate between audit and contracting that had become the status quo in the Defense acquisition process.
So we are pleased to note that the military services have begun to flow-down the DOD resolution policy to their contracting officers. As far as we know, the first to do so was the US Air Force. On March 17, 2010, the USAF issued this memorandum that “sets forth Air Force policy for resolving significant disagreements when the Contracting Officer does not concur with DCAA recommendations while establishing pre-negotiation objective[s].” The policy set forth is essentially a verbatim recap of Shay Assad’s December 2009 memo. (You can find a link to his memo in the first link above.)
To tailor the policy to the Air Force, the memo states that—
Should DCAA request Air Force management review, the Contracting Officer will advance this issue through their management chain and provide the name and phone number of the Senior Contracting Official (SCO) or Senior Center Contracting Official (SCCO) to the cognizant DCAA representative. If the parties are still in disagreement, the SCO or SCCO will advance the issue to the HCA [Head of Contracting Activities] to support any request from DCAA for further resolution.
As we have noted, there are many opportunities for disagreement between Contracting Officers and auditor that do not involve establishing pre-negotiation objectives related to questioned costs. For instance, determination of “business system” internal control system adequacy does not necessarily involve negotiating an amount of questioned costs, and determining whether a contractor is or is not in non-compliance with Cost Accounting Standards does not necessarily involve negotiating an amount of questioned costs. In other words, while the DOD resolution process is a small step forward, it does not address all the existing issues.
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