What Hath DCAA Wrought?

Thursday, 19 July 2012 00:00 Nick Sanders
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We have wondered aloud what DCAA has been doing with its time, since the agency doesn’t appear to be performing any audits—or, at least, issuing any completed audits. Since the auditors haven’t been auditing, we’ve been wondering what they’ve been doing. And now we think we have an answer.

They’ve been revising policies, procedures, and audit programs.

We visited the DCAA website recently, and found lots and lots of new stuff, most of it dated June 2012. So much new content doesn’t happen overnight; we expect DCAA HQ has been very busy typing away, developing new guidance and new audit procedures to help auditors perform more efficient and more effective audits.

First, the DCAA Publication, “Information for Contractors” (DCAAP 7641.9) has been updated and reissued, effective June 26, 2012. That’s a good thing, since the last time the document was updated was January 2005. It’s an important document, especially for smaller contractors that are relatively new to this whole government contracting thingee. In the words of the Introduction—

The manual is designed to assist contractors in understanding applicable requirements and to help ease the contract audit process. It describes what contractors should expect when doing business with the U.S. Government and interacting with DCAA auditors.

We skimmed through the new publication and did not see much that merited comment. (Readers, if you see something we missed, then send us an e-mail!)

Another new item at the DCAA website is a new and improved Incurred Cost Electronically (“ICE”) Excel workbook that allegedly complies with the requirements of the Allowable Cost and Payment contract clause (52.216-7, June 2011). But as the DCAA noted in the ICE Model—

Please note that while the ICE model is intended to aid the contractor in providing an adequate submission to DCAA, its use does not guarantee that the submission will be judged adequate. It is the purview of your cognizant DCAA Office to determine, in the judgment of the auditor reviewing your submission, whether or not it is adequate, regardless of what model is used.

That’s kind of irksome, really. That note tells users that the ICE Model is designed to comply with contractual requirements, but not necessarily to lead to a submission that would be deemed “adequate” by a DCAA auditor. We are somewhat irked by an audit agency that would posit that a submission that complied, in all material respects, with contract requirements might still be deemed inadequate in some other—non-contractual—respects. Guess what, DCAA? A contractor’s duty is to comply with contract requirements. Period.

And let’s be very, very clear here: It is NOT DCAA that determines whether or not the submission is adequate, it is the cognizant Contracting Officer. The note quoted above is indicative of the arrogance of the modern DCAA—on one hand reserving for itself the right to tell contractors that their indirect rate submissions are inadequate, even though fully compliant with contract requirements—while on the other hand usurping the Contracting Officer’s official responsibility in making the determination of submission adequacy in the first place.

So that’s enough ranting. Let’s keep going, looking at other changes made by DCAA.

We noted that many audit programs have been updated, some significantly, in the past month or two. Here’s a list of the audit programs that DCAA updated just in June 2012—

Whew!

We want to emphasize that the list of audit programs, above, includes only those that were modified and reissued in the month of June 2012. That’s quite a few, isn’t it? And it explains what HQ has been up to in the past months.

Obviously, we didn’t have time to review each audit program to see what DCAA revised. As always, if you are interested in the details of a particular audit program, you should visit the DCAA website and click on “Standard Audit Programs.” Then find the one you want and open the associated .pdf file.

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