Loss of Memory or In-Denial?
As most contractors (subject to DCAA incurred cost audits) are aware, DCAA and DCMA were soundly “defeated” in terms of ASBCA rejections of DCAA FAR 31.205-6(b) compensation reasonableness challenges (Reference to J.F. Taylor, ASBCA Cases 56105, 56322 and Metron, ASBCA Cases 56624, 56751, 56752).
In spite of these losses (which would have been embarrassing to anyone other than DCAA), contractors are on the receiving end of DCAA compensation audits which are exactly the same process as was rebuked in the ASBCA cases. Knowing that contractors would make reference to these cases, DCAA HQ (most likely with legal assistance) has prepared standard audit rejoinders to be used when contractor defend executive compensation by making note of J.F. Taylor and/or Metron.
Oddly enough, DCAA’s “standard audit rejoinder” only refers to the J.F Taylor decision, inclusive of a reference to the government’s discredited expert witness (whose PhD may not have been legitimate); thus the ASBCA was left with the contractor’s un-rebutted expert witness.
In an apparent attempt to re-write history or forget what actually transpired, DCAA’s “standard audit rejoinder” fails to mention that the ASBCA declined to rehear J.F.Taylor (denied the government request) and also wholly fails to mention the Metron case which essentially reaffirmed the substantive findings in J.F. Taylor; in particular that DCAA’s statistical analysis was nothing but a façade for a valid application of statistics; hence, statistically flawed.
Nonetheless, DCAA’s field auditors are left with no choice but to continue to apply DCAA’s highly prescriptive and statistically flawed compensation benchmarking to contractor incurred costs. Apparently no one in DOD (DPAP in particular) have the wherewithal to direct DCAA to cease and desist. Equally apparent, DCMA will be forced with tough decisions in terms of how many more scarce resources to use to support contract disputes originating with DCAA’s statistically flawed analysis.
Mike Steen is a Emeritus Advisor with Redstone Government Consulting, Inc. and a specialist in complex compliance issues to include major contractor cost accounting & business system regulations, financial compliance, resolution of DCAA audit issues, Cost Accounting Standards application, litigation support, and claims preparation. Prior to joining Redstone Government Consulting, Mike served in a number of capacities with DCAA for over thirty years, and upon his retirement, he was one of the top seven senior executives with DCAA. Mike Served as a Regional Director for two DCAA regions, and during that time was responsible for audits of approximately $25B and 800 employees. In October 2001, he was selected for the Senior Executive Service and in 2006 he received the Presidential Rank Award. During Mike’s tenure with DCAA, he was involved in conducting or managing a variety of compliance audits, to include cost proposals, billing systems, Cost Accounting Standards, claims, defective pricing, and then-evolving programs such as restructuring, financial capability and agreed-upon procedures. He directly supported the government litigation team on significant contract disputes and has prepared and presented various lectures and seminars to DCAA staff and business community leaders. Since joining Redstone Government Consulting in June 2007, Mike has developed and presented training and seminars on Government Contracts Compliance to NCMA, Federal Publications Seminars and various clients. Mike also is a prolific contributor of written articles to government contracting publications, as well as to our own Government Insights Newsletter. Mike also serves as the director of our training service offerings, with responsibilities for preparing and developing course content as well as instructing our seminars to clients and general audiences throughout the U.S. Mike also serves as a faculty instructor for the Federal Publications Seminars organization. Education Mike has a BS Degree in Business Administration from Wichita State University. He is also a graduate of the DCAA Director’s Fellowship Program in Management, and has a Masters Degree in Administration from Central Michigan University. Mr. Steen also completed a number of OPM’s management and executive development courses.