DCAA/DCMA Viewpoint
If you look through the DCAA audit guidance and the DCMA Contractor Purchasing System Review guidance, you would think that the Government is only concerned with a Commercial Item Determination when the purchase value exceeds $2M. This is all based on commerciality being an exception to the requirement for certified cost or pricing data at FAR 15.403-1(b)(3) & (c)(3).
So, what is the real FAR expectation?
FAR 52.244-6(b) requires contractors at all tiers to incorporate, to the maximum extent practicable, commercial items or non-developmental items as components of what is delivered to the Government. Neither DCAA nor DCMA test or even consider this requirement – we assume they think if there is no opportunity to question cost, why bother. FAR 52.210-1(b) requires contractors to conduct market research to determine if commercial items are available to meet their contract requirements.
So, what is in this for the Contractor?
Documenting purchases below $2M as commercial allows the contractor to flow down a limited number of Government specific contract clauses and apply industry standard commercial acquisition methods. This can significantly increase the number of vendors willing to support the contractor’s purchasing requirements. A larger vendor base can improve your competitive position.
Is there anything else to consider or remember?
Documentation – Use your market research to support your documented commerciality determination. Make sure it tells a story of how you made the determination, not simply a statement that something is commercial.
Pricing – Just because what you are buying is commercial does not by default make the price fair and reasonable. Both DCAA (especially DCAA) and DCMA like to question purchases at any value that do not include a documented price analysis supporting a fair and reasonable price is being paid.
Redstone GCI is available to assist contractor’s in assessing their purchasing policies and practices to ensure you will meet the DCMA/DCAA expectations. Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Government’s expectations in applying FAR and DFARS purchasing requirements.
John is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to the DFARS business systems, CAS Disclosure Statements, and DCAA/DCMA compliance preparation, advisory, and defense. Prior to joining Redstone Government Consulting, John served in a number of capacities with DCAA/DCMA for more than 30 years. Upon his retirement, he was based in Texas as an SES-level Corporate Audit Director for DCAA, managing a staff of 300 auditors at one of the largest DOD programs. Professional Experience John began his career in the late 80s working in the Clearwater, FL audit office and over the next three decades he progressed through a number of positions within both DCAA and DCMA with career highlights as DCAA Program Manager at Ft. Belvoir, Chief of Technical Programs Division, Deputy Assistant Director-Policy, Director of the DCMA Cost and Pricing Center, the SES-level Lockheed Martin Corporate Audit Director, and Director of Integrity and Quality Assurance. John’s three decades of experience in performing and leading DCAA auditors and DCMA reviewers provides a wealth of expertise to our clients. John’s role, not only in the performance of audits, but also in the development of audit policy affords him unique insights into the defense of audit findings and the linkage of audit program steps to the underlying regulatory framework. He is an expert in FAR, DFARS, and other agency acquisition regulation, as well as a subject matter expert in the Cost Accounting Standards having reviewed and provided audit feedback on many of the largest and most complex cost accounting practices during his tenure with the DCAA. John’s tenure with DCAA and DCMA came at a critical time during each agency’s history where a number of changes were occurring such as the response to the ICS backlog, development of audit approaches to the DFARS Business Systems and implementation of new audit initiatives as a result of Congressional oversight through the NDAA process. John’s leadership at the DCMA Cost & Pricing center saw oversight of all major DOD pricing actions, leadership of should cost review teams, the Commercial Pricing group and many other areas of strategic value to our clients. His involvement in these and other Agency initiatives is of great value to our clients due to his in depth understanding of DCAA and DCMA’s internal policy directives. Education John holds a Master of Business Administration and a B.A. in Accounting from the University of South Florida. Certifications Certified Information Systems Auditor State of Alabama Certified Public Accountant