DCAA employees have now received their long-awaited letters proposing an 11 day furlough - one day a week from July through September of 2013.   Since this furlough is cumulatively over 80 hours, employees will also lose an accrual of sick and vacation pay.  In addition, according to Jessica Wright, acting undersecretary of Defense for Personnel and Readiness, furloughs may not end in September.  She stated that looking at the FY 2014 budget numbers suggested by the White House and both sides in Congress, DoD may very well have to plan for another round of sequestration and furloughs.  Under the federal process, once an employee receives a proposal for furlough, an individual can present a case to the deciding official on why they feel like they should be excepted from the furlough. Then the deciding official will make a final decision.  Since this is a DoD initiative and exceptions apply to very few DCAA employees, the furloughs are expected to be upheld.

Why am I mentioning all of this?  Because the furloughs will delay audit work in both obvious and not so obvious ways.  The most obvious is that there will be 20 percent fewer audit hours available to be incurred.  Maybe not so obvious is the impact on productivity of the hours worked.

The DCAA guidance dictates that all furlough days be taken one per week, each occurring on a Monday or Friday.  Already the “discussions” over who is going to be off when have begun.  In addition, rumor has it that the Union is trying to motivate employees to challenge the furloughs by requesting exceptions.  Fewer productive hours worked.

Employee morale is at an all-time low.  One long term DCAA manager calls this a “low point in my career.”  Fewer productive hours worked.

How about all of the senior employees already eligible to retire?  What incentive is there for them to continue to work when 20 percent of their pay is cut?  When a supervisor retires, typically they will leave a backlog of work to be reviewed.  It will take weeks to fill the vacancy and then an inexperienced supervisor will be expected to supervise employees with less experience, review the backlog, and give current audit advice – all with much less knowledge than the person they replaced.  The person who left them the backlog.  More time spent “learning” and fewer productive hours worked.

For contractors who want incurred cost audits finished so they can close out contracts, or system follow up audits performed to clear up system deficiencies, or proposals audited for contract award, this could not be worse news.  In an effort to finish audits quicker, auditors may request shorter response times from contractors, without regard to the fact that the auditors will be there fewer hours to review the responses.  Many audits already are awaiting supervisory/management review before issuance.  Now supervisors/managers will be busy adjudicating which employees will work which days and responding to requests for exceptions – all in fewer hours per week.

The only silver lining to this cloud is that the statute of limitations may run out on more and more incurred cost proposals, thus exempting them from audit.

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Written by Cheryl Anderson

Cheryl Anderson Cheryl Anderson has been a Director with Redstone Government Consulting, Inc., since 2013. She provides Government Contract Consulting services to our government contractors primarily related to equitable adjustment claims, terminations, CAS Disclosure Statements, and DCAA audit expectations. Prior to joining Redstone Government Consulting, Cheryl served in a number of capacities with DCAA for more than 35 years. Upon her retirement, she was a regional audit manager with DCAA. Professional Experience Cheryl began her DCAA career in 1978 as an auditor-trainee with the Ingalls Resident Office in Pascagoula, Mississippi. After instructing at the Defense Contract Audit Institute for four years, Cheryl returned to the Eastern Region in 1990, holding various audit positions before ultimately becoming a Regional Audit Manager in August, 2005. Cheryl had overall management responsibility for audits performed by approximately 200 employees. During her tenure with DCAA, Cheryl was involved in conducting or managing a variety of compliance audits; to include cost proposals, incurred cost submissions, systems, Cost Accounting Standards, claims, defective pricing, financial capability and agreed-upon procedures. Cheryl directly supported the government litigation team on a contract dispute and has prepared and presented various lectures and seminars to DCAA staff. In addition, Cheryl served as an instructor for the Government Audit Training Institute for more than 20 years. Cheryl currently specializes in preparing clients for more complex DCAA audits, providing advice on FAR cost principles and contracts regulatory provisions, and in assisting clients in anticipating and addressing audit. Education Cheryl earned a Bachelor of Science degree in Accounting from Auburn University at Montgomery and a Master of Business Administration degree from Wichita State University. Cheryl also has completed courses at OPM’s management and executive development centers, and at the Federal Executive Institute. Certifications State of Georgia Certified Public Accountant State of Alabama Certified Public Accountant

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Sequestration, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support