Redstone Government Consulting Blog | Government Compliance Training (6)

The continuing trend toward the diminution of pay and benefits for Government employees will have a negative impact on DCAA for many years to come.  Over recent years, and especially the past few, DCAA has lost and will continue to lose its experience and knowledge base.  Once those who can retire and those who can find employment elsewhere do so, the “preeminent” government audit agency with the primary goal of contract audits will be a mere shell of its former self, and many would argue that has already come to pass.  Pay freezes, furloughs, changes in retirement benefits, and overall lack of leadership have had devastating effects on the DCAA auditor rolls and contractors are now seeing the impact of this “Brain Drain.”  These actions, coupled with the Agency’s overreaction to recent GAO and DoD-IG criticism, have resulted in at best inappropriate interpretations and at worst inaccurate uses of government regulations and internal DCAA guidance by auditors with very little experience or direction that in past years was provided by more senior people.

As one more indication that DCAA is the puppeteer and the DAR Council are the puppets, the DFARS Final Rule (DFARS Case 2011-D042) requiring a proposal checklist was issued on March 28, 2013.  The proposed checklist and the substance of the final checklist were eerily similar to DCAA’s proposal checklist, which “was” an unconstrained embellishment of anything actually required in the regulations.  The checklist is form over substance and just one more unnecessary document solely to make life easy for DCAA (although not quite as bad as FAR requirements for contractors to provide DCAA with SEC filings as if DCAA auditors are incapable of retrieving these from the readily accessible internet).  The absurdity of the DFARS proposal adequacy checklist rule is self-evident in one public comment and the DAR Council response:

DPAP (Defense Procurement and Acquisition Policy) recently issued a class deviation—Prohibition on the Use of Cost-Type Contracts for Production of Major Defense Acquisition Programs.  The “prohibition” actually provides for exceptions including certifications (provided to congressional defense committees) of the need which justifies a cost-type contract and steps to limit cost type pricing to portions of the contract which require this contract type.  The class deviation, by reference to a DOD Instruction, defines certain key terms including a major defense acquisition.

The first in a series of videos designed to give an overview of the incurred cost submission.  This video covers the basics of the Incurred Cost Submission, such as it's purpose, the regulation requiring the ICS and when the submission is due.  Be sure to attend our upcoming Incurred Cost Submission Webinar series for more information on preparing your Incurred Cost Submission, ensuring it's adequacy with the DCAA adequacy checklist and working with DCAA auditors during the audit of your ICS or contact us to see how we may be able to assist.  We'll be announcing the dates of the ICS Webinar series soon, so sign up below to receive a notification when the course dates have been posted.

As 2013 begins, the most significant challenge for all government contractors is sequestration (or major government agency budget reductions). We do know that there will be fewer procurement dollars and in doing its part to reduce government spending, DCAA (Defense Contract Audit Agency) has one clear self-declared mission, “Protecting the Taxpayer” even when such protection is inconsistent with applicable regulations as well as published decisions related to contract disputes.  Although there are ultimately more than four challenges, we believe the following categories top the list where DCAA assertions are  ”out on a regulatory limb” in challenges for government contractors.