DCAA’s Authority for Interim Vouchers
DCAA is given the authority under DFARS 242.803(b) to approve interim vouchers for DoD. DFARS 242.803(b) states DCAA will approve interim vouchers using sampling methodology for provisional payment after a prepayment review. This also includes reviewing completion/final vouchers and issuing a DCAA Form 1, Notice of Contracts Costs Suspended and/or Disapproved when DCAA questions the allowability of costs.
DCAA Recent Guidance on Voucher Sampling
DCAA recently issued Memorandum for Regional Directors (MRD) 21-OTS-001 dated January 15, 2021 providing guidance on cost voucher reviews. The purpose of the guidance is to better align risk and efficiencies with DCAA resources. In the past, DCAA selected high dollar vouchers and then sampled low dollar vouchers in order to review a voucher at each contractor location. However, DCAA’s MRD states they are aligning risk with DCAA resources. So, the number of vouchers reviewed will be dependent on DCAA’s staff and contractor risk. So, you don’t want to get on DCAA’s radar by having a voucher rejected and have DCAA expand the number of vouchers reviewed at your contractor location. Prepayment voucher reviews will generally slow down the payment process.
DCAA does review all first-time vouchers submitted for all new contractors and all new contracts and then performs a sampling methodology after the first voucher on each contract is reviewed.
Common Billing Issues
If you know what the common issues for rejected vouchers are up front, you can tackle them in advance of submitting your voucher.
One of the most common reasons for rejection of a first voucher is provisional billing rates are not used/established. Provisional billing rates should be established in advance of a contractor’s FY or before the first government contract billing is submitted if it occurs during the fiscal year. Provisional billing rates are established by DCAA or the Administrative Contracting Officer depending on who establishes the final indirect rates at your company. Since DCAA/ACO do not always take the lead on this process, contractors can submit rate information in advance of their FY to DCAA/ACO to establish provisional billing rates.
Other common issues that can result in a rejected voucher are:
- Using outdated billing rates (e.g., last year’s billing rates for current year costs).
- Billing not in compliance with contract terms (e.g., ceiling rates on indirect costs, special payment instructions, not billing by CLIN when funding is by CLIN, billing too much fee when there is a cap of 85%, etc.).
- Billing in excess of the funded amounts.
- Billed costs do not reconcile to the accounting records.
- Billing rates were revised during the year but only applied prospectively to cost after the change when the rates should have been applied to the year to date billed costs.
- Submitting inadequate or incomplete documentation to support the voucher.
- Adjustment vouchers were not submitted to adjust for final indirect rates.
Be Proactive – Check Your Voucher and Contract Terms
If your company is planning to submit a first-time voucher, be proactive and coordinate with DCAA/ACO to make sure you have or will have approved provisional billing rates prior to your billing. One of the best ways to stay on top of contract terms is to prepare a contract brief. See our blog on contract briefs: Are Contract Briefs Necessary?. Take time to review the voucher before submitting for common billing errors. Accurate billing is the contractor’s responsibility. Rejected vouchers will increase risk and can result in additional DCAA oversight and potential accounting system inadequacies.
Redstone GCI is available to assist contractor’s in voucher preparation, contract briefs, and rate information to support billing rates. Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Government’s expectations in applying FAR Part 31, Cost Principles, the requirements of FAR 52.216-7 Allowable Cost and Payments clause, and completing incurred cost proposal requirements.
Lynne is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to Commercial Item Determinations and support, Cost Accounting Standards, DFARS Business System Audits, Proposals, and Incurred Cost. Prior to joining Redstone Government Consulting, Lynne served in several capacities with DCAA and DCMA for over 35 years. Professional Experience Lynne began her career working with DCAA in the Honeywell Resident Office, Clearwater, FL in 1984. Lynne’s experience included various positions which involved conducting or reviewing forward proposals or rate audits, financial capability audits, progress payments, accounting and estimating systems, cost accounting standards, claims and disclosure statement reviews. She is an expert in FAR, DFARS, CAS and testified as an expert witness. Lynne assisted in drafting the commercial item guidance for DCAA Headquarters. Lynne was assigned as a Regional Technical Specialist where she provided guidance to 20 field offices on highly complex or technical issues relative to forward pricing, financial capability or progress payment issues. As an Assistant for Quality, she was involved in reviewing and ensuring audit reports were in compliance with policy and GAGAS as well as made NASBA certified presentations to the staff including but not limited to billing reviews, CAS, unallowable cost and progress payments. To enhance her experience in government contracting, Lynne accepted a position with DCMA in 2015 as part of the newly organized DCMA Cadre of Experts in the Commercial Item Group. This included performing reviews of prime contractor’s assertions and/or commercial item determinations as well as performing price analyses. Lynne was a project lead and later became a lead analyst where she engaged with the buying commands on requests and reviewed price analysis reviews performed by a team of 5 analysts. She also assisted the DCMA CPSR team relative to commercial items and co-instructed the Commercial Item Training presented to DCMA. Education Lynne earned a Bachelor of Science Degree in Accounting from the University of Central Florida. Certifications State of Florida Certified Public Accountant State of Alabama Certified Public Accountant Defense Acquisition Workforce Improvement Act (DAWIA) Level III- Auditing DAWIA Level III – Contracting