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DEFENSE CONTRACT AUDIT AGENCY (DCAA) FAQ

08 Apr 2018 11:58 | Albert Renteria (Administrator)

We are on the fast track for 2018 and one of the biggest concerns is post contract audits by DCAA and the adverse impact it can have on your federal contracting opportunities. 

I am dedicating this blog to a fellow opps4vets member Tom Rosenbury CEO of http://omnevia.com/about_us.php that has shared his current ongoing audit experience with DCAA. 

I asked Tom if he would want to start a blog to share experiences and he agreed. Once Tom posts his experience I will email all of our members to chime and learn along the way for those not audited yet and those that have been so we can be best prepared when the time comes. 

In the meantime do visit https://opps4vets.com/Badge/ to download your opps4vets badge and proudly post on your website, social media or print material. 

I posted below the DCAA FAQ from their website http://www.dcaa.mil for your reading, learning  and I invite you to post comments and experience. Semper Fi, Al

Albert R. Renteria

Founder opps4vets

Frequently Asked Questions: Contractor

1. The DCAA office code in my contract was left blank. How do I find out the DCAA DoDAAC (DoD Activity Address Code) office code that I should be submitting my provisional billing rates and interim vouchers to?

Answer: If the DCAA DODAAC is not listed in your contract, you can access our Locator tool from the top menu on the Home page of our website. This application allows you to find the Field Audit Office based on Commercial and Government Entity (CAGE) code, Data Universal Numbering System (DUNS) number, or Zip code. Once you find your responsible DCAA Field Audit Office, you can click the office name to view the DoDAAC used in the Wide Area Work Flow (WAWF) or other electronic billing systems. Use the contact information to confirm with the audit office that the code is correct. If the contract is classified, please call (703) 227-9056 or (703) 227-9045 for assistance with that type of contract.

2. Where is the best place to get an overview of the DCAA audit process and a general understanding of the submissions that I will need to prepare?

Answer: The Audit Process Overview—Information for Contractors Manual under the Guidance tab on DCAA’s website is a good place to start. The Manual provides an introduction to DCAA, describes the attributes of an adequate labor and accounting system, price proposals, Cost Accounting Standards, contract financing and interim and final vouchers, and incurred cost proposals.

3. What are the requirements for an adequate accounting system that support cost-reimbursable contracts?

Answer: Consult the Audit Process Overview—Information for Contractors Manual (under the Guidance tab on DCAA’s website), specifically Enclosure 2, “Preaward Surveys of Prospective Contractor Accounting System.” After reading Enclosure 2 and consulting with your contracting officer, DCAA recommends that you complete the Preaward Accounting System Adequacy Checklist and submit it to your contracting officer. In addition, you should refer to DFARS 252.242-7006, Accounting system administration, for requirements for an acceptable accounting system. Your contracting officer will determine the need for a DCAA audit. Contracting officers can request DCAA audit services.

4. Does DCAA recommend any commercial off-the-shelf accounting system software packages?

Answer: No. DCAA neither recommends nor approves any specific accounting system vendor software packages.

5. Prior to submitting my contract pricing proposal, forward pricing rate proposal, and incurred cost submission to the contracting officer, I want to perform a self-assessment on the adequacy of these submissions to make sure they meet regulatory requirements. Are there any tools available to help me prepare these submissions?

Answer: Yes. We have those tools and make them available on the website. One of the first steps that a DCAA auditor performs prior to starting an audit is to identify the adequacy of the contractor’s submission. The checklists that DCAA auditors use to assess the adequacy of contract pricing proposals, forward pricing rates, and incurred cost submissions are available under the Checklist and Tools tab on DCAA’s website. DCAA developed the checklists based on regulatory requirements. DCAA also developed a model for incurred cost submissions under the Checklist and Tools tab on DCAA’s website. After the submissions are sent to the contracting officer, he/she will determine if an audit is needed. Contracting officers can request DCAA audit services.

6. I am bidding on a government contract. How can I get DCAA to audit my rates?

Answer: You do not need to take any step yourself. If your contracting officer needs rates from DCAA, he/she will request them.

7. I am a small business and I recently submitted a contract cost proposal to a Government Agency. I want to ensure that all my accounting systems meet DCAA requirements. Can I contact the local DCAA office in my area and schedule a preaward accounting system survey audit?

Answer: No, a contractor cannot request DCAA to perform an audit of his or her company. Your contracting officer will determine if a DCAA audit is required and, if so, the contracting officer will initiate the audit request.

8. I’m preparing my submission(s) (e.g. contract pricing proposal, forward pricing rates, incurred cost, etc.) and would like to ask the DCAA auditor some specific questions on my submission to make sure I’m on the right track. Will the DCAA auditor give me some specific advice on how to prepare my submission?

Answer: No, a DCAA auditor cannot provide specific advice to assist a contractor in preparing their submission because doing so would impair the auditor’s independence. Generally Accepted Government Auditing Standards (GAGAS/The Yellow Book) prohibits DCAA from providing advice to contractors on certain accounting or estimating matters. However, auditors may

provide general advice on what constitutes an adequate submission and answer general questions related to the acquisition regulations. To avoid any appearance of impairment to independence, auditors should always refrain from comments that could be construed as advising the contractor on how to develop its submission. Contractors should look under the “Guidance” and “Checklist and Tools” tabs on DCAA’s website for guidance about the adequacy of their specific submission.

9. I am trying to submit a voucher to DCAA using Wide Area Work Flow (WAWF) and the program is not allowing me to submit the voucher. How can I get help resolving this issue?

Answer: If you are having problems with submitting a voucher into WAWF you should contact your administrative contracting officer (ACO) or the WAWF Help Desk for assistance.

10. I submitted a billing/invoice to Wide Area Work Flow (WAWF) and it was rejected by the DCAA Field Audit Office. How can I resolve this issue?

Answer: Each DCAA Field Audit Office (FAO) has a point of contact to answer WAWF and billing questions. If you have questions on why the billing was rejected, contact your audit office and speak to the WAWF point of contact. You may determine your DCAA FAO phone number by accessing our Locator from the top menu of our website. This application allows you to find the Field Audit Office assigned to a given CAGE, DUNS, or Zip code.

11. Can DCAA grant an extension for submitting my final incurred cost rate proposal?

Answer: No. Extensions for submitting final rate proposals can only be granted by the administrative contracting officer per FAR 42.302 and FAR 42.705-1(b)(1)(ii). To locate your responsible administrative contracting officer, please contact the Defense Contract Management Agency (DCMA).

12. Who do I contact if I want to report fraud, waste, or abuse by a contractor?

Answer: Fraud, waste, or abuse complaints should be submitted to the DoD Office of Inspector General Hotline (http://www.dodig.mil/hotline) or (800) 424-9098.


Comments

  • 08 Apr 2018 17:11 | Erwin Rosenbury
    After successfully completing contract(s), DCAA stalling audit completion - two-years, so far. CO loved us. COR tech-rep loved us. Passed every pre-audit and audit during the contract, but final audit stalled? Uncontested contract delivery. World-record results.

    Company develops (R&D) electronics for DoD. I'm the inventor and owner. Our in-house accountant is a certified CPA with thirty years experience. Our Business Manager has thirty-five years in government contracting. Our Project Manager had forty-years in government programs and previously worked for SAIC’s famous founding CEO R. Beyster. My people are all top-notch and the books are spotless.

    We believe we've been blacklisted as having an "inadequate accounting system." DCAA can't find anything wrong, but keep asking questions every few weeks and won't pass us? Recent questions were down to $1.41 a discrepancy. Meanwhile, it costs us $thousands per month to keep staff waiting for $1.41 questions.

    One more odd thing - DCAA auditors asked for the schematics. Contract doesn't give them schematic-rights (we reserved all data rights as a small business). Why do auditors want schematics? Fishy. We've applied for many other contracts, but been denied. Plenty of new BAA's surfaced asking almost exactly what we'd already developed? We were verbally told we were blacklisted, but nobody will officially confirm it.

    We're just about bankrupt.

    This last part is tricky. If DCAA won't pass the audit, they could come back and sue for the full value of the contract. Thus, making the company a $2M liability. So, we're not looking for help getting new contracts until the books pass audit? We need help tracking down who blacklisted the audit and why (we believe roadblock's in DC, not in DCAA-Florida) and we need a pro-bono attorney presuming the roadblock can't be solved? Suggestions?
    Link  •  Reply
    • 09 Apr 2018 06:32 | Schuyler Jones
      Hi Erwin:

      This is a scary situation and environment. Sorry you guys have found yourself in this mud pit.

      My only recommendation for legal assistance is to reach out to your state's Bar Association. Many state associations have a "pro-bono" pool of volunteers that help address injustices of many forms. The really difficult part will be finding someone or a firm that understands the unique environment inherent in the federal sector.

      Best of luck!
      Link  •  Reply
      • 09 Apr 2018 08:25 | Erwin Rosenbury
        Thank you. Yes, with the added complexity of Federal Claims certification. Very few attorneys are certified to litigate in Federal Claims Court.
        Link  •  Reply
    • 09 Apr 2018 16:43 | Marc Goldschmitt
      A number of questions:
      - What do you mean by the term "blacklisted?"
      - Why aren't you looking for new contracts? Better to have to pass up one or two than to wait and start from scratch.
      - Unclear why you have staff sitting around waiting.
      - How much of your in-house CPA's experience is specifically with Government contracting and applicable charts of account?
      - Did you ask DCAA why your accounting system is inadequate?
      -
      Link  •  Reply
      • 09 Apr 2018 18:20 | Erwin Rosenbury
        1) We were told our accounting system was "inadequate" and that we wouldn't be able to start new contracts until that status changed. We applied for many contracts while under contract, but didn't receive any. This isn't proof, but we'd enjoyed a pretty high hit rate previously. Now zero.

        2) The most important reason for no new contracts is that as long as DCAA retains the power to "default" whole contracts or major reimbursements within a contract, that creates a liability. The company is essentially $2M in debt, due to the liability DCAA can create on a whim. Why would we invest one more penny in a company that could have its assets put in receivership on DCAA's whim?

        2b) This is our second run at this problem. We had a previous company that experienced the same issue. We hired the retired Director of the same DCAA office that blacklisted that previous company, who had worked his way up from auditor to Director over thirty-years. He'd been retired a couple years and there was no conflict, but he did know the personnel. He said the books were spotless. We ended-up suing DCAA on his recommendation. We put the previous company on the shelf for the same liability reasons and its sole function is to sue for relief. In that case, DCAA did default whole contracts and the company will bankrupt, unless the judge rules soon. Unlikely, since that case's been ongoing for six-years already (and our attorney is dead).

        So, we did take a new contract under a fresh new corporation. Omnevia. Similar to before, the CO and technical folks loved us, DCAA passed us with flying colors until the exit audit. Backing up to before the contract started, we asked the new sponsor to pre-inspect some of the larger objection'd cost items and they pre-approved them before we signed the contract. But, it hasn't helped. DCAA may have tied the old company to the new and stalled the audit for two-years since contract completion. We think they can't pass the new company without admitting their mistakes on the old company? We've answered every audit question. Not one objection so far, rather slow-walking questions for years. Same as last time. When we hire a lawyer, we presume they'll default the contracts, just as before?

        3) Staff is loyal. All but one have been working part time for free. Two-years for free. I love my staff. I didn't even ask, they just pitch in. I feel incredibly guilty that I'm wasting their time, because this doesn't appear to be going to end well. They are fully aware. They believe in the cause.

        4) CPA's been doing gov't accounting since 2007. It's why I hired the former Director of DCAA - a lifetime auditor who knows every aspect. Hired him for two-years. First year he reviewed the books and said we'd pass. We didn't. Had him take-over the second year and actually prepare and stand as corporate accounting representative through the audit. Failed again. That's when he recommended our first attorney (who died of cancer last year).

        5) We added up all DCAA's complaints for the first company and they totaled $2.18M out of $2.25M worth of three contracts. 97%. Gov't won't commit to specific objections pre-trial, but they "defaulted" whole contracts, so liability is for the full contract amount ($2.25M). This is why we won't pursue new contracts until the books are certified. The company owes the full contract amount on DCAA's whim and we can't get relief for decades.

        I should say, DCAA told us they liked nothing more than to delay small businesses in court. They said they had many companies still in litigation since the 1970's. I thought it an idle threat at the time, but not any more.

        Would be pleased to show you, but it's thousands of pages of evidence. Showed Albert a couple sample items. Have a summary document for the previous company's case, but it's twenty-plus pages with 130 evidentiary documents (maybe a thousand pages?). Took the previous attorney a year before he believed us. Then he got cancer and died. Nobody can believe the gov't could act this way for no reason? Until they do...
        Link  •  Reply
  • 02 May 2018 12:50 | Gerald Baldy
    I do not know what kind of contract you had sounds like a CPFF ( Cost plus Fixed Fee). I don't believe you can fix the situation you are in from an accounting perspective at this point. Your best solution is through the the Legal system, unfortunately. One thing you can do to minimize your exposure in the future is to engage the contracting officers with Fixed Fee contract(s). It does not preclude players from using DCAA to obtain or contain valuable products or services (as seems to be your circumstance) but, it will curtail DCAA in many other ways that your experienced accounting group will be aware of. Under normal circumstances you protect yourself on the front end of government contracting,however, in your case I don't think you could have. If you decide you are going to try again go with a fixed fee vehicle and a solid legal group in addition to your solid accounting group. I know this advise does nothing for your circumstance but, it may help other veteran firm(s) to protect themselves on the front end of their contracting endeavors. One way to do that is to choose the types of contracts you are going to involve your firm in carefully, CPFF contracts are the worst!!
    Link  •  Reply

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