DCAA Compliance

The Government employees a small army of auditors to ensure the public receives fair and reasonable prices for the products and services it receives.  The premier audit agency is the Defense Contract Audit Agency (DCAA) where other federal, state and local agencies may use other auditors whose level of knowledge varies widely.

We are uniquely qualified to help contractors be in compliance with DCAA requirements.  Our staff has spent years on “both sides of the table”  - most are former DCAA auditors, supervisors and managers where we have a unique understanding of the way DCAA conducts business.  As auditors we have audited contractors in all areas DCAA conducts its audits such as forward pricing rates and forward pricing proposals, incurred cost proposals, requests for equitable adjustments and claims, termination settlement proposals, CAS compliance, expert testimony for the government and all systems audits such as accounting system, purchasing system, estimating system, earned value management systems, material management accounting system.  We also have over 25 years experience helping clients ensure they are in compliance with DCAA requirements.

Our DCAA compliance consulting activities closely mirror the types of audits contractors will face – forward pricing proposals for all types of contracts, provisional billing rate proposals and incurred cost proposals affecting cost reimbursable contracts, special audits for termination of convenience or requests for equitable adjustments and system audits addressing contractors’ accounting, estimating, materials management, purchasing, earned value management practices.  To ensure our clients’ system would be considered adequate by DCAA our consulting activities range from conducting “mock audits”, reviewing proposals, preparing them and helping clients liaison with DCAA.

Though ideally clients contact us before there are adverse finding we commonly are engaged in DCAA consulting activities after a negative finding has surfaced.  Whether it be adverse audit finding on forward pricing proposals, incurred cost submissions or claims and terminations assertions of unallowable costs put forth by the government can be very expensive to contractors, not to mention the imposition of penalties on certain unallowable costs.  In addition, adverse audit findings of inappropriate cost allocation practices, inadequate accounting, estimating, purchasing or EVMS systems can also result in failure to be awarded contracts, suspension of payments or hefty penalties.   Sometimes adverse audit findings are justified, sometimes clearly unjustified and much of the time quite gray.  Justified positions should be identified, clearly unjustified positions should be challenged with the intention of eliminating the effect while gray areas can be significantly mitigated if handled correctly.

Examples of our DCAA compliance consulting services in responding to adverse audit finding include:

• Assessment of the adverse audit finding, usually at no charge
• If the adverse audit finding is not justified, developing a strategy for challenging the audit finding
• Drafting position papers defending contractor’s practices and challenging audit assertions
• Negotiating with audit management and contracting personnel to reach an acceptable settlement

Example of other DCAA compliance consulting services we conduct to proactively ensure clients are in compliance with DCAA requirements include:

• Conducting “mock audits” where we put on our “audit hats” and perform abbreviated audits you can expect DCAA to perform
• Evaluation of selected elements of systems such as internal controls, adequacy of written policies, indirect costs rates, etc.
• Helping implement recommended “fixes” to deficiencies such as preparing written policies and procedures