Accounting System, Cost And Accounting, DCAA Relations, Department of Defense News, Incurred Cost Proposals

Latest DOD Office of Inspector General’s report is a Minefield for Contractors

The latest DOD Office of Inspector General (OIG) audit of DCAA and DCMA ‘s work on Contractor Business Systems creates and minefield of questions and dangers for contractors.

Let start with the largest bomb:

IF you take the report as whole, if DCAA finds problems with your business systems to include accounting estimating, compensation, etc.., DCMA should wrap the entire process up within 30 days of DCAA’s report.

Literally, this means this 30 day deadline includes full implementation and audit of the contractor’s corrective action plan.

Well, that is just fine and dandy until you consider the fact that the DCAA Director defends the decision to wait three years to start the follow-up audit as reported by the OIG:

“The Director, DCAA, agreed in principle that follow-up audits should be promptly initiated after the contractor implements the corrective actions and sufficient information exists to confirm that corrective actions are sufficient. DCAA plans to schedule an audit in FY 2014. However, the Director disagreed that it is unreasonable for the FAO to take 3 years to perform a follow-up audit of significant business system deficiencies.”

 

Here is the OIG’s counter response and a nest little table on how long it took to even start the follow-up audits.7:

However, the contractor had notified the Government that the corrective actions for all systems were completed as of January 2012, yet the DCAA FAO does not plan to compete the follow-up audits until 2015. The following table shows the actual dates of the contractor’s notification and the estimated dates for completing each follow-up audit.

Table 4. Time Elapsed Between Notification of Contractors’ Corrective Actions and DCAA’s Follow-Up Audit

Business System Contractor Notification of Corrections Estimated Completion of Follow-up Audit Time Between Notification and Estimated Completion
Compensation System November 3, 2010 June 30, 2015 4 years, 8 months
Billing System May 23, 2011 No Estimate (June 2014 start) At least 3 years, 1 month
Accounting System July 20, 2011 April 15, 2015 3 years, 9 months
Estimating System January 9, 2012 April 15, 2015 3 years, 3 months

 

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