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Government Contract Pricing Blog

DCAA Audits in 2020 – Techniques to Reduce Risk

Posted Nov 20, 2020  by  Holly DeHesa

As many contractors are aware, DCAA audits have not experienced slowdowns from Coronavirus restrictions—DCAA has even embraced “virtual auditing.” The memorandum sent out earlier this year gave guidance and workarounds to auditors to help keep the workload up.   


Then
, in late September, Acting Principal Director of Defense Pricing and Contracting, Mr. Kim Harrington issued a memo announcing a new DCMA Defective Pricing Team to support DCAA Truth in Negotiations Acts (TINA) compliance audits. With that additional support, DCAA auditors are not only continuing to push their workload forward but looking to get back into more defective pricing audits.  

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So, with these updates, what can contractors expect?  

  • As most of these audits are conducted virtually, expect an increase in questioned and unsupported costs. Since audits cannot be on-site, the back and forth might increase.  Remember, auditors have report deadlines they have to meet, and it is more important to meet those deadlines than to wait for the contractor to provide supporting documentation. 
  • An increase in contractor costs and resources to support these audits and help bring the new officers up to speed on the pricing of the contract.   

Techniques to Reduce Risk on DCAA Audits  

A hint: If you commit to documenting everything, training and managing personnel properly, and following through with system improvements, you will meet all DCAA compliance requirements. 

  • Ensure the processes around rate buildups are consistent and accurate.  
  • Have or create a system that confirms all team members have defined roles for cost entry, review, and approval processes.  
  • Check all documentation and make sure nothing was missed during negotiations.  
  • Provide sufficient documentation for ALL costs.  
  • Maintain traceability through historical archives:  
    • Cost and pricing data for seven years after projects close. 
    • No-bid cost documentation for a minimum of one year. 

 

Resources 

Consulting Firms 

Aronson - with over 55 years of experience, Aronson LLC provides a comprehensive platform of assurance, tax, and consulting solutions to today's most active industry sectors and successful individuals. 


How ProPricer Can Help 

Navigating the complexities of DCAA compliance and audits can be challenging. In addition to useful processes and procedures with clearly defined roles and responsibilities for project control, project personnel need software tools that can help them create quality data easier and faster. 

 

Identification of direct costs, the rate structure, as well as indirect costs and unallowable costs can be challenging to navigate, particularly for those without much prior experience. With ProPricer’s database pricing software, every  piece of information related to your cost proposals is saved. The ability to store, report, and later access your historical data leaves little room for misunderstandings between your estimators and DCAA auditors.

 

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PROPRICER software is built from the ground up to be compliant and to handle even your most complex government-required tasks. PROPRICER understands the demands on contractors and for the past 35+ years has delivered estimating and pricing software that helps them stay competitive and makes their lives easier. If you’re looking for a compliant software that will save you time, money, and resources, or if you’re just weighing your options, please contact us for more information. Let our experts help you find the right fit for your needs.

 

 

Topics: best practices, compliance, DCAA

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