DCMA Rebuilding its Cost/Pricing Capability

Last September, DoD revised its guidance to limit contracting officer requests for audits of contractor proposals to fixed price proposals over $10 million and cost-type proposals over $100 million. According to one estimate, this is going to leave about $92 billion (in 2009 dollars) unaudited by DCAA. Stepping in to fill that gap to review under threshold pricing actions will be the Defense Contract Management Agency (DCMA). The Agency has been working for some time now to rebuild its cost/pricing capability.

In 2010, DCMA re-established pricing branches at all of its Contract Management Offices (CMOs) and hired 30 new pricing branch chiefs. It also hired 150 new cost/price analysts and cost monitors by May of last year with a target to hire a total of 200 by the end of the fiscal year. It also has plans in place to hire 100 new engineers to provide technical support to negotiations.

DCMA also established a new cost and pricing center. It created five hub sites to assist CMOs with pricing expertise, training and specialized assistance/surge capacity. It hired experts in CAS and indirect costs.

DCMA claimed to have improved its forward pricing rate engagements. The Cost and Pricing Center now reviews all FPRAs (forward pricing rate agreements) prior to finalization. It issued guidance to re-establish formal cost monitoring programs and it plans to engage with its customer base (buying commands) to increase their involvement in the forward pricing rate process.

Additionally, DCMA is developing a capacity to conduct overhead should cost reviews and it is creating training programs to meet the demands of an influx of new cost/pricing employees.

DCMA also has plans for this fiscal year for rebuilding its cost/pricing capability. It plans to hire an additional 100 cost/pricing personnel (that's above the 200 hired in 2010). It plans to provide more internal oversight of the FPRA process, improved advance planning of overhead should cost reviews, improve relations with DCAA by ensuring priorities are better communicated and coordinated between the two agencies, increase coordination with program offices in forward pricing rate and proposal pricing collaboration efforts.

The question remaining to be answered is whether DCMA can deliver its new cost/pricing advisory services in a timely manner.