On May 20th, the Defense Contract Audit Agency (DCAA) formally instructed its auditors to discontinue any self-initiated financial condition risk assessments and financial capability audits of Government contractors and prospective Government contractors.
From now on, DCAA will perform financial capability audits when specifically requested by the Contracting Officer and only when there are unique circumstances that require technical skills that only DCAA possesses. The guidance does not provide any explanation or examples of what those unique circumstance might be. Perhaps it will become evident in time.
To fill the void, DCMA (Defense Contract Management Agency) established its Financial Capability Group to perform all financial analysis for the Department including preaward financial analysis, post award financial surveillance, and monitoring of contracts receiving financing payments. We've seen examples of the data requested by DCMA when performing preaward financial capability reviews and its pretty much the same information that DCAA might have requested. The big difference is that the DCMA group sits in DC and requires the contractor (or prospective contractor) to mail in a boatload of data whereas DCAA required far less in the way of copies because it performed its reviews at the contractor facility.
DCAA will continue to perform financial capability reviews for non DoD agencies where DCMA has not already performed a review of the particular contractor/prospective contractor.
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