Defense Contract Audit Agency's Annual Report

Yesterday we discussed a provision included in the 2012 NDAA (National Defense Authorization Act) that extended the compensation cap from the top five senior executives to all contractor employees. There is another provision that will be of interest to Government contractors - one that requires DCAA to prepare an annual report of the activities of the Agency during the previous fiscal year.

The annual report must include, at a minimum,

• a description of significant problems, abuses, and deficiencies encountered during the conduct of contractor audits:
• statistical tables showing the total number of audit reports completed and pending, the priority given to each type of audit, the length of time taken for each type of audit, the total dollar value of questioned costs, and an assessment of the number and types of audits pending for a period longer than allowed pursuant to Agency guidance.
• a summary of any recommendations of actions or resources needed to improve the audit process
• any other matters considered appropriate.

The report must be submitted within six months after the close of the fiscal year and must be made public within 60 days after that.

Its is the first bullet that should concern contractors because it will require the exercise of judgment in determining "significance" and some definitions for "problems", "abuses", and "deficiencies". Although we don't expect that contractors will be specifically named in the report, the names of miscreants tend to somehow become public anyway. It is also more likely than not that this information will be included in the Government's past performance databases for source selection decisions.