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Thursday, December 10, 2009

Resolving Contract Audit Recommendations

DoD issued guidance concerning the resolution of significant audit report recommendations when the contract auditor and contracting officer disagree on those recommendations. In cases where the contracting officer does not include at least 75 percent of the audit recommendations in his/her negotiation objectives, the issues can be elevated to succesively higher levels until there is agreement. The policy, however, makes it very clear that it is the contracting officer, not the contract auditor, who is responsible for determining fair and reasonable prices:

It is neither expected nor necessary that the contracting officer and the contract auditor agree on every issue. They have different, yet complementary, roles in the process. It is expected that the auditor and contracting officer will work together recognizing that it is the contracting officer's ultimate responsibility to determine fair and reasonable contract values.

This policy only applies to proposals greater than $10 million and does not address many other types of audits where there are significant disagreements between contracting officers and contract auditors. For example, audits citing deficiencies in contractor internal control systems would not fall under these guidelines. Yet, the resolution of systemic deficiencies are often times difficult because of the subjective nature of the audit "findings". Other examples of contract audits not covered by this policy are audits for compliance with TINA (Truth in Negotiations) and audits of incurred costs.

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