Wednesday, February 8, 2012

Adequate Accounting System

A company in Florida protested the award of an Army contract to a competitor based on a number of factors including the notion that the competitor did not have an "approved" accounting system, as required by the terms of the solicitation. The protest claimed that although DCAA (Defense Contract Audit Agency) had performed a limited scope survey in 2009, the competitor had subsequently and fundamentally changed its accounting system and DCAA had not yet completed its audit of the new accounting system.

Concerning the new accounting system, the administrative contracting officer (DCMA or Defense Contract Management Agency) had "approved" it pending DCAA verification that the company had implemented some corrective actions and that those actions were effective. In awarding the contract, the Army relied on the contracting officer's approval of the new accounting system.

The Comptroller General's office that adjudicated the protest, found that the Army reasonably concluded that the winning bidders accounting system was adequate for determining costs in a cost-type contract. The determination of a prospective contractor's responsibility rests within the broad discretion of the contracting officer, who, in making that decision, must necessarily rely on his or her business judgment. The Comptroller General found no basis to question the Army's judgment and denied the protest.

You can read the entire case here.

The basics for an adequate accounting system are laid out in DFARS (DoD FAR Supplement) 252.242-7006.

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