Wednesday, May 16, 2012

Adequacy Checklist for Incurred Cost Proposals

Yesterday we mentioned that DCAA (Defense Contract Audit Agency) recently revised its adequacy checklist for incurred cost proposals. It represents a major rewrite of the previous adequacy checklists (there have been several over the years). This one is organized so that it closely corresponds to the requirements of FAR 52.216-7. However, in some cases, the checklist requirements go beyond the FAR requirements.

For example, FAR 52.216-7 requires a schedule that shows claimed G&A (General and Administrative) expenses by element of cost as identified in accounting records. DCAA takes this requirement much further by requiring explanatory notes for any adjustments from booked expenses. Now the auditor will certainly need to have this information in order to conduct his/her audit. Its a valid inquiry. However, the contract clause simply does not require the information as part of an adequate claim. There are several other checklist items that require information or analyses beyond what FAR requires.

We would advise contractors to provide the information identified in the checklist. Its a "provide it now or provide it later" situation. It will expedite things to provide it now and not face the prospect of having your incurred cost proposal returned as inadequate.

As you review the checklist, if you have any questions about the propriety of a checklist item or just want clarification, call us or drop us an email.

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