What gets reported? Where does the report go? Who has the obligation or responsibility to resolve the issues? We'll try to answer these and other questions.
The following is recorded in the DCAA Contract Audit Manual.
When contractor personnel deny or unreasonably delay access to records needed for audit, auditors should immediately notify and thoroughly discuss the issue with responsible contractor officials authorized to make decisions. Reasonable effort should be made to resolve the issue in a timely manner at the lowest possible DCAA and contractor management level. If access is denied following the initial conference with the contractor, the auditor should follow the procedures cited in DCAA Instruction No. 7640.17.
When implementation of DCAA Instruction No 7640.17 does not resolve contractor denial of access to records, then the regional office should consider requesting Headquarters to subpoena the records in accordance with DCAA Regulation No. 5500.5. The DCAA Director is authorized to subpoena contractor documents and records needed to audit costs incurred under flexibly priced Government contracts and subcontracts, and to audit the accuracy, completeness, and currentness of certified cost or pricing data used for negotiated Government contracts and subcontracts.As a practical matter, the Agency will not be issuing any subpoenas. They tried a couple of times and failed to enforce it.
Now for the consequences. If the issue is not resolved, auditors are instructed to take the following arbitrary and unilateral actions.
When the contractor denies the auditor access to records/data, the costs affected by the denial should be questioned under price proposals. Such costs should also be questioned on progress payments and suspended under cost-reimbursement contracts.
A contractor's denial of access to records may be so extensive that it is impractical to perform any audit or determine an amount affected by the denial. In such a case, immediately notify all procurement and contract administration activities that may be involved with the subject audit and request their assistance.
In addition, the auditor should recommend suspension of payments on all affected contracts until the access to records problem is resolved.These measures can severely disrupt a contractor's cash flow and could imperil contract performance. Contractors do not want to take "access" issues lightly.
Tomorrow we will look at DCAA Instruction No. 7640.17 in more detail. This instruction provides the specific steps for documenting, elevating, and resolving access issues.