Tuesday, November 17, 2015

"Eliminating Requirements" Study - Reduce Duplicative Efforts in Rate Reviews

Yesterday we began a series discussing the recently issued "Eliminating Requirements" report (as it has become known). If you missed Part 1, click here to begin your reading. As we mentioned, this series will be focusing on recommendations pertaining to contract auditing and management, the topic that garnered the most comments from industry. Yesterday we discussed contractor complaints about the FAR requirements for maintain original paper copies of scanned images for a period of one year. The report did not find the requirement onerous and is not seeking changes to the regulations.

Today we want to discuss a complaint raised by multiple contractors (recall that the 12 largest DoD contractors participated in the study) over the duplication of efforts by DCMA (Defense Contract Management Agency) and DCAA (Defense Contract Audit Agency) in reviewing/auditing FPR (Forward Pricing Rate) proposals. These contractors asserted that having both DCMA and DCAA review forward pricing rates is generally unnecessary since payments based on estimates are corrected when actuals become available.

The report authors submitted the contractor concerns to DCMA and  DCAA. Both Agencies noted the recent workload realignment policies that gave DCMA the single agency responsible for issuing all forward pricing rate recommendations for contractors where DCMA is the cognizant contract administration office. That should reduce duplicative effort. DCMA noted that forward pricing rates are used for more than just billing purposes. They are used to establish fair and reasonable cost determinations on fixed priced contracts and profit/fee considerations on all contracts.

DCMA noted that the contracting officer may need to request audit assistance from DCAA but if it has the capability necessary to perform the required analysis, it does not seek assistance from DCAA.

Nevertheless, both DCMA and DCAA agreed that additional (but unspecified) streamlining opportunities appear possible so with that admission, the report recommended that these opportunities be addressed by the Directors of DCMA and DCAA and be provided to DoD. Now both DCAA and DCMA are on the hook to conjure up some "opportunities for streamlining" that they can present to DoD.

Go to Part 3.

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