We've been working our way through a report on a study conducted by DoD in conjunction with one of its captive FFRDCs (Federally Funded Research and Development Centers), the Institute for Defense Analysis. We've been focusing on recommendations pertaining to contract auditing and management - the topic that seemed to be of most interest by the 12 largest DoD contractors that were part of the study. So far we've looked at contractor recommendations to eliminate the one year record retention period for documents that have been scanned (that's a no go) and recommendations to eliminate duplicate efforts by DCAA and DCMA in reviewing forward pricing indirect expense rates (that's been sent back for further study). You can read Parts 1 and 2 of this series by clicking here and here, respectively.
Today we will look at a recommendation by multiple contractors for DCAA and DCMA to aggressively address contract closeout backlogs through a risk-based approach. These contractors have noted that despite renewed attention to the problem by DCAA and DCMA, contract closeout backlogs have not improved.
DCMA and DCAA both disagree with contractors' assertions that no progress has been made in reducing the contract closeout backlog. Even so, both Agencies admit that contract closeout backlogs continue to be an issue and both DCAA and DCMA are "open to considering additional initiatives" to clearing out the contract closeout backlog. To this end, the study recommends that DoD establish a team to assess contract closeout initiatives proposed by contractors.
Two of the initiatives recommended by contractors include (i) "en masse closeouts" that gives the Government 0.005 percent (i.e. one half percent) of contract values as protection against potentially unallowable costs and (ii) give authority to the head of an agency to close out contracts that are administratively complete, was entered into 10 or more years ago, and has an unreconciled balance of less than $100 thousand.
Go to Part 4.