DCAA (Defense Contract Audit Agency) recently issued its annual listing of contractors who have not submitted their annual incurred cost proposals for fiscal/calendar years 2014 and earlier. As you know, annual incurred cost submissions are due within six months following the completion of the fiscal year. For calendar year contractors, that would be June 30th. Therefore, contractors on the "list" are pushing nine months overdue for the 2014 submissions and longer for submissions prior to 2014.
These listings of "recalcitrant" contractors have had inaccuracies in the past so contractors are encouraged to review the listing. Discrepancies should be discussed with the cognizant auditor and/or contracting officer.
The listing also discusses the process for unilaterally establishing contract costs/indirect rates when submissions are not received.
Whether to apply a unilateral cost decrement, and how much to apply, are judgments at the discretion of the Contracting Officer. Upon request, audit teams should provide support to assist the Contracting Officer with applying a unilateral contract cost decrement. Audit teams should provide the Contracting Officer with all information that is relevant to the contractor's delinquent CFY (contractor fiscal year), including billing deficiencies, incurred cost audit experience, etc. Upon request, audit teams may offer for the ACO's consideration a calculated unilateral contract cost decrement based on relevant historical questioned costs.
As a last resort, (DCAA) is furnishing DCMA with a total contract cost decrement that the Contracting Officer may consider when no relevant history exists. The current rate, updated this year is 16.4 percent, based on an Agency-wide analysis.Contractors need to avoid situations where the Agency-wide decrement is applied. This decrement is not simply a reduction of an indirect rate but is applied to the total costs billed by the contractor under its cost-type contracts. Obviously, a 16.4 percent decrement will eat up any fees earned on the contract(s) and then some.
If you're looking for someone to help prepare your incurred cost submission, give us a call.