Monday, June 20, 2016

Small Exception for Prohibition against Reimbursable Audit Wrok

The National Nuclear Security Agency (NNSA) is a semi-autonomous agency within the U.S. Department of Energy responsible for enhancing national security through the military application of nuclear science. NNSA maintains and enhances the safety, security, and effectiveness of the U.S. nuclear weapons stockpile without nuclear explosive testing, works to reduce the global danger from weapons of mass destruction, provides the U.S. Navy with safe and effective nuclear propulsion, and responds to nuclear and radiological emergencies in the U.S. and abroad.

As we reported on these pages, the 2016 National Defense Authorization Act included a provision that prevented the Defense Contract Audit Agency (DCAA) from performing any services (both audit and non-audit services) for any reimbursable customers until it cleared out its backlog of incurred cost audits of defense contractors. Reimbursable customers in this case is any agency that is not part of the Department of Defense.

One of the unfortunate side-effects of that new statute is agencies having an obvious defense mission, like the National Nuclear Security Agency, were suddenly bereft contract audit services. NNSA, because it had been tucked under the Department of Energy rather than the Department of Defense, was one of those Agencies.

The Senate version of the Fiscal Year 2017 National Defense Authorization Act (NDAA) seeks to remedy that situation, at least as it pertains to NNSA. DCAA is continues to be precluded from performing any reimbursable audit services except for the NNSA. The specific exception reads:
(2) Exception for National Nuclear Security Administration. Notwithstanding paragraph (1), the Defense Contract Audit Agency may provide audit support on a reimbursable basis for the National Nuclear Security Administration.
We have heard (unofficially, of course) that DCAA is making steady progress in reducing its incurred cost backlog. If so, DCAA may soon be back performing reimbursable audit services.

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