Tuesday, February 7, 2017

DCAA Requests for Extra-Regulatory Data

Every Government contractor with cost-type contracts is familiar with the requirement at FAR 52.216-7(d)(2)(iii) that requires them to submit an indirect cost rate proposal within six months after their fiscal year ends. This requirement continues for the duration of the contract. That same FAR clause even specifies the elements that comprise an "adequate" indirect cost rate proposal. There are 15 items listed, delineated as (a) through (o). There are also a listing of 15 optional items - also delineated as (a) through (o) - most of which will be N/A (not applicable) to small Government contractors.

Most Government contractors with cost-type contracts are also familiar with DCAA's (Defense Contract Audit Agency) "ICE Model" for preparing the required indirect cost rate proposal. DCAA's ICE (Incurred Cost Electronically) Model is an Excel-based workbook with tabs that correspond to the required and optional components of FAR 52.216-7(d)(2)(iii) and (iv). The ICE Model is not mandatory for contractors - Government contractors can format their own indirect cost rate proposal so long as it adheres to the FAR requirements. For practical purposes however, most contractors utilize or modify the DCAA model.

DCAA periodically updates its ICE model. The current version is 2.0.1f dated October 2016. On its website, DCAA states that "Contractors should ensure they use the most current version of the ICE model when preparing their incurred cost proposals". That might make sense in some cases, especially where a calculation error or a "link" is corrected. However, DCAA also makes modifications to solicit information that is not specifically required by FAR.

For example, FAR 52.216-7(d)(2)(iii)(j) (corresponding to DCAA ICE Model Sechedule J) requires a listing of subcontracts awarded to companies for which the contract is the prime or upper-tier contractor. The listing should include

  • prime and subcontract numbers
  • subcontract value and award type
  • amount claimed during the fiscal year
  • subcontractor name, address, and point of contract information

In December 2015, DCAA published ICE Version 2.0.1e which modified Schedule J to "require" additional data elements that are not required by the FAR. These elements include the following:

  • subcontractor point of contact
  • subcontractor point of contact telephone number
  • subcontractor DUNS number
  • subcontract period of performance

Even though DCAA refers to the foregoing as "required" data elements, they are definitely not required by FAR and DCAA does not have the regulatory authority to make them so. Although there in nothing particularly objectionable to furnishing this information, it does create more work for the contractor that hasn't been vetted through the regulatory process.

Many contractors have had their annual indirect cost submissions declared inadequate by DCAA and returned for correction. We have found in many cases, the rejections related to optional schedules rather than mandatory schedules or schedules were not in a format that DCAA expected. Our advise to contractors receiving such rejections is to compare the reason(s) for the rejection to the specific delineated requirements of FAR 52.216.7(d)(2)(iii) and go from there.

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