But will the provision last?
Earlier this month, the DoD Office of Legislative Council sent to Congress its second package of legislative proposals for inclusion in the Fiscal Year 2018 NDAA (National Defense Authorization Act) that, if passed, would repeal that particular provision - even before it becomes effective.
That provision currently reads:
(f) Auditing Requirements. -There is, of course, a long way to go before the 2018 NDAA becomes a reality and there is no certainty that this provision will ever be included in any version of the NDAA. But, it does highlight DoD's true position on reliance on commercial audits.
(1) Notwithstanding any other provision of law, contractors with the Department of Defense may present, and the Defense Contract Audit Agency shall accept without performing additional audits, a summary of audit findings prepared by a commercial auditor if -
(A) the auditor previously performed an audit of the allowability, measurement, assignment to accounting periods, and allocation of indirect costs of the contractor; and
(B) such audit was performed using relevant commercial accounting standards (such as Generally Accepted Accounting Principles) and relevant commercial auditing standards established by the commercial auditing industry for the relevant accounting period.
(2) The Defense Contract Audit Agency may audit direct costs of Department of Defense cost contracts and shall rely on commercial audits of indirect costs without performing additional audits, except that in the case of companies or business units that have a predominance of cost-type contracts as a percentage of sales, the defense Contract Audit Agency may audit both direct and indirect costs.