Tuesday, June 26, 2018

Wouldn't Contractors Love to Have This Contracting Officer Overseeing Its Government Contracts

Is DCAA (Defense Contract Audit Agency) irrelevant? DCMA (Defense Contract Management Agency) must think so. Here's a case that represents an egregious waste of taxpayer funds.

Back in 2009, the Air Force partially terminated a contract for convenience. The part that was terminated involved the purchase of titanium for F-22 aircraft fuselages from one of the contractor's subcontractors.

In 2012, the Air Force Termination Contracting Officer (TCO) requested that DCAA (Defense Contract Audit Agency) conduct an audit of the subcontractor's termination settlement proposal.

In 2014, DCAA finally issued its audit report on the subcontractor's termination settlement proposal. DCAA identified $826 thousand of the $1.9 million claimed as questionable for not complying with FAR (Federal Acquisition Regulations). $354 thousand of the questioned amount were costs incurred after the notice of termination and therefore unallowable. The remaining $472 thousand were unallowable according to other FAR provisions.

DCMA (Defense Contract Management Agency) - the Contracting Officer - was responsible for negotiating the termination settlement proposal and for addressing the $826 thousand questioned by DCAA.

In 2016, The DCMA contracting officer, without considering any of DCAA's questioned costs, authorized the full $1.9 million termination settlement proposal.

Later in 2016, a Hotline Complaint was filed with the DoD Office of Inspector General (DoD-IG) alleging that the DCMA contracting officer's settlement was improper because it did not consider the DCAA audit findings (wonder who might have filed this hotline complaint). After receiving the hotline complaint, the DoD-IG initiated an investigation.

The DoD-IG found that the DCMA contracting officer and her supervisor were negligent in negotiating proposed termination costs. For her part, the contracting officer,

  • did not have any experience in negotiating DCAA-questioned costs and prior to this termination settlement proposal, she performed only contract administrative tasks, such as maintaining spreadsheets of invoices billed by the contractor
  • did not have any experience with contracting actions greater than $750 thousand, which did not require negotiations involving DCAA audits and
  • was not aware of the requirements for appropriately considering and documenting her actions on DCAA-questioned costs.
That should not have happened with adequate supervision, correct? Didn't happen. The DoD-IG also found that the supervisor (since retired) was negligent as well: The supervisor did not
  • document why he approved the action
  • document whether he advised the contracting officer to sonsult with or engage DCAA during negotiations
  • document whether he advised the contracting officer to seek legal counsel given her decision not to uphold the DCAA audit
  • require the contracting officer to prepare a price negotiation memorandum documenting the reasons for not upholding the DCAA questioned costs.
DCMA, as part of corrective action, rescinded the contracting officer's warrant, sent her to more training, and reviewed all of her past actions. DCMA also asked for some money back but the subcontractor refused claiming that it had a signed contract modification.

If you want to read the full investigative report, click here.

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