Monday, May 6, 2019

CORs Have a Role in Reviewing Incurred Cost

Typically, incurred cost audits and audits of interim requests for payment (i.e. voucher reviews) are performed by the contract auditor (DCAA or Defense Contract Audit Agency for DoD contracts) and reports are sent to the contracting officer for resolution if there are any findings noted.

There is another party that is often overlooked in the review process that is regularly called upon to render assistance in the audits. These are the COR's or Contracting Officer Representatives.

Contracting officer representatives (CORs) are individuals appointed by the contracting officer (CO) to assist in the technical monitoring or administration of a contract. Although CORs can be employed on any type of contract, they are more common in complex and long-term services, supply, and/or construction contracts. These are the on-site people charged with monitoring progress, performing inspections, correcting deficiencies among many other responsibilities. A COR does not have the authority to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contracts.

A recent memorandum issued by the Under Secretary of Defense for Acquisition and Sustainment lists some additional responsibilities that CORs are to assume relating to review and approval of incurred costs. If you have a COR assigned to one or more of your contracts, you can expect the following procedures will be performed periodically to assist the auditors in their review process.

  1. Ensure that costs included on an invoice are consistent with the COR's records of monitoring contract performance. For example, if a contractor is claiming overtime and the COR 'knows' from his monitoring activities that overtime was not worked, such information should be elevated to the CO.
  2. Ensure that hours worked equal hours invoiced. This is probably not a precise calculation but one of general magnitude. If the COR knows that a contractor has 100 on-site, he/she would not expect to see a voucher with 5,000 hours for the month.
  3. Verify that materials and services required by the contract were in fact delivered and accepted by the Government. So, for example, if the contractor bills for 1,000 yards of ready-mix, there should be contemporaneous records to show that 1,000 yards of ready-mix were delivered to the job site.

Any information developed from these procedures are to be elevated to the CO and the contract auditor for further consideration and evaluation.

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