DCAA Update John Gilbert, Regional Audit Manager DCAA Central - - PowerPoint PPT Presentation

One Agency, One Team, One Direction

John Gilbert, Regional Audit Manager DCAA Central Region

DCAA Update

One Agency, One Team, One Direction

One Agency – One Mission

DCAA Mission and Organization Incurred Cost Forward Pricing Agency Initiatives GFY 2020 Priorities

Page | 2

One Agency, One Team, One Direction

DCAA Mission

As a key member of the government acquisition team, we are dedicated stewards of taxpayer dollars who deliver high quality contract audits and services to ensure that warfighters get what they need at fair and reasonable prices.

Page | 3

One Agency, One Team, One Direction

Department of Defense Organization

Secretary of Defense Deputy Sec of Defense Department

• f Army

Procurement Department

• f Navy

Procurement Department

• f Air Force

Procurement Under Secretary (A & S) DCMA Under Secretary (Comptroller) DCAA Inspector General

Page | 4

Our placement under the DoD Comptroller assures our independence from

• ffices that have procurement responsibility within the services.

One Agency, One Team, One Direction

Defense Contract Audit Agency

Approximately 5, 000 employees located at over 300 offices throughout the United States and

• verseas.

Responsibilities and Duties:

Perform all needed contract audits for DoD Perform accounting and advisory services to DoD (and Civilian when requested) acquisition and contract administration components during all contract phases:

Preaward Contract Execution Settlement (Contract Closing)

Page | 5

One Agency, One Team, One Direction

DCAA Reorganization

Flexibility and responsiveness to our customers One senior executive point of contact for customer/major contractor leadership Developing a more efficient, effective, and innovative audit process

Building synergy Challenging prior processes

Improving communication and collaboration Proven results – significant improvement in audit timeliness

Page | 6

One Agency, One Team, One Direction

Washington Oregon California Nevada Idaho Montana Wyoming Colorado Utah New Mexico Arizona Texas Oklahoma Kansas Nebraska South Dakota North Dakota Minnesota Wisconsin Illinois Iowa Missouri Arkansas Louisiana Alabama Tennessee ‐ Michigan Upstate New York Vermont ‐ Georgia Florida Mississippi Kentucky ‐ South Carolina ‐ North Carolina ‐ Maryland Ohio Delaware Indiana West Virginia New Jersey Connecticut ‐ Massachusetts Maine Rhode Island Virginia ‐ New Hampshire Alaska

3 Regions, Field Detachment, 4 Corporate Audit Directorates

Page | 7

Hawaii

Europe

Puerto Rico

Washington DC

Downstate New York ‐

Field Detachment ‐ 351 not shown above North Asia South Asia Pennsylvania

CAD ‐ Boeing, Honeywell: St. Louis, MO CAD ‐ Raytheon, General Dynamics, BAE: Lowell, MA CAD ‐ Northrop Grumman: McClean, VA CAD ‐ Lockheed Martin: Ft. Worth, TX Field Detachment

Western Central Eastern

Central Region: Irving, TX Eastern Region: Smyrna, GA Western Region: La Palma, CA

One Agency, One Team, One Direction

Director

Anita Bales

Deputy Director General Counsel

Eastern Region

Smryna, GA

Central Region

Irving, TX

Western Region

La Palma, CA

Field Detachment

Chief of Staff

Operations

• Ft. Belvoir, VA

Human Capital and Resource Management

• Ft. Belvoir, VA

Policy and Plans

• Ft. Belvoir, VA

Integrity & Quality Assurance

• Ft. Belvoir, VA

Inspector General

Legend Director’s Office Headquarters Regions

• Corp. Audit Directorates

Corporate Audit Directorate Lockheed Martin

McLean, VA

Corporate Audit Directorate Raytheon, General Dynamics & BAE

Lowell, MA

Corporate Audit Directorate Boeing & Honeywell

• St. Louis, MO

Corporate Audit Directorate Northrop Grumman

McLean, VA

Page |8

One Agency, One Team, One Direction

DCAA’s Involvement in the Acquisition Process

Page | 9

Interim Payment Monitoring Truth in Negotiations Compliance Business System Compliance Preaward Accounting System Audit Disclosure Statements Price Proposal Audit CAS Compliance Cost Realism Audit Real Time Labor and Material Audits Forward Pricing Rates/Factors Audit Incurred Cost Audit Cost/Rate Information Equitable Adjustment Audit Termination Audits Audit of Contractor Claim Final Price Submissions Assist in Negotiations Final Vouchers

RFP Proposal Contract Contract Contract Contract Contract RFQ Submitted Negotiations Award Performance Physically Closed Complete

One Agency, One Team, One Direction

DCAA Products and Services

Page | 10

Prior to Contract Award During Contract Performance During Contract Close‐Out

Complete Proposal Audit Interim Payment Monitoring Termination Audits Examination of an entire proposal - All cost elements Processing & testing of vouchers submitted for payment and/or

paid on contracts, to include examination of progress payment requests

Examination of contractor proposals for costs related to contract termination Audit of Part of a Proposal Business System Compliance Final Price Submissions Examination of one or more cost elements or parts of a cost element Examination of contractor’s systems and internal controls for compliance with DFARs criteria & early Identification & reporting of system deficiencies Effort expended to accumulate audit findings and conclusions from all audits related to cost incurred for a specific fixed-price incentive or fixed-price re- determinable contract or subcontract Audit of Forward Pricing Rates CAS Compliance & Disclosure Statement Final Vouchers Examination of a contractor’s direct and indirect rates Examination of contractor compliance with applicable CAS standards, reporting of noncompliance(s), & examinations of Cost Impact Proposals as well as support for Disclosure Statement determinations Support for Contracting Officer assessment of final contract vouchers to allow for timely contract close-

• ut

Cost Realism Audit Real-time Labor & Material Audit Examination to ascertain potential cost understatements and overstatements Examination of critical contractor internal controls over labor and material costs accumulated, reported and billed on contracts Cost / Rate Information Incurred Cost Audit Sharing of contractor’s direct and indirect rates available in related audit files. Annual examination of contractor costs incurred on all contractor flexibly priced contracts. Pre-Award Accounting System Audit Truthful Cost or Pricing Data Compliance Examination of prospective contractor’s accounting system Examination of contract awards for compliance with truth in negotiations requirements Fact-Finding/Negotiation Support Audits of Equitable Adjustments/Claims Advisory effort to support contracting officer’s negotiations Examination of contractor proposals for Equitable Price

Adjustments

One Agency, One Team, One Direction

Incurred Cost Process

Incurred cost proposals will be evaluated upon receipt for adequacy in accordance with FAR 52.216‐7 Adequate incurred cost proposals exceeding $250 million in auditable dollar value will be audited Other incurred cost proposals received and determined adequate will be assessed for risk and classified as high

• r low risk

High‐risk adequate incurred cost proposals will be audited Low‐risk adequate incurred cost proposal will be sampled using sampling parameters

Page | 11

One Agency, One Team, One Direction

Incurred Cost Years Completed

Page | 12

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 FY 15 FY 16 FY 17 FY 18 FY 19 Years Closed

One Agency, One Team, One Direction

Forward Pricing Strategy

DCMA/DCAA Joint Communication Plan

Early Coordination Responsive to the Buying Commands Eliminate Duplication Tailoring Audits to meet the Customers needs Timely Completion of Audits

Page | 13

One Agency, One Team, One Direction

Forward Pricing Proposal Audits Elapsed Days

85 86 83 85 82 80 81 82 83 84 85 86 87 FY 15 FY 16 FY 17 FY 18 FY 19

Page | 14

One Agency, One Team, One Direction

Current Agency Initiatives

Meeting the 2018 NDAA Incurred Cost Requirements Reducing unsupported costs reported in forward pricing audits Contractor business system initiative DCAA services available to buying commands for Other Transaction Agreements (OTAs) DCAA’s Industry outreach initiative

Page | 15

One Agency, One Team, One Direction

Incurred Cost Initiatives in Response to the 2018 NDAA

Section 803 – Performance of Incurred Cost Audits

Requires adequacy assessment within 60 days of receipt of submission Audits must be completed within one year of receiving an adequate submission unless a waiver is obtained No multi‐year audits unless requested by the contractor Comply with commercially accepted standards of risk and materiality in the performance of each incurred cost audit by October 1, 2020 Use of qualified private auditors to maintain an appropriate mix of Government and private sector capacity to meet the current and future needs of the Department of Defense for the performance of incurred cost audits by April 1, 2019

Page | 16

One Agency, One Team, One Direction

Reducing Unsupported Costs In Forward Pricing Audits

Inadequate prime/higher tier contractor cost

• r price analyses were the leading cause of

unsupported costs in proposal audits. DCAA revised our guidance in this area which should reduce the amount of costs classified as unsupported in our audit reports.

Page | 17

One Agency, One Team, One Direction

Reducing Unsupported Costs In Forward Pricing Audits

DCAA will not classify costs as unsupported unless unable to obtain sufficient appropriate evidence through performing alternative procedures. DCAA will report FAR 15 noncompliance with completion schedule for amounts associated with incomplete or inadequate cost or price analysis.

Page | 18

One Agency, One Team, One Direction

The Department of Defense Federal Acquisition Regulation Supplement (DFARS) Contractor Business Systems (CBS) regulations became final February 24, 2012

Recognized six contractor business systems Established business system audit criteria Established contractor responsibility for acceptable systems that comply with DFARS criteria Established Government Withhold Authority for systems determined to not be in compliance with applicable criteria

Page | 19

Contractor Business System Initiative

One Agency, One Team, One Direction

The 6 DFARS identified systems are:

Defense Contract Audit Agency Cognizance

DFARS 252.215‐7002 – Cost Estimating System Requirements DFARS 252.242‐7004 – Material Management and Accounting System DFARS 252.242‐7006 ‐ Accounting System Administration

Defense Contract Management Agency (DCMA) Cognizance

DFARS 252.234‐7002 – Earned Value Management System DFARS 252.244‐7001 – Contractor Purchasing System Administration DFARS 252.245‐7003 – Contractor Property Management System Administration

Page | 20

Contractor Business System Initiative

One Agency, One Team, One Direction

Contractor Business System Initiative

Audits of CBS adds value to the acquisition process. Contractor business systems produce critical data that help contracting officers negotiate and manage defense

• contracts. These systems and their related internal controls

act as important safeguards against fraud, waste, and abuse

• f federal funding. Federal and DoD acquisition regulations

and DoD policies require that DoD take steps to complete the audit for certain business systems. As part of DCAA’s commitment to CBS oversight, DCAA is planning on increasing the number of CBS audits performed.

Page | 21

One Agency, One Team, One Direction

Post Award Accounting System Audit

Performed to examine smaller less complex contractor accounting systems after contract award Usually performed when:

A follow‐up to the preaward survey is recommended A preaward survey was not performed prior to award and the contracting officer determines that an audit is now required to support contract requirements Risks are identified by the auditor or contracting officer

Page | 22

One Agency, One Team, One Direction

DCAA Services Available on Other Transactions Agreements (OTAs)

Page | 23

What are OTAs?

Legal acquisition instruments other than contracts, grants, or cooperative agreements Not subject to the FAR, its supplements, or laws that are limited in applicability to procurement contracts

DCAA established an initiative to determine what services we can provide to buying commands for OTAs.

One Agency, One Team, One Direction

DCAA Industry Outreach Initiatives

Page | 24

DCAA has several programs underway to support

• ur Industry Outreach Goals. Some of the

current programs are as follows:

Strategic Action Team Small Business Assistance

(Contact Information: dcaa-oal-smallbusinessfocalpoint@dcaa.mil)

Industry Briefings

One Agency, One Team, One Direction

FY 2020 Priorities

FY 2020 moving forward – increasing the Agency audit effort in:

Business Systems Audits Truth in Negotiations Audits Real‐time Labor and Material Audits Paid Voucher Audits

Page | 25

One Agency, One Team, One Direction

Questions

Page | 26