DCAA, DCMA and the small business government contractor (You).

As we did a webinar this morning for quite a few SBIR award winners from the Navy regarding the DCAA and the DCMA, it occurred to me that there could be a lot of small business government contractors that are slightly confused about these agencies roles.  I thought it would be useful to go over a little bit of the discussion from the webinar here. 

The DCMA stands for the Defense Contract Management Agency.  The DCMA is a relatively new agency, created in 2000.  It has roots back to the early 1960's when the Defense Supply Agency (DSA) was created to provide common services to DoD components.  In the mid 60's the contract administration activities of the DSA were transferred to the Defense Logistics Agency (DLA).  The DLA performed most of the contract administration on defense contracts until the mid 1990's when the DLA formed a sub-group called the Defense Contract Management Command (DCMC).  Several years later the DCMA was formed as a separate agency to serve all of the DoD for Contract Administration services.  The stated mission of this agency is:

We provide Contract Administration Services to the DOD Acquisition Enterprise and its partners to ensure delivery of quality products and services to the warfigher, on time and on cost.

Their primary function is to help with contract management before the award by helping construct solicitations, helping select qualified suppliers, identifying potential risks and helping write contract.  After the award they primarily monitor contract performance and contractor management systems to ensure cost, product performance and delivery are in compliance with the terms and conditions of the contract. 

The DCAA, on the other hand, stands for the Defense Contract Audit Agency.  The DCAA was formed in 1965 as a single agency within the DoD to perform provide contract audit services.  The stated mission of the DCAA is:

Defense Contract Audit Agency (DCAA), while serving the public interest as its primary customer, shall perform all necessary contract audits for the Department of Defense (DoD) and provide accounting and financial advisory services regarding contracts and subcontracts to all DoD components responsible for procurement and contract administration.  These services shall be provided in connection with negotiation, procurement and settlement of contracts and subcontracts to ensure taxpayer dollars are spent on fair and reasonable contract prices.  DCAA shall provide contract audit services to other Federal agencies as appropriate.

It is important to recognize that the DCAA mission is to provide "advisory" role as the FAR designates the ACO (normally a part of the DCMA) as having the primary responsibility for the negotiation, administration and settlement of contracts and subcontracts.  To summarize, in a general sense, the DCAA provides audits to the DCMA in order for the contracting officer to make informed decisions that are in the best interest of the buyer, the taxpayer.  I think it is also worth noting that some of the responsibilities may be confusing.  For instance, in a 2011 Memorandum from the Under Secretary of Defense, the responsibility for Financial Capability Reviews and Audits was shifted from the DCAA to the DCMA.  This was to allow the DCAA to concentrate on larger issues that would have a bigger impact on the savings to the taxpayer.  The same memo also transferred the responsibility for Purchasing System Reviews from the DCAA to the DCMA.  As a result, the DCMA added additional personnel in order to perform these tasks. 

As you can see, in general, the DCMA has responsibility for the performance of the contract and most of the decisions affecting the contractor.  The DCAA performs audits and relays this information to the ACO, who can make decisions affecting the contractor.  It is important to keep this in mind and really satisfy both agencies as they both have a bearing on the success of the government contractor.  Please let me know if you would like to discuss in more detail as this is a very superficial overview.



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