NDIA & SBTC Committee to address DCAA issues for Small Business

A while back I wrote a blog about our Russ Farmer heading a joint committee of the SBTC and NDIA to take small business concerns to the DCAA and DCMA for resolution.  At that time the committee was asking for input from Small Business of concerns or problems that they were having with primarily the DCAA but also any issues they might have with DCMA.  As you might imagine, there are some issues out there.  The first priorities of the committee were to 1) establish a relationship primarily to identify and resolve issues that were common, broad-based and significant and 2) to define a path forward to work on resolution of consultant cost conflicts on dated outstanding incurred cost audits.  The issue on the consultant costs has 3 primary issues:

  1. Extensive  expanded requests by auditors for documentation far greater and much more detailed than experienced for numerous years before
  2. Lack of understanding by the auditor of business operations
  3. Deeming consultant cost documentation as being insufficient to support the costs to be allowable, although the same documentation had been accepted by the DCAA for numerous years previously.

This week the committee will be meeting with upper level people from both the DCAA and DCMA.  The topics for this week's meeting include:


·         Catching up on Incurred Cost Proposals

o   What is DCAA's plan to get caught up (and time frame)

o   Have expanded the audit scope which is taking more time to audit

o   Doesn’t help to have the GAO issue scathing reports on DCAA inadequacies

·         Inconsistency of auditors in applying FAR 31

o   Auditors are requiring a change to indirect cost pools and what goes into those pools after years of doing it the same way.   "We just had our accounting system approved by DCAA in March but then in August we finally were contacted by DCAA about our billing rate proposal for the same year.  The DCAA auditor wanted us to discontinue use of our material and subcontract burden even though we have had this structure for years..." 

·         Communication of expectations by DCAA

o   "We have been receiving approved billing rates from DCAA for years.  These rates have been used until new billing rates are approved, which usually takes a number of months into the new year.  DCAA issued a letter approving our billing rates but then stated these rates were only valid for that fiscal year.  Why are changes like this not communicated ahead of time if there are new guidelines? "

·         Process for “internal” (within DCAA) appeal by small businesses that don’t agree with auditor findings

o   "An auditor determined our accounting system was “inadequate” and held up an award of a cost type contract because one of our employees didn’t properly document a time sheet change where they had charged the wrong charge number." 

o   "How can we appeal an auditor’s decision?" and

o    "Why does/should a “minor” procedural violation have such a major impact on a small business?  There used to be a “conditional approval” for situations like this.  Why was it terminated?"

The issues of small business are being addressed with the DCAA.  We are very optimistic that this committee will have a positive effect on small business in government contracting.  If you run across an issue that you think needs attention, please don't hesitate to let us know.


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