As I've mentioned before in our blog, Russ Farmer of ReliAscent (Russ is a part owner and co-founder of ReliAscent) is the chairman of the joint NDIA/SBTC committee that is working on small business issues with the DCAA. The efforts of this committee in their first year have been significant in helping small business's not only voice their concerns to the DCAA but to work out issues with the DCAA. The committee has only been working with the DCAA for a year now but the progress is significant and this should give small business concerns a reason for optimism in government contracting in the future.
Some of the work by the committee with the DCAA in the first year focused on a couple of critical areas:
- Allowability of Consultant Costs
- Incurred Cost Audit consistency
- Punitive actions by the DCAA as a result of business challenging audit findings
As I mentioned in a blog a few weeks ago, there have been some significant changes, for the better, to clarify and make more consistent the way the DCAA views consultant costs. There also has been good dialog around Incurred Cost Report audits. Since these audits are as much as 7 years overdue, these issues are not trivial as interpretations, regulations and general business conditions may be much different today than they were when the reports were submitted. Attached is a brief list of some of the positive steps the DCAA is taking, most as a result of working with the NDIA/SBTC committee.
- The DCAA is adding focused training sessions for field supervisors relative to incurred cost reports
- Updated Incurrred Cost Audit sample guidance and formal MRD 13-PPD-021(R) (Memorandum for Regional Directors) which includes a reduced criterion level of selection for audit of "low-risk" small business contractors
- Revised the definition and guidance for auditing consulting costs which will be published shortly
- The DCAA has started working with the state PTACs (Procurement Technical Assistance Centers) to provide small business training across the US
- DCAA training is emphasizing the use of critical thinking skills and alternative audit procedures as better approaches to satisfy their audit objectives, especially in cases where specifically requested documentation was not available
- The DCAA designated a Small Business liaison for small business to take issues that have not been satisfactorily resolved with the auditor, supervisor or branch manager
As you can see, significant progress indeed. There are already more items on the committee's agenda to work on in the coming year with the DCAA including working with the DCAA to clarify the position on patent costs especially on SBIR/STTR awards. This positive relationship will only serve to help small business in the long run.