The Defense Contract Audit Agency (DCAA) was founded in 1965 under Robert McNamara, the Secretary of Defense from 1961 to 1968. Its function is to perform all contract audits for the Department of Defense. Prior to 1965, each U.S. Military branch had separate contract audit functions and regulations.Read More
DCAA Compliance Blog
Your Source for DCAA & FAR Compliance News and Discussion
ReliAscent® LLC is the only government contract accounting firm that specializes in all aspects of government contracting compliance. From our DCAA compliant accounting services, to monthly government contract accounting for all government agency awards, contract management & administration, and financial services & planning, our goal is to ensure the success of our clients, and all small business government contractors and grantees.
In our DCAA Blog, we discuss the latest government contracting news from the Federal Government, the DCAA, and DCMA, as well as promotions offered by ReliAscent, and helpful tools and resources for contractors.
We hope you will visit and take part in the discussions on our blog on a regular basis. If you ever have any questions or would like to discuss how our experts can help, do not hesitate to contact us at any time!
The Defense Contract Audit Agency was created in 1965 to help the Government assure that they are making the best use of taxpayer dollars on the contracts they enter into. As a result, they have been auditing contractors ever since for the Department of Defense (DoD) and even some other Government Agencies. Their audit services have grown to include all kinds of business system audits from Floorcheck Audits (timekeeping function) to full financial system audits. Last year the results of the DCAA were staggering, according to director Pat Fitzgerald:
Running a small business is a challenge. I saw a statistic the other day that less than half of small businesses survive to see their 5th birthday. If it isn't enough facing challenges of cash flow, business development and infrastructure to confront the new business owner there can be other obstacles like compliance with government regulations. Government regulations take many forms and meanings to the small business, depending on your business line and even your customer list. A "standard" small business must concern itself with loans (bank, SBA, Angel funding, etc), taxes, municipal regulations, rent, lines of credit, equal employment regulations, minimum wage guidelines, vacation time, mandatory sick leave, cash flow, health care for employees, insurance and a myriad of other complex situations. For instance, if you are a government contractor, you open yourself up to a lot more regulations. When your customer is the US Government, there are regulations to go around that make things more complex. Things like the Federal Acquisition Regulations (FAR), the Code of Federal Regulations (CFR), the Office of Management and Budget (OMB) directives, Agency directives, Defense Contract Audit Agency (DCAA) regulations and Defense Contract Management Agency (DCMA) to name a few can add layers of complexity on the small business.
We get a lot of people that call us and ask if we can help them with DCAA approval of their company or accounting system. This is a bit of a misunderstanding as the DCAA does not "approve" accounting systems, they review them for adequacy. If you look at the Defense Department Directive Number 5105.36, p5.e, you will see that the DCAA mission is to determine the adequacy of an accounting system, not approve it. If you look at their mission statement (found in Para 3) you will see that:
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.
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.
As you may know, one of our founders Russ Farmer is serving on a joint committee of the National Defense Industry Association (NDIA) and the Small Business Technology Council (SBTC) to work with the Defense Contract Audit Agency (DCAA) to help discuss and resolve issues critical to small business. A guidance memorandum (13-PAC-026(R) came out of the DCAA office this week as the result of the committee that Russ heads up.