Presentation on theme: "How Does DCAA Fit In? Ray Hillis"— Presentation transcript:
1 How Does DCAA Fit In? Ray Hillis Presented by:Ray HillisFinancial Liaison Advisor Defense Contract Audit AgencyPhone: (256)
2 ObjectiveThe objective of this presentation is to define where DCAA fits into the acquisition process. At the end of the presentation, the student will understand the procedures DCAA uses to perform audit services and how to request those services.
3 Outline of Presentation Audit Services Provided by Financial Advisory Services CenterTypical Field Audit ServicesAudit Report Opinions - What They MeanGuide to Requesting ServicesRapid Rates Program
4 Financial Advisory Services Center Audit ServicesProvided byFinancial Advisory Services Center
5 History of DCAA July 1965 -- DCAA Was Formed by Transferring Existing Resources FromEach of the Military Services Into theNewly Formed Defense Contract Audit Agency.Resulted in:One set of audit guides --the DCAA Contract Audit ManualA single organization the contractor could deal with on contract audit matters.Audits of military contracts can be traced back 60 years or more. Initially, the various branches of the military had their own contract audit function and associated instructions and accounting rulings. Uniformity was non-existent. Contractors and government personnel recognized the need for consistency in the areas of contract administration and audit.The Navy and Army Air Corps made the first attempt to perform joint audits in By December 1942, the Navy, Army Air Corps, and Ordnance Department had established audit coordination committees for selected areas where plants were producing different items under contracts for more than one service.On 18 June 1952, the three military services jointly issued a Contract Audit Manual (CAM). The Manual prescribed detailed policies and procedures for use in auditing procurement contracts. Because of differences between the procurement organizations and practices of the services, finalizing standard guidelines was difficult.In May 1962, Secretary, Department of Defense, Robert S. McNamara instituted "Project 60" to examine the feasibility of centrally managing the field activities concerned with contract administration and audit. An outcome of this study was the decision to establish a single contract audit capability.On 8 January 1965, the Defense Contract Audit Agency (DCAA) was formed. Mr. William B. Petty, formerly the Deputy Comptroller of the Air Force, was selected as the Director with Mr. Edward T. Cook, formerly Director of Contract Audit for the Navy, selected as the Deputy Director.Today, the Defense Contract Audit Agency consists of approximately 4,000 people located at more than 300 field audit offices throughout the United States, Europe, and in the Pacific. The Agency provides standardized contract audit services for the Department of Defense, as well as accounting and financial advisory services regarding contracts and subcontracts to all DoD Components responsible for procurement and contract administration. These services are provided in connection with negotiation, administration, and settlement of contracts and subcontracts. DCAA also provides contract audit services to some other Government Agencies.
6 DCAA Charter - DoD Directive 5105.36 MISSION -- DCAA shall: Agency MissionDCAA Charter - DoD Directive MISSION -- DCAA shall:Perform all necessary contract audit for the Department of Defense and provide accounting and financial advisory services regarding contracts and subcontracts to all Department of Defense components responsible for procurement and contract administration. These services will be provided in connection with negotiation, administration and settlement of contracts and subcontracts.Provide contract audit service to other Government agencies as appropriate.
7 Defense Contract Audit Agency DirectorDeputy DirectorExecutiveOfficerGeneral CounselDefense Legal ServiceAssistant DirectorOperationsAssistant DirectorPolicy & PlansAssistant DirectorResourcesRegional Offices (5)DirectorDeputy DirectorFive Regions Supervise Following Offices: TotalResident OfficesBranch OfficesSuboffices (Off-site)368Regional Offices (5)Central, Eastern, Mid-Atlantic,Northeastern, and Western
14 Defense Contract Audit Agency AUDIT LIAISON DIVISION (OAL) Buying CommandCityStateTelephone3rd Wing Fighter Group/3CES/CEIElmendorf AFBAKUS Army Space & Missile Defense CommandHuntsvilleALMarshall Space Flight CenterRedstone ArsenalUS Army Aviation and Missile CommandCamp Pendleton Regional Contracting OfficeCamp PendletonCANaval Air Warfare Center - China LakeChina LakeAF Flight Test CenterEdwards AFBAir Force Space & Missile Systems CenterEl SegundoUS Army National Training CenterFort IrwinNaval Facilities Engineering Command-Port HuenemePort HuenemeNaval Facilities Engineering Command, SWSan DiegoSpace and Naval Warfare Systems Command, San DiegoSupervisor of Shipbuilding San Diego30th Space Wing/30 CONS/LGCZVandenberg AFBTRICARE Management Activity - AuroraAuroraCOUS Army Space CommandPeterson AFBNavy Facilities Engineering Command - HeadquartersWashingtonDC
15 Defense Contract Audit Agency AUDIT LIAISON DIVISION (OAL) Buying CommandCityStateTelephoneNavy Strategic Systems ProgramsWashingtonDCNaval Sea Systems CommandWashington Navy YardNAVFAC Engineering Field Activity, ChesapeakeAir Armament CenterEglin AFBFLNAVAIR Training Systems Division OrlandoOrlandoTyndall AFB 325 CONS/CCTyndall AFBSouthern Region Contracting CenterFort McPhersonGAWarner Robins Air Logistics CenterRobins AFBSavannah District, Corps of EngineersSavannahTACOM - Rock IslandRock IslandILUS Army Joint Munitions CommandHQ Air Mobility CommandScott AFBUSTRANSCOM/TCCS-AQAir Force Electronic Systems CenterHanscom AFBMAUS Army Robert Morris Acquisition Center AberdeenAberdeen Proving GroundMDUS Army Medical Research Acquisition ActivityFort DetrickMaryland Procurement OfficeFt. George G. Meade
16 Defense Contract Audit Agency AUDIT LIAISON DIVISION (OAL) Buying CommandCityStateTelephoneNaval Air Systems CommandPatuxent RiverMDUS Army Tank-Automotive & Armaments CommandWarrenMIKansas City District, Corps of EngineersKansas CityMODefense Contract Audit AgencySt. LouisOmaha District, Corps of EngineersOmahaNEUS Army Communications Electronics CommandFort MonmouthNJNational Nuclear Security Admin. Service CenterAlbuquerqueNMAFRL KirtlandKirtland AFBDefense Supply Center ColumbusColumbusOHDFAS-Acquisition Support DirectorateDFAS-Commercial Pay ServicesAeronautical Systems CenterWright Patterson AFBAir Force Materiel CommandOklahoma City Air Logistics CenterTinker AFBOKNaval Facilities Engineering Command-EFANELesterPADefense Supply Center PhiladelphiaPhiladelphiaNaval Inventory Control Point - Philadelphia
17 Defense Contract Audit Agency AUDIT LIAISON DIVISION (OAL) Buying CommandCityStateTelephoneNaval Undersea Warfare Center Newport DivisionNewportRISpace and Naval Warfare Systems Center, CharlestonHanahanSCNaval Facilities Engineering Command-Southern DivNorth CharlestonDevelopment Center for Operational MedicineBrooks City BaseTX311th Human Systems Wing/AEBrooks City-BaseAir Force Outreach Program OfficeACA, Southern Region, Fort Hood Contracting CmdFort HoodUS Army Medical Command Acquisition ActivityFort Sam HoustonUS Army Medical Command Health Care Acq. ActivityFort Hood Family HousingKilleenAir Education and Training CommandRandolph AFBAcquisition Center of ExcellenceHill AFBUTOgden Air Logistics CenterDefense Contract Management AgencyAlexandriaVAHQ, Military Traffic Management CommandUS Army Material CommandOffice of Naval ResearchArlington
19 Examples of Audit Liaison Services Facilitating communicationCoordinating audit requestsInterpreting audit reportsExplain changes in audit policies & proceduresElevate customer concernsArrange attendance of DCAA personnel at negotiations and meetingsParticipate in training sessions
20 Financial Advisory Services Center (FASC) Potential Assistance Areas Cost analysisAnalysis of other than cost or pricing dataCommercial pricingMarket researchIPT activitiesSource evaluation boardsParametricsOther areas
21 Examples of FASC Support to Source Selection Evaluation Boards Assist in analysis of contractor dataAssist in assessing adequacy of accounting systemsAssist in evaluating financial capabilityAssist in using/interpreting auditsParticipate in oral discussions
22 Examples of FASC Support to Contract Administration Review modificationsComplex contract close outsAssist reconciliations between the contractor, DFAS and the buying office
23 Examples of Other FASC Potential Support Areas Cost monitoringCost estimatingNo A-76 Most Efficient Organization (MEO) assistance
24 Field Audit Office vs. FLA Audit Services Field AuditorFLA- On-Site at Ktr. Location- Has Access to Ktr. Books and Records- Performs Audits- On-Site with Customer- Available for Immediate Advice on Audit/ Financial Issues
26 Typical Field Audit Services Preaward Contract Audit ServicesAccounting System Survey and Financial CapabilityPrice ProposalsForward Pricing Labor and Overhead RatesAttend Negotiation Conferences
27 Typical Field Audit Services Postaward Contract Audit ServicesIncurred Costs/Annual Overhead RatesClaims (Hardship, Equitable Adjustment/Delay Claims, and Termination Claims)Financial CapabilityChange Order ProposalsContractor BillingsContract Audit Closing Statements
28 Typical Field Audit Services Contractor Internal Control System AuditsAccountingEstimatingEDPCompensationBillingBudgetingMaterial ManagementLaborPurchasingIndirect and Other Direct Costs
29 Typical Field Audit Services Investigative Support DivisionDCAA is not authorized to conduct independent criminal investigations.However, we do provide support to investigative organizations when requested and appropriate.DCAA has special teams of auditors to support investigations.
30 Requirements for Audit Contracting Officer RequestsContract TermsPublic LawAcquisition Regulations
31 Planning the AuditAssess reliance which can be placed on management and financial systems - (see previous list of contractor internal control system audits)Assess risk environmentEstablish scope of audit
32 Scope of Required Audits DCAA professional judgment considering:Audit objectiveContracting officer requestProfessional auditing standardsAmerican Institute of Certified Public AccountantsGeneral Accounting Office (GAGAS)
35 AUDIT OPINION EXAMPLES Cost or Pricing Data The auditor’s opinion on submitted cost or pricing data generally can be categorized in one of the following three areas:Completely Acceptable (Adequate)Generally Acceptable Except For Some Minor Deficiency (Inadequate In Part)Unacceptable (Not Adequate)Opinions Address the Adequacy of Proposal as a Basis for Negotiation of a Fair and Reasonable Price.
36 AUDIT OPINION EXAMPLES FAR, Part 15 is often used in determining if the submitted data is adequate as the basis for negotiation of a fair and reasonable price. Additionally, the proposal may be in various degrees of compliance with promulgated Cost Accounting Standards or FAR, Part 31. For reporting purposes, these include:No InstancesInsignificant InstancesSignificant Instances Of Noncompliance
37 AUDIT OPINION EXAMPLES No Instances of Noncompliance In our opinion, the offeror has submitted adequate cost or pricing data. The proposal was prepared in accordance with applicable Cost Accounting Standards and appropriate provisions of FAR and the DoD FAR Supplement. Therefore, we consider the proposal to be acceptable as a basis for negotiation of a fair and reasonable price.
38 AUDIT OPINION EXAMPLES Insignificant Instances In our opinion, the offeror has submitted adequate cost or pricing data. The proposal was not prepared in all respects in accordance with applicable Cost Accounting Standards and appropriate provisions of FAR and the DoD FAR Supplement. However, as discussed on page 12, Exhibit A, Note 4, the impact of the noncompliances is considered relatively insignificant. Because the FAR and/or CAS noncompliances are considered insignificant, we believe that the proposal is an acceptable basis for negotiation of a fair and reasonable price.
39 AUDIT OPINION EXAMPLES Significant Instances In our opinion, the offeror has submitted adequate cost or pricing data. The proposal was not prepared in all respects in accordance with applicable Cost Accounting Standards and appropriate provisions of FAR and the DoD FAR Supplement (see comments on page 12, Exhibit A, Note 4. Because the FAR and/or CAS noncompliances are considered significant, we do not believe the proposal is an acceptable basis for negotiation of a fair and reasonable price, as discussed with Mr. Bill Jones by Mr. Ray Hillis of our office on March 30, 2002 and as confirmed in our letter to you dated March 30, At your request, we have, nevertheless, evaluated the proposal to the extent possible in the circumstances.
40 AUDIT OPINION EXAMPLES Disclaimer of Opinion Due to (list of reasons identified on next slide), we were not able to obtain sufficient competent evidential matter on which to base an opinion on the proposal as a whole (or the specific cost element to be reviewed). The time that was provided for performance of the audit did not allow us to apply auditing procedures to satisfy ourselves as to the acceptability of the contractor’s proposal. The scope of our work was not sufficient to enable us to express, and we do not express an opinion on the contractor’s proposal and its acceptability as a basis for negotiation of a fair and reasonable price as discussed with Mr. Bill Jones by Mr. Ray Hillis of our office on March 30, 2002 and as confirmed in our letter to you dated March 30, 2002.
41 AUDIT OPINION EXAMPLES Disclaimer of Opinion A disclaimer of opinion may be used when:Imposed time constraints allow only a portion of the cost or pricing data to be reviewed.Unresolved costs are due to the nonreceipt of assist audit reports covering the proposed subcontract costs.Nonreceipt of technical evaluation reportsThe prime contractor’s proposal is evaluated through application of agreed-upon procedures, including cost realism analyses.
43 Guide to Requesting Services Determining the Service RequiredLocating the DCAA Field Audit OfficeRequesting AuditsRequesting Rate InformationAdditional HelpExample of Audit Request Letters
44 Guide to Requesting Services Determining the Service RequiredAudit of Entire ProposalAudit of Part of the ProposalAgreed Upon ProceduresRate Information
45 Guide to Requesting Services Locating the DCAA Field Audit Office (FAO)DCAA is organizationally divided into five regions.Within each region are field audit officesDCAA has a software package to identify the cognizant FAODCAA internet web siteFLA can assist in locating the cognizant FAO
49 Guide to Requesting Services Requesting AuditsPrime Contracts - Any special concerns that need to be addressed by the auditors should be specifically identified in the request. If there are special concerns, it often helps to call and discuss them with the DCAA auditor prior to issuing the request for audit.
50 Guide to Requesting Services Requesting AuditsSubcontracts - If any subcontracts need to be audited, it will save time if the PCO/ACO sends a copy of the audit request directly to the DCAA subcontract auditor.
51 Guide to Requesting Services Requesting AuditsPreparing the Request - The request should include:(Sub)contractor’s proposal or name of person providing it;Information on technical evaluations, especially the name of the contact at the office doing the evaluation;And the name of a contact at your office.The prime contract audit request should identify any subcontract audits that have been requested.
52 Guide to Requesting Services Requesting AuditsSend the Request - Mail, , or telefax the request to the branch or resident office.If urgent, call the DCAA office that will perform the audit.FLA can assist you with audit requests.
53 RapidConceptRatesImprove Availability, Quality, and Timeliness of Rates for CustomersEstablish and Maintain On-Site rates for Contractors Identified by Customers as Potential Suppliers
54 Rapid Rates Benefits to Customers Single DCAA Contact Point for Rates Faster Access to RatesDCAA Rate Analysis will be more Complete and Current
55 Guide to Requesting Services Requesting Rate InformationCall the FLA to see if Rapid Rates information is availableLet FLA call cognizant DCAA office if no Rapid Rates information is available
56 Guide to Requesting Services Requesting Rate InformationInformation to Give DCAA - Have available:The Rates ProposedRFP/Proposal NumberContract TypeExpected Contract ValuePerformance PeriodDeliverables
57 Guide to Requesting Services Requesting Rate InformationWritten Confirmation - DCAA should send written confirmation within several days.Availability of Rates - If there has been no recent contact with the contractor DCAA will provide available rates, but qualified with explanatory comments.
58 Guide to Requesting Services Requesting Rate InformationIf Rates Provided Are Qualified for Applicability or Adequacy - Discuss the possibility of DCAA auditing the entire proposal, part of it, or evaluating rates only under agreed upon procedures.FLA can assist in the determination of the alternate procedures described above.
59 Guide to Requesting Services Getting Additional HelpIf additional help is required, contact the following:The Supervisor or FAO Manager.The Regional Office. Each DCAA office reports to a Regional Audit Manager (RAM) who will resolve problems not settled by the supervisor or FAO Manager.The Financial Liaison Advisor (FLA). These auditors are assigned to various Army, Navy, and Air Force buying components to provide advice and consultation.
60 Review of How DCAA fits in to the Acquisition Process