| Contacting
Sides with Contractor, Not Civilian Agency Auditor
Scenario
A government contractor provided professional
services under cost reimbursement contracts to both civilian and
defense agencies. The Defense Contract Audit Agency (DCAA) issued
final indirect rates each year, approving changes in the contractor’s
cost accounting structure as the firm grew and the business changed.
While performing a routine contract closeout, the Contracting Officer
on one of the company’s civilian agency contracts rejected
the changes in the contractor’s cost accounting system and
the DCAA-approved final indirect rates. A civilian agency auditor
determined that this change and the related findings resulted in
an over-billing of over $98,000. The contractor was unable to resolve
the issue. The agency demanded that the contractor remit payment
for the $98,000.
CB&H Action Steps
CB&H government contracting specialists reviewed
the contract agreement, the annual DCAA final indirect rate reports
and the applicable sections of the Federal Acquisition Regulation
(FAR). CB&H demonstrated to the Contracting Officer that the
FAR specified that DCAA was the sole cognizant audit agency for
this contractor and that the civilian agency was therefore specifically
required to abide by its decisions and reports. Furthermore, CB&H
was able to substantiate other errors in the assertions of the civilian
agency auditor.
Results
The Contracting Officer agreed to reject the
findings of the civilian agency auditor and proceed directly with
contract closeout. The contractor closed the contract using the
indirect rates approved annually by DCAA. The contractor saved over
$98,000 in inaccurate claims by the government, avoided unnecessary
legal fees and was able to maintain its excellent reputation with
government agencies.
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