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Guidance Issued on Treatment of “Blended” Compensation Caps in Incurred Cost Submissions

On June 30, 2016, the Defense Contract Audit Agency (“DCAA”) issued Memorandum for Regional Directors (“MRD”) 16-PSP-007(R), Audit Alert on Handling Incurred Cost Proposals Using a Blending Approach of Compensation Caps. In this memo, the DCAA discusses how auditors are to treat new and existing incurred cost submissions (“ICS”) that include blended compensation caps, in the absence of an advance agreement. One of the key points of the memorandum is that DCAA should not delay the adequacy review of an ICS if an advance agreement is not present. The audit team must continue with the adequacy review. During the adequacy. Read More.

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Audit Alert Issued for DCMA Implementation Guidance on Blended Compensation Caps

On February 19, 2016, the Defense Contract Audit Agency (“DCAA”) issued Memorandum for Regional Directors (“MRD”) 16-PSP-005(R), Audit Alert on DCMA Implementation Guidance on Blended Compensation Caps. The Alert provides auditors with official guidance when dealing with blended compensation caps with contractors, and in tandem with the Defense Contract Management Agency (“DCMA”). What does this mean? Let’s take a few steps back to October 2014, when Shay Assad, the Director of Defense Pricing Acquisition Technology, and Logistics OUSD (“AT&L”), issued a memo stating that use of a blended rate is deemed “practical and cost efficient.” This was in reaction to. Read More.

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