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How to Best Meet DCAA Compliance Requirements

The Defense Contract Audit Agency (DCAA) performs all contract audits for the Department of Defense (DoD). This audit includes Estimating System Reviews (ESRs).

Even though ESRs aim to improve the accuracy and reliability of government contract proposals, going through one is tedious and nerve-wracking. And failure leads to some steep consequences:

  • Your future proposals are scrutinized more.
  • The proposal negotiation process takes longer to complete
  • Governmental agencies will second-guess the accuracy and reliability of your future proposals.
  • Your name is entered into the Federal Awardee Performance and Integrity Information System (FAPIIS)
  • You may not get 5% of your progress and performance-based payments

Now that we have your attention, let’s talk about ways to avoid all these penalties.

**Spoiler Alert**

If you commit to documenting everything, training and managing personnel properly, and following through with system improvements, you will meet all DCAA compliance requirements.

Conduct your own internal audits

It may sound funny, but the first thing DCAA auditors do is audit your audits.They study the frequency, scope, and corrective actions taken during each of your company’s own estimating system reviews.

DCAA compliance tips:

  • Spot-check your estimating files to ensure they are complete and follow policies and procedures.
  • Confirm that estimators understand the ins and outs of your company's preferred estimating methodologies.
  • Implement corrective actions and document improvements every. single. time.

 Know your management style

DCAA auditors will verify your managers are managing appropriately. They evaluate proposal management oversight and confirm there is a clear chain of command (and paper trail) for approvals.

DCAA compliance tips:

  • Compare projected results to actual results to confirm estimating methodologies are working correctly.
  • Supervise the process surrounding estimating direct labor rates, direct labor hours and skills mix, cost/price analysis to maintain accuracy.
  • Document your review/approval processes to confirm team members stay aligned.

 Keep internal skills current

DCAA auditors will peek into your training sessions. They take note of lessons learned and how new information is dispersed to the team.

DCAA compliance tips:

  • Train annually and maintain records of it.
  • Provide regular training for those responsible for preparing estimates.
  • Use of statistical aids and advanced estimating techniques when training.

 Organize your business records

DCAA auditors will look into your past. They select and evaluate recent pricing proposals for compliance with established procedures.

DCAA compliance tips:

  • Maintain cost and pricing data for seven years after projects close.
  • Keep no-bid cost documentation for a minimum of 1 year.

Don’t get caught off guard. Start preparing now.

If you operate under the assumption the DCAA will audit each proposal you prepare, you’ll likely stay compliant when the auditors come knocking. Consider using an estimating tool that has a rate traceability system with a history of passing DCAA audits—like BOEMax.

Request a demo to see the software in action.

Topics: basis of estimate, data traceability, government requirements

Author: Tom Shanahan