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VBP OutSourcing Urges Caution on New DCAA Audit Rules
Recent changes by the Defense Contract Audit Agency (DCAA), the Department of Defense (DoD) agency which conducts audits for DoD contracts, may seem like DCAA audits will be a thing of the past for many small businesses.
Glen Burnie, Maryland (MMD Newswire) November 18, 2010 -- Recent changes by the Defense Contract Audit Agency (DCAA), the Department of Defense (DoD) agency which conducts audits for DoD contracts, may seem like DCAA audits will be a thing of the past for many small businesses. Specifically, the DCAA changed its threshold for price proposal audits according to a recent memo: rather than auditing fixed price contracts of $700,000 and above and cost-type contracts which exceed $10 million when asked to do so by contracting officers, the new thresholds are $10 million and $100 million, respectively. Instead, contracts below those thresholds may be audited by the Defense Contract Management Agency (DCMA), whose audits are less thorough, according a 2009 Wartime Contracting Commission report.
"This doesn't mean smaller companies doing business with the federal government shouldn't think they don't have to make their accounting system DCAA compliant," said VBP OutSourcing, Inc. president and CEO, Veronica Eyenga. "This is no 'Get Out of Jail Free' card."
Eyenga, head of a Maryland company which specializes in accounting and marketing services for companies who work with, or are attempting to work with, federal government agencies, cautioned small companies that DCAA compliance hasn't become less important--just the opposite.
Bob Greco, a managing partner of BKH, LLC, a government contractor consulting firm in Virginia, echoed this thought. "The change significantly affects price proposal audits. Under the new guidance, this means that a contractor, rather than having aDCAA audit identify issues before a contract is fulfilled, might not know there are problems with their pricing until the contract has been completed. Then they're facing penalties and possible sanctions, as well as having to potentially return money due to defective pricing."
Eyenga and Greco's advice: Make sure your accounting system and your policies and procedures remain DCAA-compliant. The onus on contractors to be compliant hasn't changed, and neither have the penalties for being non-compliant: DCAA still audits on a pass-fail system and falling short in any way can mean delayed or denied payments, as well as give-backs and sanctions, which are often disastrous for smaller businesses. Only now, instead of a price proposal audit uncovering pricing problems before a contract is fulfilled, when a contractor still has time to fix them, issues will be uncovered later in the process, with more serious consequences."
For more information on DCAA-compliant accounting, contact VBP OutSourcing at 410-590-5000, or online at http:///www.vbpoutsourcing.com.
About VBP OutSourcing
VBP OutSourcing is a Maryland-based, professional accounting and marketing firm servicing the growing needs of DoD federal contractors. Whether you have a need for DCAA government cost accounting solutions via QuickBooks and Peachtree software or you need to strengthen the links between your company's brand and the federal government with a strong capability statement, website or brochure, our professional team is ready to assist. We've been helping government contractors gain more federal business and also meet their DCAA compliance requirements for over 12 years. For more information call 410-590-5000, email info@vbpoutsourcing.com or visit http://www.vbpoutsourcing.com.
About BKH
BKH, LLC provides financial solutions and government contracting expertise to small-to-medium sized entities and multi-billion dollar, globally traded entities anywhere in the U.S. We are CAS and FAR specialists who assist contractors in the prevention of audit issues, or in the resolution or negotiation of DCAA and other government agency audit deficiencies that have been identified. For more information call 1-877-254-9998, email info@bkhus.com, or visit http://www.bkhus.com.
