Follow the DCAA Checklist – Get a Passing Grade!

DCAA issued an MRD on August 27, 2015, “Revised Checklist for Determining Adequacy of Contractor Incurred Cost Proposal.”  The purpose of the MRD is to revise the adequacy checklist so as to have clearer defined guidelines in determining if the proposal is adequate enough to audit.  It’s no longer about making sure you can check all the boxes as adequate.

The change to the ICS proposal adequacy review is to make an initial decision on whether the proposal is auditable and help the audit team determine whether to accept or decline the engagement.  If the audit team should accept the engagement they may determine to expend efforts on work done during the ICS audit.  This means a contractor could have one or two items deemed inadequate; however, the overall proposal is still suitable to be audited.  Conversely a contractor may have only one item deemed inadequate but that one item can make the proposal unacceptable to audit.  DCAA auditors are required to make reasonable decisions based on the facts of each submission and provide supporting rationale.

In addition to ensuring the ICS is auditable, DCAA’s revised checklist is also focused that the adequacy considerations are based on the requirements of FAR 52.216-7(d)(iii) and with some minor recommendations noted below, that’s what they did.

• Schedule H – Explain that contractors need to detail all prime and subcontracts that contain FAR 52.216-7 at the billing level all other contract types can be shown as one summary line.
• Schedule I – The question “is the contract physically complete” if yes, mark on Schedule O which is for contract closeouts. However contractors are showing data on Schedules I at billing level which is often not at the contract level.  Making sure everyone understands when a contract is physically complete and ready for closeout.
• Schedule J – Subcontractor Information, does DCAA want to see both subcontractors and consultants since consultants are defined by the FAR as subcontractors?

Having reviewed the new checklist we can say, “Way to go DCAA!”  The new checklist is much easier to follow and understand.  The best part is the checklist coincides with how Aprio has prepared ICS’ for years.

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