National Contract Management AssociationMay 10, 2012

Ronald C. Meldonian Regional Director

Northeastern RegionDefense Contract Audit Agency

The views expressed in this presentation are DCAA's views and not necessarily the views of other DoD organizations

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DCAA Organization

DirectorPatrick FitzgeraldDeputy Director

Anita Bales

CentralRegion

Tim CarrVacant

EasternRegion

Paul PhillipsGary Spjut

NortheasternRegion

Ron MeldonianWilliam Adie

Mid-AtlanticRegion

Ken SaccocciaSteve Hernandez

WesternRegion

Donald MullinaxDavid Johnson

General CounselDefense Legal

ServiceSusan Chadick

Assistant Director,Resources

Philip Anderson

Assistant Director,Policy & Plans

Vacant

Assistant Director,OperationsTom Peters

Internal ReviewGerry Reichel

Field Detachment Karen Cash

Terry Schneider

RegionsHeadquarters

Assistant Director, Integrity &

Quality AssuranceDon McKenzie

Executive OfficerJoe Garcia

Executive OfficerJoe Garcia

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Agency Goals/Priorities “One Agency” with a culture of teamwork,

excellence, accountability, mutual respect, integrity, and trust

Deliver high-quality audits and other financial services

Develop the skills of our motivated professionalsDevelop effective working relationships with DCAA

external stakeholdersEnsure the workforce has the right space, the right

equipment and the right technology at the right time to successfully deliver on the mission

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Deliver High Quality Services and Products

Agency will use new Strategic Plan to work audit quality and workforce issues

Established proposal walk-through and early identification of issues/inadequacies

All Raytheon audits under cognizance of one region Issued extensive changes to audit guidance, procedures and

processes Authorized additional management/supervisory positions to

allow more time on audits Holding Agency-wide Field Audit Office (FAO) Managers

Conference annually

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Making a concerted effort to engage with stakeholders: Issued “Rules of Engagement” Initiated regular high level meetings with contracting

communityExecutives participated at speaking engagements with

DoD Procurement and Contractor Associations Issued Joint DCAA/DCMA Directors Memorandums

Established MOU on EVMS Cost Recovery Initiative

Working Relationships with Stakeholders

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Working Relationships with StakeholdersRequirements Workload and Resources

Working with Stakeholders to defer or divest low risk workload - will allow DCAA to focus on higher risk work with larger payback to Warfighter/Taxpayer.

Added 500 new employees over the last 2 years

DPAP Memorandum (1/4/2011), “Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending: ‘Align DCMA and DCAA Processes to Ensure Work is Complementary” Increased Thresholds for Price Proposal Audits Forward Pricing Rate Agreements/Forward Pricing Rate

Recommendations Financial Capability Reviews Purchasing System Reviews Contractor Business Systems Rule

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Incurred Cost Initiative

Developed a risk-based approach to working down backlog in a effective manner: Increase staffing Dedicated audit teams (FAO Manager, Supervisors, and

auditors) Developed revised incurred cost audit program Delivering an incurred cost auditing refresher training course Continue working with DoD on strategies to better align the

limited DCAA resources to the higher risk contracting areas

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Other DCAA InitiativesEmphasizing annual program plan meetings with

contracting officer and contractor to discuss priorities

Implementing a project management approach to include detailed milestone plans to facilitate timely completion of audits

Enhancing the role of the prime contract auditor in coordinating major subcontract proposal audits under major procurements.

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Contractor Business Systems

The final Business System Rule was issued on February 24, 2012 Defines contractor business systems as the contractor’s

Accounting System Estimating System Material Management and Accounting System (MMAS) Purchasing System Property Management Earned Value Management System (EVMS)

Currently pilot testing new programs at several contractor locations (accounting system program will be published in the near future).

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Contractor Business Systems

DCAA will report on compliance with the criteria in DFARS

DCAA Reports will identify significant deficiencies – defined by the interim Business System Rule asShortcomings in the system that materially

affects the ability of officials of the DoD to rely upon information produced by the system that is needed for management purposes

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Contractor Support to Facilitatea More Timely Audit Process

Effective contractor proposal walk-throughsAdequate contractor submissions and assertions

Forward Pricing Rate Proposals Adequate Subcontract Proposals Adequate CAS cost impact proposals

Adequate supporting data in a timely manner and timely access to key contractor personnel responsible for contractor support

Real-time DCAA access to contractor systems

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Forward Pricing Proposal Adequacy

Adequate Contractor Proposals – Facilitate Effective Audit Proposed amounts supported by detailed basis of estimate and

supporting documentation Supporting justification/explanation provided for significant

variances between prior buy actual cost data and proposed amounts Consolidated Bill of Material Detailed support for additive factors applied to various cost

elements Indirect Rates supported by contractor budgetary or trend data Adequate Support for Subcontractor Proposals

Adequate prime contactor cost or price analysis Adequate subcontract proposal

Support for commercial item price reasonableness Proposal reflects anticipated accounting changes

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WAY AHEAD

Continue to build on professionally developing our workforce

Reducing learning curve with our new processes and guidance

Build on the changes to increase quality of services and products

Reduce Incurred Cost audit backlog to support contract close-out

Continue to broaden relationship and communication with our stakeholders

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Additional information on DCAA and Points of Contact available at

www.dcaa.mil

Defense Contract Audit Agency