Class Deviation 2012-O0013 - DCAA Policy and Procedure for Sampling Low-Risk Incurred Cost Proposals

Summary

Department of Defense contracting officers must accept either a Defense Contract Audit Agency (DCAA) audit report or a DCAA memorandum to satisfy incurred cost audit requirements. The DCAA memorandum documents a risk assessment and adequacy evaluation under Federal Acquisition Regulation (FAR) 42.705-1(b)(1)(iii). This risk-based sampling process has been in use since 1994 and includes safeguards against unacceptable risk.

Required Contracting Officer Actions

1. Accept a DCAA audit report or a DCAA memorandum documenting a risk assessment and adequacy evaluation to satisfy audit requirements at FAR 4.804-5(a)(12), 42.705-1(b)(2) and 42.705-2(b)(2)(i).
2. Rely on the DCAA memorandum as sufficient documentation that an incurred cost proposal was deemed low-risk and not selected for further audit.

Affected Provisions and Clauses

52.216-7, (Clause)

• Prescribed in: 16.307(a)
• Change type: MODIFIED
• Action: Modify clause 52.216-7

Notes

Backlog Relief: Low-risk proposals with ADV of $1 million or less received before October 1, 2011 will not be selected for audit. DCAA will issue a memorandum to the CO for these proposals.

Mandatory Audit Cycle: Proposals between $100 million and $250 million require a mandatory incurred cost audit once every three years. If no proposal is selected in a three-year cycle, the FAO must select one in the third year.

Duration: This deviation remains in effect until incorporated into the FAR or DFARS or otherwise rescinded.

Suggested Questions