1. Acquisition Workshop Training NCMA Los Angeles/South Bay Chapter DCAA’s Role in Contract Closeout October 27, 2015 C. Steven Hernandez Deputy Regional Director DCAA Western Region Page | 1The views expressed in this presentation are DCAA’s views and not necessarily the views of other DoD organizations.

2. Topics  About DCAA  Contract Closeout Stakeholders – Integrated Approach  DCAA’s Role in Contract Closeout  FAR 42.708 Quick Closeout  Contract Closeout Barriers  Actions to Overcome Barriers Page | 2

3. About DCAA DCAA Mission Statement The DCAA, while serving the public interest as its primary customer, shall perform all necessary contract audits for the Department of Defense and provide accounting and financial advisory services regarding contracts and subcontracts to all DoD components responsible for procurement and contract administration. These services shall be provided in connection with negotiation, administration, and settlement of contracts and subcontracts to ensure taxpayer dollars are spent on fair and reasonable contract prices. DCAA shall provide contract audit services to other Federal agencies, as appropriate. Page | 3

4. Page | 4 Director Anita Bales Deputy Director Ken Saccoccia Eastern Region David Johnson Mark Richards Northeastern Region * vacant Martha McKune Mid-Atlantic Region ** vacant Chris Andrezze Western Region Donald Mullinax Steve Hernandez General Counsel Defense Legal Service Susan Chadick Assistant Director, Human Capital & Resource Management Maureen Higgins Assistant Director, Operations Tom Peters Inspector General Angela Janysek- Denzler Field Detachment Karen Cash Ken Anderson Assistant Director, Integrity & Quality Assurance Gary Spjut Chief of Staff George Lembrick Chief of Staff George Lembrick Assistant Director, Policy & Plans Don McKenzie DCAA Organization Headquarters Regions Central Region Diana Graff Debbra Caw DCAA 1965-2015: Celebrating 50 Years of Excellence *Raytheon CAC** Northrop Grumman CAC

5. Page | 5

6. Contract Closeout Stakeholders Integrated Approach Page | 6

7. DCAA’s Role in Contract Closeout  Audit Annual Incurred Cost/Rate Submissions  Support Pre-Negotiation and Negotiation of Annual Costs and Rates  Evaluate Cost-Reimbursable Final Vouchers Page | 7

8. DCAA’s Role in Contract Closeout (Cont.) Negotiated and Quick Closeout Rates Page | 8 Contract Incurred Cost/Rate Submission Fiscal Year 20082009201020112012 A B C D E

9. DCAA’s Role in Contract Closeout (Cont.) Incurred Cost Initiative  Eliminating the Incurred Cost Backlog was an Initiative under DoD’s Better Buying Power 2.0  Developed a Multi-Pronged Approach to Working Down Backlog in an Effective Manner Dedicated audit teams Multi-year audit techniques Increased staffing dedicated to incurred cost Implemented a low-risk sampling approach to performing incurred cost audits Page | 9

10. DCAA’s Role in Contract Closeout (Cont.) Completed Incurred Cost Years By Fiscal Year Page | 10

11. FAR 42.708 Quick Closeout  Provides for Quick Closeout of Contracts prior to Agreement on Final Indirect Cost Rates  Powerful Tool to Close the Last FY of a Multi-Year Contract  Quick Closeout Criteria: Contract is physically complete Amount of “unsettled” direct and indirect costs on any one contract or delivery order is less than $1M or 10%, whichever is less Risk assessment is performed Agreement can be reached on a reasonable estimate of allocable dollars Page | 11

12. FAR 42.708 Quick Closeout Negotiated and Quick Closeout Rates Page | 12 Contract Incurred Cost/Rate Submission Fiscal Year 20082009201020112012 A B C D E

13. Contract Closeout Barriers  Delinquent Contractor Incurred Cost Submissions  Delayed Settlement of Contractor Final Overhead Rates Delay and even denial in providing supporting records Disallowed/questioned costs pending resolution (Form 1) Delay in the prime settlement of subcontract costs Delay in submitting final vouchers  Discrepancies between the Accounting and Paying Offices (Reconciliations and Special Provisions)  Awaiting Removal of Excess Funds  Litigations/Investigations Pending Page | 13

14. Actions to Overcome Barriers Reducing Late Submissions  Send Contractor a 30-Day Late Letter  Support the Contracting Officer in Establishing Unilateral Rates Based on audited or other data that excludes unallowable costs Set low enough so unallowable costs are not reimbursed Page | 14

15. Actions to Overcome Barriers (Cont.) DCAA Tools for Contractors  All are Found at the DCAA Public Website (http://www.dcaa.mil)  Audit Process Overview - Information for Contractors Manual (Guidance) Assists with understanding applicable requirements and help ease the audit process Describes what contractors should expect when doing business with the U.S. Government and interacting with DCAA auditors  ICE (Incurred Cost Electronically) Model (Checklist and Tools) Standard electronic version of the "Model Incurred Cost Proposal" Assists in preparing adequate incurred cost proposals  Incurred Cost Submission Adequacy Checklist (Checklist and Tools) Page | 15

16. Defense Contract Audit Agency Additional Information on DCAA is found at www.dcaa.mil DCAA Points of Contact are available at www.dcaa.mil under “Locator” Supporting the Warfighter Protecting the Taxpayer Page | 16

17. Backup Slide Page | 17

18. DCAA’s Role in Contract Closeout (Cont.) Wide Area Workflow (WAWF)  DFARS 252.232-7003 states WAWF is the Only Acceptable System Used to Submit Vouchers Except when The contract requires hard copy submission The process is determined unduly burdensome to the contractor  Sampling Methodology used by DCAA to Select Interim Vouchers in WAWF for Review and Approval  DCAA Submits Approved Interim Vouchers through WAWF to DFAS (Non-Selected Vouchers are Sent Directly to DFAS)  Final Vouchers are Sent Through WAWF to the Contracting Officer who May Request a DCAA Evaluation  Contracting Officer Approved Final Vouchers are Submitted Through WAWF to DFAS for Payment Page | 18