Fort Belvoir, Va. –
DCAA’s Melbourne Resident Office responded to a request from the Defense Contract Management Agency (DCMA) and audited a major contractor’s cost impact proposal related to a change in corporate allocation practices. A cost impact proposal is used to determine whether those cost accounting practice changes will increase or decrease cost to the government. This audit focused on the contractor’s adverse unilateral change and its effect on how certain corporate costs were distributed across multiple entities. The team found the contractor underestimated the cost impact by more than 20 percent. In some cases, the contractor included cost changes that fell outside the scope of the cost impact proposal, skewing the results.
While DCAA regularly completes multi-million-dollar audits, auditors provide the same support and technical expertise on smaller cost audits to help ensure fair and reasonable prices across all DoD contracts of any size. Supervisory Auditor Irreka Knotts led the team and Technical Specialist Mike Glover provided support throughout the audit. The team incorporated knowledge and methods from other recent audits and ensured limited resources did not limit cost savings.
The contractor ultimately agreed with the audit findings and approach, exemplifying that no matter the size of the audit, DCAA auditors will always take the same care and time to review the audit and ensure excellence to fully support the Warfighter and protect taxpayer dollars.