Report | Oct. 1, 2015

Evaluation of Defense Contract Management Agency Actions on Reported DoD Contractor Business System Deficiencies



We evaluated Defense Contract Management Agency’s (DCMA) actions on DoD contractor business system deficiencies reported in 21 Defense Contract Audit Agency (DCAA) audit reports. Our objective was to assess DCMA compliance with the Defense Federal Acquisition Regulation Supplement (DFARS). This is the second of two reports we issued on DCMA compliance with the DFARS requirements.


For the 21 DCAA reports we evaluated, DCMA contracting officer actions did not comply with one or more DFARS requirements involving reported business system deficiencies. DCMA contracting officers did not:

  • issue timely initial and final determinations,
  • obtain or adequately evaluate contractor responses, and
  • withhold a percentage of contractor payments.

For example, in 17 of 21 cases, contracting officers did not issue final determination letters within 30 days as DFARS Procedures, Guidance, and Information (PGI) 242.7502(d)(2)(ii)(C) provides. On average, contracting officers took 252 days to issue the final determinations. This likely caused delays in correcting significant business system deficiencies and lengthened the time the Government was unable to rely on data generated by the business systems.

In 8 of 21 cases, contracting officers did not withhold a percentage of contractor payments pursuant to DFARS clause 252.242-7005(e). Without a payment withhold, the Government is not protected from the effects of business system deficiencies.

Management Actions

In response to Report No. DODIG-2015-139, “Evaluation of Defense Contract Management Agency Contracting Officer Actions on Reported Deficiencies Involving DoD Contractors’ Estimating Systems,” June 29, 2015, DCMA held several training sessions on the business system requirements. In addition, DCMA made business system compliance a special focus during internal reviews, and implemented a tracking tool.


We recommend that the Director, DCMA:

  • review the 21 cases and ensure that contracting officers take appropriate action on the   reported business system deficiencies,
  • better enforce the use of the business system tracking tool and consider requiring a Board of   Review when a contracting officer determines that a reported deficiency is not significant, and
  • consider appropriate remedial actions for contracting officers not complying with the DFARS.

Management Comments and Our Response

In an September 25, 2015, response, the Director, DCMA agreed to the reported recommendations. However, we are requesting additional comments for Recommendation 1.a.