Report | Oct. 29, 2015

Follow up on the Actions to Improve the Defense Contract Management Agency's Cost Analysis Function

DODIG-2016-005

Objective

We conducted this evaluation to follow up on the corrective actions taken by Defense Procurement and Acquisition Policy (DPAP), Defense Pricing (DP), and Defense Contract Management Agency (DCMA) in response to our previous Report No. DODIG-2013-015, “Actions to Align Defense Contract Management Agency and Defense Contract Audit Agency Functions,” November 13, 2012.

Findings

DPAP, DP, and DCMA made progress in addressing our prior recommendations.  However, they have not fully resolved our prior recommendations.

DPAP and DP did not monitor the progress DCMA has made in performing the cost analysis function after the audit thresholds changed. Monitoring by DPAP and DP may have resulted in detecting DCMA’s continued cost analysis inadequacies and resolving the inadequacies in a timely manner.

In addition, DCMA’s cost analysis case file documentation still does not demonstrate that DCMA cost analysts are performing sufficient steps to determine if a contractor’s price proposal represents a fair and reasonable price, as Federal Acquisition Regulation 15.404-1(a)(3) requires.

DCMA also still cannot reliably report on its cost analysis performance and results. Without reliable information, DCMA cannot demonstrate to DoD and the taxpayer that DCMA cost analyses can achieve an annual return comparable to the return that Defense Contract Audit Agency had achieved.

Recommendations

We recommend that the Directors of DPAP and DP monitor the impact of the audit thresholds change involving the DCMA cost analysis function.

We recommend that the Director, DCMA:

  • Modify DCMA policy and improve DCMA oversight to help ensure that cost analysis case files include   sufficient documentation.
  • Implement planned corrective actions to enable reliable data collection and reporting of its cost   analysis function.

Management Comments

The Directors of DPAP (responding for DPAP and DP) and DCMA agreed with the recommendations. Their comments and planned corrective actions addressed all the specifics of the recommendations, and no additional comments are required.