Getting out of Gridlock – Resolving Contract Audit Recommendations

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To keep the process moving forward as quickly as possible and to obtain resolution at the lowest levels possible, the Department of Defense Procurement and Acquisition Policy (DPAP) issued a memorandum on resolving contract audit recommendations in December 2009;  these procedures were furthered clarified in May 2010.

The DPAP memorandum dictates, when the contracting officer has a basis for disagreement with the audit findings, the contracting officer should first attempt to resolve the issues and recommendations identified with the DCAA auditor.  In such cases,The contracting officer shall:

  • Discuss the basis of the disagreement with the DCAA auditor prior to negotiations.
  • Document the discussion, including the basis for the disagreement during pre-negotiation. This documentation must be in writing to the DCAA auditor prior to negotiations to ensure the disagreement is adequately documented.

Accordingly, DCAA shall:

  • Review the basis for disagreement and attempt to resolve it with the contracting officer.
  • Evaluate the contracting officer’s written decision with the Supervisory Auditor and FAO Manager to ascertain the need to elevate the issue.
  • Request DoD Component’s management review of the contracting officer’s decision if not resolved within three days.

DCAA issued open audit guidance 10-PAS-015(R) to further clarify procedures to quickly resolve disagreements as they arise. The initial step is a discussion with the FAO Manager and the contracting officer, followed by the Regional Director and the Component’s Senior Executive or Flag Officer in the contracting officer’s chain of command. If the disagreement remains unresolved, Regional Directors should elevate the disagreement to Headquarters, policy for resolution with senior leaders in the Department. DCAA will update Contract Audit Manual Sections 1-403.3 and 1-403.4 to reflect the current guidance.

Find out how Aronson & Company can assist your organization. If you have federal contract, pricing, or compliance related questions, do not hesitate to contact Nicole Mitchell at (301) 222-8231 or nmitchell@aronsoncompany.com.

About Aronson LLC


Aronson LLC has been thinking ahead for its clients for more than 50 years. Aronson’s construction, real estate, government contracting, nonprofit, technology and private industry experts provide innovative audit, tax, and consulting services that help its clients move to the next level. From start-up to exit strategy, Aronson works with companies throughout the entire business lifecycle by proactively identifying opportunities and addressing challenges so that clients are able to focus on their core business. Aronson shows companies how to rethink everything to be more profitable, more competitive and better prepared for the future.

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