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We currently have an FFP proposal submitted for approx. $24 million over three years. Our work is mainly DoD. It is CAS covered (we are currently modified CAS w/ CAS contracts under $50 million a year).

My supervisor seems to believe that there is some kind of dollar threshold (in this case $20 million, she thinks) that sets off a business system audit of some kind. Is any one familiar with this? We have only had an audit of our accounting system to date and is was found to be adequate. I have spent a lot of time over the past few days trying to find reference for my supervisor to this threshold/requirement to support her but I cannot find anything that appears to fit the bill. Any feedback would be appreciated.

The contract does have the business systems clause flowed down if that helps with a response.

Thanks!

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See DFARS 242.7000, "Contractor Business System Deficiencies," and the clause at DFARS 252.242-7005, "Contractor Business Systems." Audit requirements apply to individual systems included within the definition of "contractor business systems."

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There is no threshold for a business system audit. Look at the prescriptive language for each clause. You will see that the clauses for the various business systems are to be used in contracts that are not subject to the CAS although withholdings are only authorized for CAS covered contracts. Moreover, the clauses are used in contracts well below $20M. As long as a business system clause is in a contract, that system is subject to evaluation regardless of the contract value or whether withholdings are authorized under that contract.

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canberra07,

To add to Vern's post, you need to comply with the requirements of an individual business system when there is a specific business system clause in your contract. Each business system has an individual clause. If you don't have a business system clause in your contract then (technically) you don't need to comply with the requirements of that business system. For example, if you don't have the EVMS clause in your contract, you don't have to establish a full-fledged EVM system and you won't be audited for compliance on that system.

Hope this helps.

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H2H, what you have said is theoretically correct. However, DCMA is using the criteria from the Purchasing System clause when it conducts a CPSR. Also, some DCAA offices are using the criteria from the Accounting System clause to evaluate a contractor's accounting system for pre-award adequacy. Thus, rightly or wrongly, contractors can be impacted by the system criteria when they do not have the various business systems clauses in their contracts.

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Retreadfed,

Are you saying that DCMA would conduct a CPSR at a contractor which had zero contracts that contained DFARS 244.7001 (Contractor Purchasing System Administration)? Why?

Similarly my understanding is that DCAA uses the SF1408 for pre-award, and only moves to the more rigorous audit program post-award. That's been my experience, in any case.

H2H

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H2H, when DCMA is the cognizant agency for granting or denying approval of a contractor's purchasing system, that (dis)approval applies to all contracts, not just DoD contracts or contracts with the Purchasing system clause in them. Thus, disapproval of a contractor's purchasing system using the DFARS criteria affects the contractor's ability to subcontract on non-DoD contracts that are not subject to the Purchasing System clause.

As for DCAA, your experience is somewhat different from mine as some offices are using the Accounting Systems clause criteria when reviewing a contractor's accounting system pre-award. To the best of my knowledge, that is not DCAA policy, but I hope you will agree that DCAA offices do not always follow DCAA policy.

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To the best of my knowledge, that is not DCAA policy, but I hope you will agree that DCAA offices do not always follow DCAA policy.

Yes, indeed. In fact, NDIA issued a call for DCAA audit consistency a couple of months ago when acquisition reform input was being solicited.

H2H

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