Ensure DoD contractors have acceptable estimating
systems that consistently produce well-supported proposals that are
acceptable as a basis for negotiation of fair and reasonable prices
Process
1. Determine
Disclosure, Maintenance, and Review requirements. The
criteria is defined at
DFARS 215.407-5-70(b)(2).
1.1. Applicability. The
ACO shall apply the disclosure, maintenance and review requirements to large
business contractors that meet the regulatory requirements. A contractor is a large business contractor, if in
its preceding fiscal year, the contractor received DoD prime contracts or
subcontracts totaling $50 million or more for which cost or pricing data
were required. The ACO shall apply the same requirements to any other large
business contractor if in the preceding fiscal year the contractor received
DoD prime contracts or subcontracts totaling $10 million or more (but less
than $50 million) for which cost or pricing data were required and when the ACO determines
it to be in the best interest of the Government (e.g. significant estimating
problems are believed to exist or the sales are predominantly Government).
The ACO shall not apply the disclosure, maintenance and
review requirements to other than large business contractors.
2. Ensure Contractors' Disclosure, Maintenance and
Review Requirements. The ACO shall (DFARS 215.407-5-70(c)):
2.1. Determine the acceptability of the disclosure and system. 2.2. Pursue corrective action of any deficiencies. 2.3. Ensure that contractors subject to estimating system
disclosure:
2.3.1. Maintain an acceptable system. 2.3.2. Describe the system to the ACO. 2.3.3. Provide timely notice of
changes in the system. 2.3.4. Correct system deficiencies
identified by the ACO (DFARS 215.407-5-70(c)(4))
2.4. Characteristics of an acceptable estimating
system and examples of potentially significant estimating deficiencies are
identified at
DFARS 215.407-5-70(d).
3. Conduct Review. The ACO shall work with
DCAA to establish and manage a regular program for reviewing the
contractor's estimating system and work with DCAA to conduct the review
(PGI 215.407-5-70(e)(1)). The
ACO shall request DCAA to lead a review every three years unless
the ACO and DCAA agree to lengthen or shorten the review cycle based on a
documented joint risk assessment.
3.1. DCAA shall lead the review team and prepare the team's written report.
3.2. The ACO shall:
3.2.1. Identify qualified technical
specialists to participate on the review (e.g. price/cost analyst,
industrial specialist, engineers that are used to evaluate proposal
estimates).
3.2.2. Coordinate the DCMA technical
specialists review activity.
3.2.3. Consolidate the DCMA technical
specialists findings and recommendations.
3.2.4. Prepare a comprehensive written
report to DCAA outlining the findings and recommendations of the DCMA
technical specialists.
4. Receive DCAA Audit Report. When the ACO
receives the DCAA audit, the ACO shall ensure that the DCMA technical
specialists' findings and recommendations are addressed in the DCAA audit
report.
4.1. If the DCAA report does not identify deficiencies and the
DCMA technical specialists have no findings or recommendations, the ACO
shall report the system status as "acceptable."
4.2. If the DCAA report does not identify deficiencies but the
DCMA technical specialists have findings or recommendations, the ACO should
consider those findings and recommendations and make a determination on
acceptability of the system following the procedures in paragraph 7 below.
5.1. Initial notification.
The ACO shall provide a
copy of DCAA's report to the contractor and request the contractor to
provide a written response in 30 days (PGI 215.407-5-70(f)(2). Generally, DCAA incorporates contractor
comments on its findings and recommendation and its rebuttal to the comments
in the audit report. If DCAA incorporated the contractor's comments in the
audit report, the ACO should obtain additional information from the
contractor as needed. If DCAA did not incorporate the contractor's comments
or the ACO needs additional comments, the ACO shall request comments from
the contractor within 30 days of the written notification. The ACO may grant a reasonable
extension; however, estimating system audits are reportable
audits subject to the requirements of the
Contract Audit Follow-Up Instruction
and must be
resolved within 6 months.
6. Make System Status Determination. The ACO shall consider all
findings and recommendations fully before rendering a decision on the
adequacy of the contractor's estimating system.
7.1. The ACO shall prepare a letter to notify the
contractor and the auditor of the determinations. (ND) The ACO
shall document the following in a supporting memorandum to file:
7.1.1. An affirmative
statement that the ACO agrees or disagrees with each audit and technical
specialist's finding and recommendation. 7.1.2. Sound rationale to resolve
each audit or technical specialist's findings and recommendations. The
rationale must demonstrate that the ACO has considered all appropriate FAR,
DFARS and DCMA Instructions related to the issues or questions raised.
7.2. If the ACO determines that all or selected
portions of the system are inadequate, the ACO shall include in the letter a
notice of the ACO's intent to disapprove all or selected portions of the
system.The notice shall (PGI 215.407-5-70(f)(4)):
7.2.1. Identify the cost
elements covered; 7.2.2. List the deficiencies that prompted the disapproval; and
7.2.3. Be sent
to the cognizant auditor, and each contracting and contract administration
office having substantial business with the contractor
8. Obtain Approval of Contractor Notification Letter
8.1. (ND) The ACO shall obtain approval
of the notification letter and supporting memorandum to file from the CMO Contracts Director and any required
Contract Management Board of Review (BoR) approval before issuing the
letter. The CMO Contracts Director may delegate this action to a level no
lower than the contract team supervisor/leader. If the ACO does not agree with each audit or technical specialist's
findings and recommendations, the action is subject to BoR approval. 8.2. (ND) The CMO Contracts Director shall verify that the ACO
followed the procedures for resolving the reportable audit before
approving the notification letter. The CMO Contracts Director may delegate
this action to a level no lower than the contract team supervisor/leader. Refer to
paragraph 6 of DCMA
Contract Audit
Follow-Up Instruction.
9.1. The ACO shall provide copies of the letter
to DCAA and each contracting activity that has substantial business with the
contractor (PGI 215.407-5-70(f)(5)(iii)).
10. Prepare Notice of Disapproval. If the Contractor has not submitted
an acceptable corrective action plan or corrected the deficiencies within 45
days, the ACO shall prepare a notice of disapproval for all
or selected portions of the contractor's estimating system (PGI 215.407-5-70(f)(5)).
10.1.1. Identify the cost elements covered. 10.1.2. Identify the deficiencies that prompted the disapproval.
10.2. The ACO shall document the
following in a supporting memorandum to file:
10.2.1. An affirmative statement that the ACO agreed
or disagreed with each audit and technical specialist's finding and/or
recommendation. 10.2.2.
Sound rationale to resolve each audit or
technical specialist's findings and recommendations. The rationale must
demonstrate that the ACO has considered all appropriate FAR, DFARS and DCMA
Instructions related to the issues or questions raised.
11.1. (ND) The ACO shall obtain approval of the determination
letter and supporting memorandum to file from the CMO Contracts Director before issuing the notice. The
CMO Contracts Director may delegate this action to a level no lower than the
contract team supervisor/leader. 11.2. (ND) The CMO Contracts Director shall verify that the ACO
followed the procedures for the disposition of the reportable audit before
approving the notice of disapproval. The CMO Contracts Director may delegate
this action to a level no lower than the contract team supervisor/leader. Refer to
paragraph 7 of DCMA
Contract Audit
Follow-Up Instruction.
12.1. The ACO shall issue a notice of disapproval to the
contractor. 12.2. The ACO shall provide copies of the notice to DCAA and
each contracting activity that has substantial business with the contractor
((PGI 215.407-5-70(f)(5)(iii)).
13. Monitor Contractor Corrective Action.
The ACO
shall monitor the contractor's progress in correcting deficiencies. If the
contractor fails to make adequate progress, the ACO shall take whatever
action is necessary to ensure that the contractor corrects the deficiencies
(PGI 215.407-5-70(f)(6)). Examples of actions the ACO can take are: bringing the issue to the
attention of higher level management, reducing or suspending progress
payments (see
FAR 32.503-6), and recommending non-award of potential
contract.
14. Assess Impact of deficiencies on Individual Pricing Actions.
The ACO or the price/cost analyst should quantify the impact of any
estimating system deficiencies on any pricing action that is potentially
impacted by any unresolved estimating deficiencies (DFARS
215.407-5-70(g)). If the ACO or the
price/cost analyst believes an unresolved deficiency has no impact or if the
impact cannot be quantified then the ACO or price/cost analyst shall state that in a
pre-negotiation objective position or pricing report, as appropriate.
15.1. The ACO will withdraw the disapproval when the ACO
determines that the contractor has corrected the significant system
deficiencies. The ACO will notify the contractor, the auditor, and effected
contracting and contract administration activities of the withdrawal (PGI 215.407-5-70(f)(7)). 15.2. (ND) The ACO shall
obtain approval of the withdrawal of disapproval letter from the CMO
Contracts Director before issuing the letter.
The CMO Contracts Director may delegate this action to a level no
lower than contract team supervisor/leader.
Competencies/Certifications
Certification: For ACOs, the
Certification
and Core Plus Development Guides implement the contracting certification
standards of the Defense Acquisition Workforce Improvement Act (DAWIA).
Training Matrix
Estimating System
Review Training Matrix
What
TASKS are
required to
accomplish this
process?
Methods
of training
On-the-Job
Training (OJT)
Computer
Based Training (CBT)
Course
(Commercial, College/ Vocational)
Contractor
Sponsored Training
Guidebooks
DCMA
Developed
Administrative Task (The task is wholly enabled by the
contents of the instruction and requires no training intervention)
Task 1 -
Determine Disclosure, Maintenance, and Review requirements