 Government Consent, Notification is Often Required for Subcontracts
 Prime contractors are often required to provide the U.S. government with advance notification of subcontract awards and to gain government consent for those awards. For example, under cost-reimbursement contracts, contractors must notify their contracting officer before awarding certain subcontracts. Notification requirements vary by agency and department. If consent is also required, the contracting officer considers a number of factors, including:
· Basis for selection of the subcontractor · Adequate price competition · Appropriate contract type · Compliance with small business requirements Requirements are generally more flexible when a contractor has undergone a Contractor Purchasing System Review (CPSR) and its purchasing system has been approved.
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Planning for an Indirect Rate Audit
 As a contractor, it is paramount that you are prepared for the indirect rate audit process. Contractors should establish a point of contact with the audit agency and schedule an entrance conference prior to the start of the audit. During the entrance meeting, you should review the nature and timing of the audit and request an exit interview. You should also alert them at this time of those contracts that have been closed through the quick-closeout process ( FAR 42.708). Contractors can also ask the audit agency to provide them with a scope letter identifying any items that will be requested as part of the audit. Be prepared to supply a number of relevant documents, such as internal policies and procedures. These can provide valuable information and reduce auditor requests.
Also key to the process is the entire completion of the incurred cost submission, including all optional schedules. Your management team or outside CPA firm should review these forms prior to the audit in order to ensure their accuracy. Ensure that your Schedule of Contract Closing Information is completed. Additional information is available at the Defense Contract Audit Agency's website. |
