The Defense Contract Audit Agency (DCAA) recently published a Memorandum for Regional Directors (MRD), titled “Audit Alert on Requirement for Prime Contractor Cost and Price Analyses,” that provides answers to frequently asked auditor questions regarding cost and price analyses to establish the reasonableness of proposed subcontract prices.
Importantly, the MRD states that DCAA auditors should proceed with subcontract proposal audits even if contractor cost or price analyses are not yet available. This should help mitigate what has been a continuing problem for prime contractors—long waits for DCAA audits of subcontractor proposals—and expedite contract price negotiations.
FAR 15.404-3(b) requires a prime contractor or subcontractor to establish the reasonableness of proposed subcontract prices and to provide supporting cost or price analyses in the proposal. In certain circumstances, a prime contractor may not be able to complete the cost or price analyses by the time it submits a proposal. In such cases, the prime contractor may include a matrix in the proposal identifying the dates by which it expects to receive subcontractor proposals. The MRD states that this type of matrix does not satisfy the requirement to submit supporting cost or price analyses in the proposal, and a DCAA auditor would mark the proposal as inadequate on grounds of incomplete cost or price analyses.
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