Defense Contract Audit Agency(DCAA)
The DoD agency responsible for auditing defense contractor costs, pricing, and accounting systems.
Overview
The Defense Contract Audit Agency (DCAA) is the federal agency that audits the financial records and accounting systems of defense contractors. DCAA's mission is to ensure that the Department of Defense pays fair and reasonable prices for goods and services by verifying that contractor costs are allowable, allocable, and reasonable.
Why It Matters in GovCon
If you hold cost-reimbursement contracts or negotiate prices based on cost data, DCAA will likely audit your books. A clean DCAA audit is a significant competitive advantage — it signals to agencies that your accounting practices are reliable. Conversely, audit findings can delay payments, trigger investigations, and damage your reputation.
Key Details
- Types of Audits: Incurred cost audits (verifying actual costs billed), forward pricing audits (evaluating proposed costs), and accounting system audits (assessing internal controls).
- Adequate Accounting System: DCAA evaluates whether your system meets the criteria in DFARS 252.242-7006. An "adequate" determination is required for cost-type contracts.
- Indirect Rates: DCAA reviews overhead, G&A, and fringe benefit rates to ensure they are properly calculated and applied.
- Timeliness: Incurred cost submissions are due within six months of your fiscal year end.
Related Terms
- Cost Plus Fixed Fee (CPFF)
- Allowable Costs
- Defense Federal Acquisition Regulation Supplement (DFARS)
- Indirect Rates
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