A number of my clients have been advised that DCAA is waiving the incurred cost audit for cost reimbursable contracts. This appears to be limited to small business contractors. One contractor had 5 years waived. It appears that DCAA (in some of its offices in certain parts of the country) is making a risk assessment of small contractors. If they conclude the contractor imposes limited risk, DCAA has waived the audit and has accepted the incurred costs and indirect rates as proposed in the contractor’s incurred cost submission. I have seen in the last 6 months over ten such waivers. It seems this waiver approach is in response to the fact that DCAA is substantially behind in its incurred cost audits of contractors.

My observation is an important criteria for waiver is the quality and adequacy of the contractor’s incurred cost submission or proposal. Compliance in making the submission seem to be more important than ever. It seems DCAA is placing reliance on the quality and adequacy of the contractors incurred cost submission.

There is no guarantee that any small business contractor will receive the waiver, as the waivers I have observed are subject to DCAA discretion. DCAA audit decisions are inconsistent from office to office depending on the circumstances. I recommend that the contractor submit a compliant and quality incurred cost submission on time that meets the DCAA adequacy criteria. This should improve your chances.