DCAA Proposal Rejections: Why Your Estimating Tool Matters More Than Ever

In their May 2017 story, Defense Contract Audit Agency Loses Focus, National Defense Magazine refers to DCAA’s recent annual reports to Congress, stating that

The measure of mission success [for DCAA] is that their audit activities provide a large return on investment by identifying a large number of adverse audit findings rather than on executing their primary advisory functions.

The results of DCAA’s evolved mission, says the journal, is that contractors lose timeliness and affordability in their proposals to avoid allegations.

This situation underscores the need for all government contractors to submit estimates and proposals that are as ‘air-tight’ as possible. To that end, we reviewed DCAA’s published article, 11 Reasons Why A DCAA Proposal is Rejected, and aligned those findings with the ‘Cost Estimating System Requirements’ found in DFARS 252.215-7002.

The result? We've connected the dots for you between your technical cost estimating system requirements and the top reasons for DCAA proposal rejections.

The Connection Points between Rejections and Your Cost Estimating System

While DFARS 252.215-7002 lists many cost estimating system requirements, there are only six technical requirements that, if met, would enable your organization to avoid common issues for DCAA proposal rejection. The DFARS requirements and their associated DCAA rejection reasons are as follows.

Cost Estimating System Requirement #1

Identify and document the sources of data and the estimating methods and rationale used in developing cost estimates and budgets.

Associated DCAA Rejection Reason(s):

• Unsupported costs
• No explanation or basis for pricing inter-organizational costs
• Differences between proposed costs and supporting data due to support being out of date
• Major differences between resulting unit prices proposed being based on quantities substantially different from the quantities required
• The contractor does not have budgets beyond the current year to support indirect expense rates proposed for future years

Cost Estimating System Requirements #2 and #3

• Provide for consistent application of estimating and budgeting techniques
• Provide for detection and timely correction of errors

Associated DCAA Rejection Reason(s): Large differences between detailed DCAA proposal amounts and summary totals.

Cost Estimating System Requirement #4

Protect against cost duplication and omissions.

Associated DCAA Rejection Reason(s):

• No time-phased breakdown of labor hours, rates, or basis of proposal for significant labor costs
• Failure to list parts, components, assemblies, or services that will be performed by subcontractors when material amounts are involved
• Subcontract assist audit reports indicate problems with access to records, unsupported costs, and indirect expense rate projections

Cost Estimating System Requirement #5:

Integrate data and information available from other management systems.

Associated DCAA Rejection Reason(s): No bill of materials or other consolidated listing of the individual material items and quantities being proposed.

Cost Estimating System Requirement #6

Provide for internal review of, and accountability for, the acceptability of the estimating system, including the budgetary data supporting indirect cost estimates and comparisons of projected results to actual results, and an analysis of any differences.

Associated DCAA Rejection Reason(s): No indication of basis for indirect cost rates.

ProPricer Technical Capabilities Help Prevent DCAA Rejections

ProPricer’s ability to store and report on your proposal data, pricing algorithms, and cost rationale leaves little room for misunderstandings between your estimators and DCAA auditors. With ProPricer, you can avoid the costly and time-consuming rejections and ongoing negotiations inherent in so many recent DCAA proposal reviews.