rich wilkinson, director, watkins meegan llc susan...
TRANSCRIPT
GC-212 The DCMA Voucher Sampling Initiative – How Will it Affect You? Rich Wilkinson, Director, Watkins Meegan LLC Susan Longo, Manager, Watkins Meegan LLC
Background
Public Awareness
Current Events
The Substance of the Changes
Questions
Session Content
Wide Area Workflow (WAWF) is a DOD-specific system for electronic acceptance and invoicing on DOD contracts
Mandated by the 2001 Defense Authorization Act and implemented via DFARS 252.232-7003 (E-Invoicing ) – March 1, 2003
WAWF program initiated December 3, 2004
DFAS Guidance – No “paper” invoices as of January 1, 2006
The Background on WAWF
Invoices requiring DCAA review prior to payment were automatically routed to the cognizant auditor by WAWF
Invoices of contractors with “Direct Bill” authority bypassed DCAA and were routed directly to the paying office (DFAS)
The WAWF system is run by DCMA (not DCAA) and applies ONLY to DOD contracts
But, DCAA controlled invoice flow (with an iron hand)
How WAWF Used to Work…
DCAA’s “troubles” started in 2008 with a seriously adverse GAO report and came to a crescendo in 2009 with a worse follow-up report
In December 2008, DCAA’s “new management” declared war on Contractors with a series of guidance memos aimed at… Resetting the “grading standard” for audits from a continuum to
Pass/Fail Revoking Contractor’s systems approvals for any perceived deficiency Suspending payments after any adverse finding
DCMA and its ACOs routinely and almost universally ignored DCAA’s most extreme positions and recommendations
Background on DCAA and Direct Bill
DCAA’s Turmoil Timeline
2008 2009
Public Awareness
You’re kidding, right?
NONE!
Very little awareness of the issue even within the GovCon community
Visibility and exposure of the changes limited by design
Public Awareness
Current Events
Memo 09-PAS-004 – March 13, 2009 – created requirement to report to DOD IG when DCAA advice to a CO is ignored “where a contracting officer
ignores a DCAA audit report and takes an action that is grossly inconsistent with procurement law and regulation” … “the FAO will provide a report covering the details of the conditions to the region” … “the submission will be forwarded to the DOD IG for appropriate action”
The tension between DCAA and DCMA became a shooting war
The WAR between DCAA and DCMA
Memo 09-PPD-006(R) – April 15, 2009 – required that Direct Bill authority be rescinded upon ANY change in their billing system Auditor is required to provide both
written and verbal “30-day notice” FAO is cautioned to ensure that
there is a plan and procedures for voucher review AND that appropriate personnel are available and authorized to perform the reviews
Auditor should immediately commence a billing system audit
DCAA’s WAR on Direct Bill
WAWF 5.2 deployed 31 OCT 2011
Includes automated risk-based selection process that will only route selected vouchers to DCAA for review and approval
DCAA review of high risk vouchers and a sample of all other vouchers
How to Pull DCAA’s Teeth?
The Substance of the Changes
High risk vouchers defined as: All first vouchers on new contract/delivery/task orders All vouchers with amounts greater than a specified dollar threshold
($5M by default)
Remaining vouchers are routed to the approver using a sampling methodology Samples to be selected on a pseudo-random basis Default sample rate is 1 in 20 (5 percent)
Dollar and percent parameters are set (by the ACO) based on contractor risk assessments performed by the local (DCAA) office
A Deeper Dive in the Sampling Initiative
Does not impact Direct Billing (says DCAA’s Maria Davey) Except for first vouchers, all contractor cage codes currently
participating in the direct bill program will continue to have their vouchers routed directly to the payment office
Pursuant to DCAA Headquarters, ANY contractor’s sampling rate may be adjusted based on risk assessment – Direct Bill authority notwithstanding
Default sampling rate for current Direct Bill participants is zero percent for other than first vouchers
Default sampling rate for non-direct bill contractors is 5%, but can be adjusted up or down based on risk factors
More on Sampling
DSO for current Direct Bill participants (mostly larger contractors) may rise slightly First vouchers will be routed to DCAA (not currently) Other than first vouchers subject to sampling at any time without notice
and without disclosure of basis
DSO for contractors NOT currently on Direct Bill will almost certainly drop dramatically 95% of all vouchers (other than first vouchers) will be routed directly to
DFAS – at least by default Other than first vouchers subject to sampling increase at any time
without notice and without disclosure of basis
DSO Impact of Voucher Sampling Initiative
Vastly increased requirement for documentation of vouchers Pursuant to DCAA memo of 29 NOV 2011…
Based on the changes explained, in order to review and approve the vouchers, the following documentation must be submitted:
SF 1034 and SF 1035 showing the indirect rates applied Current amount billed and cumulative previously billed amounts Contract funded amount Project Summary Report/Job Status Report
Any voucher that does not include the requested supporting documentation will be rejected. Please share this information with the Billing Department and any other personnel related to the billing process.
• Conversation with DCAA Fairfax Branch confirms that documentation will be required for ALL vouchers in case one is selected for review – otherwise it will be rejected
Administrative Impact of Sampling Initiative
Contractors with zero sampling rate for other than first vouchers will not have to document all vouchers First vouchers will require documentation Other than first vouchers will not be sampled (for now) and will not
require documentation
Contractors subject to random sampling of non-first vouchers… Vouchers to be reviewed cannot be predicted prior to submission All vouchers will require documentation or they will be rejected Submission of all vouchers without documentation and resubmission of
sampled vouchers is a possible strategy DCAA cannot confirm that resubmitted vouchers will be sampled
Logical Outcomes
DCAA AGM Memo 09-PAS-021(R) – 22 OCT 2009 – requires that control risk be assessed at maximum when a contractor’s last internal control report is more than 4 years old OR there have been significant changes to the contractor’s system Auditor is required to qualify all opinions with respect to risk All reports must state that “a current audit of the system has not been
performed”
Assessment of maximum control risk may significantly increase sampling rate of even current direct bill participants
The Last Word on “Risk”
Questions?
Call to Action/Contact Us
8000 Towers Crescent Drive Tysons Corner, VA 22182 www.WatkinsMeegan.com
Rich Wilkinson, Director (703) 847-4435 [email protected]
Susan Longo, Supervisor (703) 847-4437 [email protected]
Call to Action/Contact Us