Working in government contracting requires a good understanding of the many acronyms that are used to describe the different agencies and regulations involved. Two acronyms that are easy to confuse are the DCAA and the DCMA.
Both are agencies that originate from the Department of Defense (DoD) and are related to assisting contractors who are carrying out work for the department. However, there are some important differences that you need to be aware of to ensure that you do not run afoul of the regulations.
Although both agencies do support the procurement of services and goods for the Department of Defense, their missions are unique. In simple terms, the DCMA can be thought of as a group that administers contracts, while the DCAA is more focused on accounting and finances. Here is a closer look at the specific roles that each agency plays when it comes to DoD contractors.
What Is The DCMA?
The Defense Contract Management Agency (DCMA) refers to a particular component of the Defense Department that is in charge of working with contractors directly to ensure that the government is receiving the best value and highest quality for the money it spends, along with timely delivery. The DCMA is a relatively new component of the DoD and it operates under the control and general direction of the Under Secretary of Defense for Acquisition, Technology And Logistics.
Before The Contract Award
Prior to the awarding of a contract, the DCMA is responsible for providing advice to contractors to help them construct effective solicitations. They are also tasked with identifying potential risks, recommending potential contractors and writing contracts that meet the needs of the government.
Following The Contract Award
The agency’s work does not end once the contract is awarded. During the period of contract performance, they provide contract administration services to the Department of Defense. They are responsible for monitoring several aspects of contract performance, including the schedule, cost and product performance.
Contract close-outs are another important part of the work that they do. In addition, the DCMA is the agency that ensures the deliverables are provided. The DCMA has roughly 12,000 employees who must deploy to 15,000 contractor locations around the world.
What Is The DCAA?
The Defense Contract Audit Agency (DCAA) provides auditing and financial advisory services to the DoD and other federal entities and operates under the authority of the Under Secretary of Defense Chief Financial Officer. The agency is responsible for two major service areas related to the Department of Defense, audit services and negotiation assistance. Outlined below is a closer look at each category.
When it comes to pre-award audits, the DCAA is in charge of pre-award surveys of accounting systems, forward pricing labor and overhead rates, CAS disclosure statements, and price proposals.
They also perform post-award audits that relate to components such as floor check, CAS compliance and adequacy, compliance with the Truth in Negotiation Act, incurred costs and annual overhead rates, interim voucher reviews, provisional billing rates and termination settlement proposals.
Another important aspect of what the DCAA does is auditing contractor business systems. This includes systems for electronic data processing, material management, accounting and estimating.
The DCAA is also responsible for negotiation assistant services, which includes help with procurement, fact finding, and analyzing contractor information.
The DCAA has around 4500 employees across 300 locations.
What Is The Relationship Between The DCMA And The DCAA?
If you win a Department of Defense award and become a defense contractor, you can expect to deal with both the DCAA and the DCMA. Your contracting officer will generally come from the DCMA and will be authorized to make commitments on behalf of the government. In contrast, when a DCAA auditor comes to your business to review your financial systems, they may make recommendations back to the DCMA, but they cannot bind you to a commitment to the federal government.
Reach Out To The Government Contracting Consultants
As a government contractor, you are responsible for ensuring that you follow all of the regulations that apply to your contract. Understanding which agencies are responsible for which aspects of your work is an important component of successfully completing your contract. This can be extremely difficult to navigate without proper knowledge.
If you would like professional advisors on your side who have the experience and knowledge needed to ensure your contracts are following the proper regulations, procedures and documentation, reach out to the team at Diener And Associates.
We are well-versed in the policies of the DCAA, DCMA, and the Department of Defense at large as well as relevant standards such as Federal Acquisition Regulation and Cost Accounting Standards. Our CPAs can verify that your business complies with the relevant government agencies and regulations to help you secure and maintain awards and improve your chances of gaining future contracts.