Blog

June 06, 2013

General Rule for File Documentation: The Less The Government Wants You To Do Something, The More Documentation Is Required To Do It.

The farther a procurement strays from the Three Big C's of government procurements - Competition, Commercial Items and Constrictive Contract Types - the more documentation is required for a compliant file, the more public laws apply and the more opportunity for the file to create findings.  

This is fairly obvious from a 10,000 foot perspective - compare the thickness of a $1M competitively awarded FFP purchase order for commercial items to a $1M noncompetitive CPFF order for noncommercial services and you'll quickly see the difference. Also, if you were to track the findings on the first type of file to the second type of file during a CPSR you'd find a severe inverse ratio develop. 

Where this rule may not be as obvious is how DCMA and DCAA have been involved in effecting evolving government policy regarding management of contractor fraud, waste, and abuse during contractor system audits and reviews. Two excellent examples of this negative reinforcement process can be seen in (a) the recent revision to FAR 52.244-2 which requires contractors without approved purchasing systems to provide Advance Notice and secure Consent prior to award of all Labor Hour, T&M and CR subcontracts of any value (the revision occurring in OCT 2010 after the 2009 Senate subcommittee hearings on contractor fraud, waste and abuse in Iraq and Afghanistan); and (b) recently enhanced agency requirements regarding pre-award compliance for issuance of T&M, Labor Hour and CPFF subcontracts (these enhanced documentation requirements were also put into standardized practice during CPSRs late 2010 / early 2011).  

What's the result of this aggressive negative reinforcement? The documentation required to award an other than FFP subcontract was severely increased and DCMA and DCAA were empowered to cite contractors for both public law violations and additional findings for inadequate determinations of accounting system adequacy during CPSRs if contractors fail to meet these enhanced documentation requirements (remember both agencies could perform CPSRs when 52.244-2 was revised). 

So the same Other-Than-FFP documentation process that could lead to no more than a minor finding during a CPSR before OCT 2010 could fail the same system after OCT 2010 without any additional findings. Why did this happen?  

The logical explanation is that the Senate subcommittee decided that the irresponsible issuance of other than FFP subcontracts helped contribute to fraud waste and abuse via the misappropriation of risk in the supply chain. The issuance of these subcontracts could not be halted, but they could definitely be discouraged using the Unofficial General Rule for File Documentation. 

That's my theory, at least.