Benefits

Fix the source, not the symptom

One system breakdown — in estimating or across interconnected business systems — can trigger deficiencies or payment withholdings. Identify root causes, from basis of estimates (BOE) to cost volume generation, through a targeted assessment.

  • Gap analysis

Connect systems and silos

Integrate estimating functions and proposal development processes to drive efficiencies across accounting, purchasing, finance, HR, and compliance so operational and compliance objectives reinforce each other.

  • System integration mapping
  • Cross-functional process review

Be the “best DCAA has ever seen”

Turn your estimating system walk-throughs into a stand-out example with proprietary internal control matrices and demonstration prep aligned to DCAA expectations.

  • DCAA entrance conference preparation
  • System demonstration documents
  • System demonstration presentations
  • Proprietary internal control matrices

Close gaps for good

Implement revisions to policies, procedures, and system manuals with custom or off-the-shelf versions, approved by DCAA to support ongoing, compliant operations.

  • Policy & procedure development
  • System manual development
  • Form & template development
  • Corrective action plan development
  • Corrective action plan implementation

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FAQs

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What is an acceptable estimating system?

DFARS 215.407-5-70 states “Acceptable estimating system” means an estimating system that complies with the system criteria in paragraph (d) of 252.215-7002, Cost Estimating System Requirements, and provides for a system that—

  • Is maintained, reliable, and consistently applied
  • Produces verifiable, supportable, documented, and timely cost estimates that are an acceptable basis for negotiation of fair and reasonable prices
  • Is consistent with and integrated with the contractor’s related management systems
  • Is subject to applicable financial control systems

What are DFARS estimating system requirements, audited by DCAA?

The DFARS estimating system requirements, primarily outlined in the 17 adequacy criteria contained at DFARS 252.215-7002, establish the standards contractors must follow to ensure cost proposals, pricing data, and estimates submitted to the government are accurate, complete, current, and based on consistent estimating practices. An adequate estimating system includes documented policies and procedures, clear management oversight, traceable source data, and controls to ensure estimates are supported by historical experience, labor and material assumptions, indirect rates, and subcontractor pricing information. The system must also provide a reliable basis for developing proposals that comply with FAR and DFARS requirements and withstand government review or audit.

Who is responsible for auditing a contractor’s estimating system?

For DOW contractors, the DCAA is responsible for auditing the contractor’s estimating system. Final determination of the adequacy of a contractor’s estimating system is the responsibility of the contractor’s DCMA Administrative Contracting Officer (ACO) or Cognizant Contracting Officer. For those contractors with agencies other than DOW, your contracting officer may request agency assigned auditors, a contracted third-party audit firm, or that DCAA perform the estimating system audit.

What triggers a DCAA estimating system audit?

Estimating system audits are not automatic actions undertaken by DCAA, and require a Contracting Officer’s request for audit. FAR 15.407-5 requires audit surveillance of a contractor’s estimating system and DFARS 215.407-5-70 requires all DOW contractors to have an acceptable estimating system. However, factors such as contract value, the required submission of certified cost or pricing data and repeated contract type contribute to a contracting officer’s decision in requesting a review of a contractor’s estimating system. Lastly, large DOW contractors meeting the applicability requirements of DFARS 252.215-7002 should generally expect an audit by DCAA within a year of applicability, and then once every 3-4 years thereafter.

What proposals or estimates would be considered “in-scope” during an estimating system audit?

During a DFARS estimating system audit, DCAA typically reviews contractor proposals and estimates that require the submission of certified cost or pricing data at the time of award. This generally includes proposals exceeding the applicable truthful cost or pricing data (formerly, TINA) threshold, currently $2.5 million, increasing to $10 million effective July 1, 2026, unless an exception applies. DCAA commonly selects proposals submitted within the 12 months preceding the audit notification to evaluate whether the contractor consistently followed its disclosed estimating policies, procedures, and internal controls when developing pricing data and proposal estimates.

Can I request a review of my organization’s estimating system by my cognizant contracting officer or auditor?

Contractors are certainly welcome to inform their Contracting Officers that they are prepared for and welcome DCAA’s audit of the estimating system. However, the Contracting Officer and/or DCAA is not obligated to fulfill such requests. Additionally, contractors are cautioned against such requests; especially if they have not had the estimating system independently evaluated. Business system audits are costly and time-consuming endeavors for both contractors and the government; and an inadequate determination has business and financial consequences, including system inadequacy determinations and associated contractor payment withholds, and the triggering of other business system audits.

Turn interconnected systems into operational advantage

Because estimating touches every other business system, create interoperability for ongoing audit readiness.

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