TIP LINE – EDITION 9 (Part 2) – DCAA’s FY2024 Report
With DCAA’s FY2024 data now in focus, contractors are getting clearer insights into what sticks in an audit—and what doesn’t. In this week’s Capital Edge Tip Line, CEO Chad Braley breaks down the agency’s audit sustainment rates, completion timelines, and growing oversight into OTA government contracts. He also highlights where audit activity is rising in other agencies, including HHS.
Key Updates from This Week’s Tip Line
Audit Sustainment Rates – What’s Being Upheld
What’s happening? Nearly 49% of DCAA audit exceptions were sustained by contracting officers across all categories in FY2024.
Breakdown by audit type:
- Forward Pricing: 57.9% sustained
- Business Systems / CAS / TINA: 53.2%
- Claims & Terminations: 45.4%
- Incurred Cost: 31.4%
What it means for you:
- The likelihood of a sustained exception is higher in forward pricing and system reviews.
- Some 2024 sustainments stem from prior fiscal year findings.
Action Item: Treat every audit finding seriously. Even if the audit occurred years ago, current sustainment decisions may still apply.
Audit Timelines – How Long You Should Expect
What’s happening? Audit cycle times remain long, particularly for complex systems reviews.
Average durations:
- Incurred Cost: 204 days
- Forward Pricing: 96 days
- Business Systems / CAS / TINA: 291 days
- Claims & Terminations: 175 days
Chad’s take: A low-risk letter from DCAA does not equal a clean bill of compliance. Many contractors assume approval when they’ve only passed the adequacy checklist.
Action Item: Prepare for extensive durations. Keep your documentation current, even if your last contact from DCAA was a simple memo.
OTA Government Contracts – Yes, They’re Being Audited
???? What’s happening? DCAA evaluated over $550 million in OTA costs in FY2024, despite their FAR-exempt status.
???? What it means for you:
- OTAs Government contracts are under audit at DoD’s request, and possibly others.
- These agreements are supposed to follow commercial practices—but that doesn’t mean they escape oversight.
???? Action Item: Don’t rely on OTA exemptions. Structure records and reporting as if the agreement will be audited.
Third-Party Audits on the Rise – HHS Gets Active
???? What’s happening? Other agencies like HHS are leaning on third-party auditors to scrutinize historic contract activity.
???? Example: HHS recently initiated audits on a 2020 CAS change with a $75,000 cost impact—years after the fact.
???? Action Item: Be proactive in documenting cost changes and rate adjustments, even if years have passed. Third-party audits are expanding.
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