A major systems integrator discovered the devastating compounding effect of unallowable cost penalties when DCAA auditors imposed $14.3 million in additional charges beyond the initial $8.7 million in disallowed costs during their fiscal year 2024 audit. The contractor’s inclusion of unallowable entertainment expenses, excessive compensation costs, and lobbying expenditures in their cost pools triggered the…
A Fortune 500 defense contractor faced $38.4 million in disallowed indirect costs after DCAA auditors rejected their overhead rate proposal for inadequate supporting documentation during fiscal year 2024 negotiations. The contractor’s failure to provide acceptable cost pool segregation evidence, proper allocation base justification, and compliant organizational realignment documentation resulted in a 47% reduction in proposed…
A multinational aerospace contractor faced $14.3 million in questioned costs and immediate contract suspension after DCAA auditors discovered systematic CAS 410 violations across seven subsidiary companies spanning four states. The contractor’s failure to properly identify business units under Cost Accounting Standards 410 resulted in improper cost allocations totaling $47.8 million over three fiscal years, triggering…
A Fortune 500 defense contractor recently paid $8.7 million in penalties after DCAA auditors discovered systematic violations of tangible asset capitalization requirements under CAS 404. The contractor’s $1,000 capitalization threshold—considered “industry standard” by their CFO—directly violated federal cost accounting standards, resulting in questioned costs, contract suspensions, and a two-year remediation process that cost an additional…
Recent Government Accountability Office reports indicate that NASA contract obligations exceeded $665 billion annually, making proper oversight essential for taxpayer protection. However, industry data suggests that first-time NASA contractors face compliance failure rates approaching 40%, with timekeeping deficiencies representing the most common audit finding. Audit Frequency and Scope Analysis NASA audits follow predictable patterns that…
A major aerospace contractor faced $47.2 million in questioned costs after DCAA auditors discovered systematic violations of Cost Accounting Standard 420 regarding Independent Research and Development (IR&D) cost accounting. The contractor’s failure to properly segregate IR&D costs above the statutory ceiling resulted in contract termination, suspension from federal contracting, and civil penalties under the False…
A Fortune 500 defense contractor learned the hard way that misallocating material costs can trigger a $47 million cost adjustment under CAS 418. Their error? Using headcount to allocate material handling costs when square footage was the appropriate allocation base. The Defense Contract Audit Agency (DCAA) didn’t just reject their methodology—they demanded repayment of previously…
Government contractors face an increasingly complex landscape when it comes to maintaining compliance with Defense Contract Audit Agency (DCAA) regulations. The Defense Contract Audit Agency (DCAA) is the governing agency responsible for ensuring that government contracts are executed with transparency, accuracy and adherence to established regulations. For contractors seeking to win and maintain government contracts,…
In January 2024, a Tennessee-based defense contractor learned the catastrophic cost of CAS 402 disclosure failures when DCAA auditors discovered systematic inconsistencies between disclosed cost accounting practices and actual operations spanning 22 months. The contractor faced $18.3 million in questioned costs, immediate contract suspension, and potential debarment after investigators found that disclosed indirect cost allocation…
In September 2024, a Virginia-based aerospace contractor discovered the devastating cost of treating employee timesheet signatures as a mere formality when DCAA auditors uncovered systematic certification failures across 14 months of operations. The contractor faced $12.7 million in questioned costs and immediate contract suspension after investigators found that 73% of employee timesheets lacked proper certification…
