Contract Brief

Introduction

Contract Briefings generally include a synopsis of all pertinent contract provisions, such as contract type, contract amount, product or service(s) to be provided, applicable Cost Principles, contract performance period, rate ceilings, advance approval requirements, precontract cost allowability limitations, and billing limitations.

Requirements

Incurred Cost Submissions

If you have a flexibly priced contract you will most likely have the contract clause FAR 52.216-7 in your contract. That clause requires a contractor to:

• "Submit an adequate Final Indirect Cost Rate Proposal to the Contracting Officer (or cognizant Federal agency official) and auditor within the 6-month period following the expiration of each of its fiscal years."

An adequate indirect rate proposal is required to have certain information. In addition, "supplemental information is not required to determine if a proposal is adequate, but may be required during the audit process.". Contract Briefs will be required if you have Department of Defense (DoD) contracts, at a minimum during audit.

DCAA provides to contracts a "model incurred submission" template. The requirements are also within the Defense Contract Audit Manual (DCAM) Chapter 6, Figure 6-8-1. DCAA states that a contractor need not use the example form if the information is already generated and available within its automated accounting or billing systems.

Billing System

A contractor will also be required to produce contract briefs during a billing system audit. The DCAA Audit Program requires, and reads as follows:

"However, if you determine that you can rely on the contractor’s brief based on testing in the first phase i.e., no errors are found on the tested briefs), in any subsequent phases, step 1 below can be limited to obtaining for our perm files any modifications issued since the last testing period and ensuring that you have an updated contract brief reflecting those modifications.

• 1.Contract Briefs. The purpose of this step is to determine if the contractor’s billing personnel have contract information that is current, accurate and complete as needed to prepare billings that are acceptable for

payment. "

Post Award Audit

Contract Briefs are going to be required in a Post Award audit. The auditor is going to request a list of contracts that contain the Truth in Negotiations Act (TINA)contract clause(s). In conjunction, the auditor may request contract briefings related to those contracts, or subsequent to the master list provided, may request contract briefs selected from the master list. While the DCAA audit program pecifies that the auditor complete the brief, the auditor normally requests the brief, then either uses that contract brief in audit step 7, or updates the brief to capture additional information, or capture inaccuracies. Contractors need to be prepared to provide DCAA with contract briefs when they are undergoing a Post Award audit.

Financial Management Requirements Audts

DCAA is going to request Contract Briefs when performing this audit. DCAA needs to "determine, from contract briefing files or other available sources, those contracts which require limitation of cost reports, limitation of funds reports, or limitation on payment statements."

Other Requirements and Audits

There are other audits in which DCAA may request and/or require contract briefs, such as an Accounting System or ERP audit. The circumstances for providing DCAA these documents will vary. Audits such as delay disruption claim, request for equitable adjustments, and termination claims, will all require the auditor to brief the contract. In most circumstances, the burden will be shifted to the contractor.

Summary

There is debate within the industry as to whether or not a contractor is in contract non-compliance by not compiling contract briefs, but that debate is academic. It is academic because the inability or unwillingness to produce contract briefs will cause audit delays, possible access to records issues, and be viewed as internal controls weaknesses requiring alternative internal controls, or having a system deemed inadequate. Thus it is a contractors best interest to produce them.

Compiling contract briefs in the US Government Contracting industry is common practice, and best practice. It affords a contractor the ability to meet US Government requirements while managing risk by procurement type and contract type. Contract briefs are normally an output of an effective Contract Management System, and such a system built into their ERP or Accounting System affords the contractor the ability to do TINA monitoring, anticipate cost impacts on CAS covered contracts (by capturing CAS contract requirements). Such a system also allows for comparing contract clauses against similar contracts, identifying clauses which may or may not be included in contracts improperly.