Every government contract/subcontract is subject to a “Settlement of Final Rates and Final Certificate of Current Cost or Pricing Data” at the end of a contract/subcontract. To get this final settlement, a Defense Contract Audit Agency (DCAA) auditor must review and audit the contract. The DCAA auditors are backlogged with work, and these final audits can take many years until a contract may be addressed and finalized
During the five to ten years it may take for contract/subcontract finalization, the appropriation of funds used on the contract/subcontract expires. Essentially we have tied up current fiscal year funds for a long period of time, sometimes ten plus years. Furthermore, the result at the end of the period likely can result in a credit. Thus we are wasting the funds and purchasing power for all those years, as the fiscally-outdated funds are no longer usable.
Step one in improving the process is to assess the amount of funds that are tied up while waiting for final audit by Contractor. The second step is to address the issue of auditor’s backlog.
Ultimately, if the audit was completed within a year or less, the remaining funds could potentially be put to good use.