Part 5142 - Contract Administration and

Audit Services

(Revised September 2023)

Subpart 5142.1 - Contract Audit Services

5142.190 Follow-up on contract audit reports.

5142.190-1 Responsibilities.

5142.190-2 Tracking of contract audit report recommendations.

5142.190-3 Reporting.

5142.190-4 Overage Audit Review Boards.

5142.190-5 Processing Audit Findings.

Subpart 5142.2 - Contract Administration Services

5142.202 Assignment of contract administration.

Subpart 5142.3 - Contract Administration Office Functions

5142.302 Contract administration functions.

Subpart 5142.6 - Corporate Administrative Contracting Officer

5142.602 Assignment and location.

Subpart 5142.7 - Indirect Cost Rates

5142.703 General.

5142.703-2 Certification of indirect costs.

Subpart 5142.15 - Contractor Performance Information

5142.1502 Policy.

5142.1503 Procedures.

5142.1503-90 Policy.

Subpart 5142.71 - Voluntary Refunds

5142.7100 General.
Subpart 5142.1 - Contract Audit Services

5142.190 Follow-up on contract audit reports.

5142.190-1 Responsibilities.

(a) The Deputy Assistant Secretary of the Army (Procurement) is the Army’s contract audit follow-up

official.

(b) The senior contracting official (SCO) shall perform the functions of the Army’s contract audit

follow-up official for their respective commands. SCOs shall –

(1) Establish Overage Audit Review Boards;

(2) Ensure that the effective resolution and disposition of audit findings and recommendations in a

timely manner while fully protecting the Government’s interests is a factor in organizational and

individual performance standards and objectives; and

(3) Maintain close surveillance of all contract audit reports, resolve, and dispose any audit reported.

(c) Chiefs of contracting or contract administration offices shall track and assist contracting officers

in the resolution and disposition of those audit recommendations which appear unlikely to be

resolved within six months of the date of an audit report.

(d) Contract Audit Follow Up Monitor

(1) The Monitor shall receive new audits and coordinate with Contracting Officers, their SCO and

the ODASA(P) to resolve and disposition audits in a timely manner.

(2) The Monitor shall ensure Contracting Officers receive a copy of the audit and status updates on

the resolution and disposition of the audit on a monthly basis.

(3) The Monitor shall maintain current information and status of the audits in the Contract Audit

Follow Up system.

(e) Contracting officers shall –

(1) Resolve the recommendations as described in DoD Instruction (DoDI) 7640.02 not later than six

months from the date of the audit report and dispose those recommendations within 12 months;

(2) Invite the auditor to participate in the review when it is considered necessary; and

(3) Appear before the Overage Audit Review Board to discuss the resolution and disposition of any

audit reported in accordance with 5142.190-4 Overage Audit Review Boards.(a)(4).

5142.190-2 Tracking of contract audit report recommendations.

(a) Centrally track all contract audit reports from request for audit through receipt, resolution and

disposition. Each contracting or contract administration office, including satellite offices such as
Government-owned contractor-operated, shall establish a single entity for requesting, receiving and

tracking all audit reports. Provide the activity name, address, attention symbol, point of contact and

telephone number of the single entity to the contract administration services office and Defense

Contract Audit Agency regions involved.

(b) Centrally track and report audit report data in accordance with DoDI 7640.2. Maintain a file for

each audit report and include in each file the following information:

(1) Report number.

(2) Activity address code.

(3) Issuing agency.

(4) Date of report.

(5) Contractor name.

(6) Contract number(s).

(7) Organization responsible for disposition.

(8) Contracting officer responsible for disposition.

(9) Total amount subjected to audit.

(10) Total questioned costs.

(c) For reportable audit reports, the central files shall also include the following information:

(1) Type(s) of recommendations contained in report. Use the codes in DoDI 7640.2.

(2) Target date of resolution.

(3) Actual date of resolution.

(4) Target date for disposition.

(5) Date of final decision (if any) of contracting officer.

(6) Date of filing with Armed Services Board of Contract Appeals or court (if any) and docket or case

number.

(7) Disposition results in terms of questioned costs sustained.

5142.190-3 Reporting.

Each contracting or contract administrative office shall submit the Status Report on Specified

Contract Audit Reports (RCS DD-IG (SA)1580), as required by DoDI 7640.2 to reach the addressee at

5101.290(b)(2)(ii)(A), not later than 30 November and 31 May. Obtain the program and instructions

from the addressee at 5101.290(b)(2)(ii)(A). Negative reports are required.
5142.190-4 Overage Audit Review Boards.

(a) Make every effort to resolve audit recommendations within six months of the date of an audit

report and disposition them within 12 months. Each SCO shall establish and chair an Overage Audit

Review Board (the Board) to review the status of open audits reported as overage or unresolved on

the Status Report on Specified Contract Audit Reports. The SCO shall chair the Board. The Board

shall –

(1) Be comprised of the contracting activity’s senior legal, contracting, and pricing personnel;

(2) Review all open, unresolved audits over six months old and resolved audits over 12 months old

that are reported as open on the most recent Status Report on Specified Contract Audit Reports;

(3) Meet early in November to consider the audits due to be reported on 30 November and early in

May to consider those audits due to be reported on 31 May. The Board may meet at other times, as

necessary;

(4) Hear the contracting officer’s presentation of efforts to resolve and dispose the audit

recommendations;

(5) Assist the contracting officer in developing a plan of action for timely resolution and disposition

of the audit recommendations; and

(6) Provide the contracting officer with necessary guidance and assistance to resolve and dispose the

audit recommendations. This shall include reordering priorities, assigning additional or alternate

resources or committing the personal attention of the HCA or the SCO to the effort.

(b) Upon completion of its review, but not later than 30 November and 31 May, the Overage Audit

Review Board shall submit to the addressee in 5101.290(b)(2)(ii)(A), under a summary cover letter

from the SCO, a detailed plan of action for the resolution and disposition of each audit report in the

four major categories listed in (1).

(1) The Board shall separate the audits into the following four major categories for reporting:

(i) 6-12 months old, unresolved.

(ii) Overage (over 12 months old), unresolved.

(iii) Overage (over 12 months old), resolved.

(iv) Resolution date slip from previous report.

(2) Each plan of action shall contain the following information:

(i) Audit report number.

(ii) Report date.

(iii) Contractor name.

(iv) Type of audit.

(v) Cost questioned or cost avoidance.
(vi) A narrative plan of action for resolution and disposition of the audit findings.

(vii) Target resolution date.

(viii) Target disposition date.

(ix) Contracting officer’s name.

(x) Contracting officer’s phone number.

(3) The Board’s report shall describe the action taken to resolve the audit and identify attendees and

their role in the process, such as the contracting officer.

5142.190-5 Processing Audit Findings.

(a) Resolution Status. The contracting officer shall update the audit CAFU record to resolution status

when the written pre-negotiation objective memorandum is approved. For audit reports covering

CAS noncompliances, resolution is achieved when the contracting officer issues a notice of potential

noncompliance to the contractor. For audit reports covering business systems, resolution is achieved

when the contracting officer notifies the contractor in writing of the initial determination.

(b) Disposition Status. The contracting officer shall provide a copy of the post-negotiation

memorandum to the DCAA auditor and other affected government offices, as applicable. The

contracting officer shall update the audit CAFU record to disposition status when the written postnegotiation memorandum is approved and one of the following actions occurs:

(1) The contracting officer notifies the contractor in writing of the final determination covering

business systems findings and recommendations.

(2) The contracting officer negotiates a settlement covering all audit issues with the contractor

(including corporate or home office allocations) and executes any required contracting action (e.g.

indirect rate agreement).

(3) The contracting officer issues a final determination/decision on a CAS noncompliance audit or

other matter pursuant to the disputes clause. The contracting officer must reinstate the audit report

as an open report (“in litigation status”) if the contractor appeals to:

(i) The Armed Services Board of Contract Appeals (ASBCA) within 90 days, or

(ii) The U.S. Court of Federal Claims within 12 months.

(4) The contracting officer makes a final determination on a disclosure statement submission or

revision.

(5) The ASBCA or U.S. Court of Federal Claims renders a decision, any required actions directed by

ASBCA or the Court are completed, and a contractual document is executed.

(6) DCAA supplements or supersedes the audit report.

(7) The contracting officer determines final action on a CAS cost impact proposal.

(8) The contracting officer makes a written determination that corrective actions have been taken,
so that no further actions can be reasonably anticipated.

(c) Where to store files in PCF. Audit reports are stored in PCF based on the type of audit being

resolved and dispositioned.

(1) Pre-Award Audits. Pre-Award Audit documentation shall be filed in PCF within the following

section: I Pre-Award, C. Evaluation, 04. Evaluations, Technical Evaluations.

(2) Incurred Cost, Defective Pricing, Claims, Business System, Cost Accounting Standards,

Operations, Earned Value Management System, Other shall be filed in PCF within the following

section: II Award, F. Post Award Documents, 01 Post Award Documentation.

(3) Terminations shall be filed in PCF within the following section: II Award, I. Administration, 10

Post Terminations.

Subpart 5142.2 - Contract Administration Services

5142.202 Assignment of contract administration.

(c)(2) The head of the contracting activity shall approve the delegation as stated in FAR 42.202(c)(2).

See Appendix GG for further delegation.

Subpart 5142.3 - Contract Administration Office Functions

5142.302 Contract administration functions.

(a)(S-75)(c)(1)(i)(C) The head of the contracting activity shall direct a formal program of Government

monitoring of contractor policies, procedures, and practices for controlling costs at contractor

locations as stated in DFARS PGI 242.302(a)(S-75)(c)(1)(i)(C). See Appendix GG for further

delegation.

Subpart 5142.6 - Corporate Administrative Contracting

Officer

5142.602 Assignment and location.

(a)(2) The Assistant Secretary of the Army (Acquisition, Logistics and Technology) approves the need

for a CACO. See Appendix GG for further delegation.

Subpart 5142.7 - Indirect Cost Rates
5142.703 General.

5142.703-2 Certification of indirect costs.

(b)(1) The Assistant Secretary of the Army (Acquisition, Logistics and Technology) may waive the

certification requirement at FAR 42.703-2. See Appendix GG for further delegation.

Subpart 5142.15 - Contractor Performance Information

5142.1502 Policy.

(d) Orders under single-agency contracts. Where the scope of the indefinite delivery contract is

narrow or orders will be essentially similar, the contracting officer shall prepare reports at the base

contract level.

5142.1503 Procedures.

(a)(1)(ii)(1) Contracting officer’s representatives (CORs) will assist the contracting officer with

entering objective performance information in the Contractor Performance Assessment Reports

System (CPARS) for each contract or order assigned. The contracting officer may assign the COR

the role of assessing official representative in CPARS.

(2) Include the contracting officer in the assessment process prior to forwarding a report to the

contractor for review.

(2) See 5142.1503-90(a) for a list of CPARS assessing officials (AOs) for contracts in different

business sectors.

(b)(2)(vi) The AO shall consider the extent to which the contractor complied with Department of

Defense policy for item unique identification; see DFARS 211.274-2 Policy for item unique

identification, and AFARS 5111.274-2.

(b)(4) The AO shall support the rating assigned to an element or sub-element with narrative

rationale. Narratives shall clearly convey the rationale behind the rating to the contractor, as well as

to a Government source selection official who is not familiar with the instant contract. This is

especially important for any rating above or below satisfactory. The AO should support narratives

with quantifiable or verifiable documentation. While larger or more complex efforts warrant greater

detail, narratives should be clear and concise.

(f) See Army Regulation 715-30, as revised, for maintenance of past performance information that

cannot be maintained in an unclassified database.

(h)(2) The contracting officer shall process the CPARS initial registration consolidated format and a

CPARS access request form and shall ensure the CPARS focal point receives both documents to

ensure completion of registration within 30 calendar days from award of a contract. CPARS

registration formats are located at 5153.303-9 Initial registration and 5153.303-10 Access request.
5142.1503-90 Policy.

(a) The CPARS AOs are as follows:

Business Sector CPARS Assessing Official

Systems Program Manager (PM)

Operations Support Contracting Officer

Services Contracting Officer or PM*

Information Technology Contracting Officer

Construction Contracting Officer

Architect-Engineering Contracting Officer

All other contracts Contracting Officer

* The PM (program/project/product manager) is the assessing official for those service contracts

providing technical or management support to the program office.

(b) The AO may prepare an out-of-cycle or “addendum” report if there is a need to record an

extraordinary event prior to the next regularly scheduled evaluation or if it is necessary to report a

meaningful occurrence during the period between physical completion of the contract and contract

closeout. The AO shall prepare an addendum report in CPARS if any unusual or extraordinary action

occurs during contract execution including the issuance of a show cause letter, stop work order or

termination of the contract. Additionally, the AO may prepare addendum reports to record

contractor’s performance relative to contract close-out and other administrative requirements (e.g.,

final indirect cost proposals, technical data, etc.).

(c) For job order contracts, the contracting officer shall ensure completion of an assessment report

for each order of $700,000 or more.

Subpart 5142.71 - Voluntary Refunds

5142.7100 General.

(4) Voluntary refunds must be approved by the head of the contracting activity as described in

DFARS PGI 242.7100(4). See Appendix GG for further delegation.