Please answer the following questions:
1) What are the consequences for the Government and
2) what are the consequences for the contractor for not submitting a CAS Disclosure Statement on a CAS contract prior to award?
3) If after contract award the contractor/subcontractor either does not have a CAS Disclosure Statement or refuses to submit one, then what is the Government's responsibility?
4) What is the contractor's incentive to comply?
5) Are there any safeguards to prevent awarding a contract without a CAS Disclosure?
6) What are the repercussions? - Termination? Cost Recovery? Litigation?
7) What if the current contract is not CAS covered, but the contractor has other CAS Covered contracts in the same accounting period - are they required to notify us?
8) What if they don't? How would we know?
9) DCMA should identify this, right? what if they miss it too?
10) what if it goes all the way to closeout? and we have made payments to a contractor without an approved accounting system or a CAS Disclosure?
Just trying to get a clear understanding
In accordance with FAR 30.202-6, Contracting Officers shall not award a contract until such time as the Cognizant Federal Agency Official (CFAO) has made a written determination that a contractor’s disclosure statement is adequate. Only the Head of Agency can waive the requirement for CAS and then, only if certain circumstances exist. However, there have been instances where a CAS-covered contract has been awarded without incorporating the applicable clauses and without submission of a Disclosure Statement (if required). Although we are not aware of any specific legal activity that has tested the incorporation of the CAS clauses under the Christian Doctrine (see G.L. Christian & Associates vs. United States), it may be that the clauses are incorporated by operation of law since CAS is mandatory in statute or regulation, represents significant public policy, and is designed to protect the Government. Typically, upon receipt of a contract for administration that requires CAS and the submission of a Disclosure Statement, and such submissions have not been made, the CFAO will require the contractor to submit the required Disclosure Statement. Failure to submit may subject the contractor to withhold of payments and potential issuance of a final determination subject to the Disputes Clause. Contracts may not be terminated for default based upon non-compliance with CAS.
In your example of a $20M CPFF contract, a Disclosure Statement may not be required. See 48 CFR 9903.201-1 for CAS applicability and 48 CRF 9903-202-1(b) for Disclosure Requirements. In some instances (e. g. award to a small business), a $20M CPFF contract would not be subject to CAS or Disclosure Statement requirements. In other instances, a $20M CPFF contract may be subject to modified coverage only, and not require submission of a Disclosure Statement. This area is somewhat complex and contract-specific.
As always, because DAU does not have all the facts regarding this matter, we recommend that the requester consult with their contracting officer, legal staff, or CFAO before taking any actions. We highly suggest you enroll in CON 252, Fundamentals of Cost Accounting Standards, which covers this subject matter. In addition, if you are a DCMA employee, the College of Contract Management will soon offer CMC 234, CAS Administration for more specific coverage of CAS.