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  • Question

    10 U.S.C. §2371b does allow for audits in flexibly priced contracts by third party auditors. Do they have to submit a single party audit through the Federal Audit Clearinghouse? The contract is issued and administered by the buying command which is a CPFF Prototype OTA.


    Answer

    This is an Agreement-specific question which can only be answered by reference to the applicable documents.  First, the contractor should reference their project agreement; second, their member Agreement, and third, the Consortium OT Agreement.  Specifically, they are looking to identify what accounting system and audit requirements they are subject to. If the Agreements are silent on audit and accounting requirements, then they should not be submitting anything to DCAA.

    Additionally, CPFF as understood in FAR Part 16 is inapplicable to OTAs, so the controlling processes and reporting requirements will all come from the Agreement document. For OTAs, this type of agreement is an "Expenditure-Based" Agreement.

    For the future, the company should push back on the Government if they are using "CPFF" as a contract-type for OTAs, as this type of language confuses the requirements by inserting FAR terminology where the FAR doesn't apply. 

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