Attachment A PWS (00001).pdf

ATTACHMENT A: CONTRACT AUDIT SUPPORT SERVICES (CASS)

PERFORMANCE WORK STATEMENT

INTRODUCTION

This Performance Work Statement (PWS) describes NASA’s requirements to acquire Contract Audit Services in support of NASA procurement offices to perform a broad range of contract audits on NASA cognizant contractors. The intent of these contract audit services is to provide NASA with information that will assist in the pre-award, award, and administration functions of NASA contracts and modifications. This procurement for contract audit services will be an Indefinite Delivery Indefinite Quantity (ID/IQ) multiple award contract. The contracts will be structured for maximum flexibility in providing an expedited ordering process in order to satisfy the needs of NASA contracting officers.

Task orders will be awarded on a firm-fixed-price basis.

1.0 BACKGROUND

NASA spends over 80 percent of its appropriated funding – approximately $18 billion – acquiring goods and services. A majority of the acquisitions are associated with cost-type contracts under which NASA reimburses contractors for all allowable costs incurred producing a product or performing a service. NASA awards cost-type contracts for a variety of purposes, including developing scientific instruments, operating the International Space Station, and obtaining such services as flight safety analysis, ground and launch pad safety, and fire protection and emergency preparedness at NASA facilities.

In 2016, NASA increased the number of its partners to provide contract audit services and support. The Agency augmented its longstanding partnership with the Defense Contract Audit Agency (DCAA) with the addition of multiple commercial service providers, plus other Federal agencies.

2.0 SCOPE

The contract audit services will be performed by commercial auditors for NASA contracts and modifications; services that were previously performed by DCAA. The purpose of contract auditing is to assist in achieving prudent contracting by providing those responsible for Government procurement with financial information and advice relating to contractual matters and the effectiveness, efficiency, and economy of contractors’ operations. Contract audit activities include providing professional advice on accounting and financial matters to assist in the negotiation, award, administration, re-pricing and settlement of contracts. Audit interest encompasses the totality of the contractor’s operations. Audits are performed to assure the existence of adequate controls which will prevent wasteful, careless, and inefficient practices by contractors. These audits include the evaluation of a contractor’s policies, procedures, controls and actual performance, identifying and evaluating all activities which contribute to, or have an impact on, proposed or incurred costs of Government contracts. Areas of concern to the auditor include: the adequacy of contractor’s policies, procedures, practices, and internal controls relating to accounting, estimating, and procurement; the evaluation of contractors’ management policies and decisions effecting costs; the accuracy and reasonableness of contractors’ cost representations; the adequacy and reliability of contractors’ records for Government-owned property; the financial capabilities of the contractor; and the appropriateness of contractual provisions having accounting or financial significance.

As part of conducting a contract audit, the contractor will refer indications of potential fraud or other criminal acts discovered during an audit to the NASA, Office of Inspector General (NASA-OIG). Guidance on and examples of fraud indicators can be found in the Government Auditing Standards at https://www.gao.gov/assets/700/693136.pdf. Contact information for the NASA OIG is at https://oig.nasa.gov/hotline.html.

3.0 REQUIREMENTS

3.1 Work Description

The Contractor shall provide contract audit services in accordance with the PWS and any additional instructions provided at the time the task order is issued. The Contractor shall furnish all the necessary services, qualified personnel, material, equipment, and facilities not otherwise provided by the Government as needed to perform all audit services as delineated in each task order and at a minimum in accordance with the documents cited in section 3.11, Reference Documents, of this PWS.

Contract audit services include:

3.1.1 Task Area 1: Incurred Cost Audits – Represents the effort to perform an incurred cost audit of a contractor’s fiscal year incurred cost proposal to determine if costs charged to auditable Government contracts are allowable, allocable, and reasonable in accordance with contract terms and applicable Federal Government acquisition regulations.

3.1.2 Task Area 2: Contractor Disclosure Statement Compliance - Represents the examination of the contractor disclosure, to include at a minimum, verifying the completeness and accuracy of the disclosure, including any disclosed cost impact to Federal Government contracts.

3.1.2.1 Sub-Task Area 2.1: Cost Accounting Standards (CAS) Compliance - The purpose of CAS compliance auditing is to determine if the contractor's policies, procedures, and practices used to estimate, accumulate, and report costs on Federal Government contracts and subcontracts comply with the requirements of

CAS.

3.1.3 Task Area 3: Forward Pricing Rate Proposal Audits – Represents the effort to plan and perform an audit of a forward pricing rate proposal to evaluate the proposal for its acceptability in determining fair and reasonable rates and factors for the award, administration, modification, or re-pricing of Federal Government contracts.

3.1.4 Task Area 4: Contractor Labor Floor Checks or Interviews – Represents the effort to evaluate the accuracy of contractor employee (salaried and/or hourly) labor hour charges to contracts, indirect accounts, or other cost objectives.

3.1.5 Task Area 5: Testing of Paid Vouchers – Represents the effort to perform limited current period tests on selected paid vouchers. This effort is designed to test the contractor’s compliance with the contract terms. Additionally, the auditor will use the results of the testing to support the incurred cost audit for the period.

3.1.6 Task Area 6: Business System Audits (Accounting, Estimating, or Purchasing)

- The objective of these types of audits is to examine the contractor’s compliance with the system criteria for an acceptable accounting, estimating, and purchasing system.

3.1.7 Task Area 7: Full or Partial Cost/Price Proposals Audits – Represents the effort of planning and performing the audit of cost/price proposals to evaluate the proposal for reasonableness and its compliance with FAR Part 15 and 31, as well as applicable Cost Accounting Standard provisions.

3.1.7.1 Sub-Task Area 7.1: Financial Due Diligence Assessment - Represents the effort to support the contracting officer in determining whether prospective contractors and subcontractors are responsible. The assessment will determine if a prospective contractor has adequate financial resources to perform the contract, or the ability to obtain them.

3.1.7.2 Sub-Task Area 7.2: Overhead Should Cost Review (FAR 15.407-4(c)(2)

- Represents the effort to support the Administrative Contracting Officer (ACO) in negotiating final indirect rates. The objective of the overhead should-cost review is to evaluate significant indirect cost elements in-depth and identify and recommend corrective actions regarding inefficient and uneconomical practices.

3.1.8 Task Area 8: Review and Approval of Interim Vouchers - Represents the effort expended to process the Federal Government contractor's interim public vouchers for provisional payment.

3.1.9 Task Area 9: Establishment of Provisional Billing Rates – Represents the effort to establish or adjust provisional billing rates as required by FAR 42.704, Billing Rates.

The scope of the work performed does not constitute an audit or attestation engagement under generally accepted government auditing standards (GAGAS).

3.1.10 Task Area 10: Evaluation of Final Vouchers – Represents the effort of performing an evaluation of a final voucher to determine the costs and fee (or profit) payable for closing of cost reimbursement, labor hour, time and material (T&M) and Fixed Price Incentive (FPI) contracts/subcontracts.

3.1.11 Task Area 11: Pre-award Survey of Prospective Contractor Accounting System – Represents the effort to obtain an understanding of the accounting system to appropriately complete the Pre-award Survey of Prospective Contractor-Accounting System, Standard Form (SF) 1408, and to opine as to whether the design of the contractor’s system is acceptable for the award of a cost-type contract.

3.1.12 Task Area 12: Application of Agreed-Upon Procedures – Represents the effort of performing the procedures that have been mutually agreed to in advance with the Federal Government contracting officer. The procedures should be specific, subject to measurable criteria, and not require an analysis or audit opinion.

3.1.13 Task Area 13: Resident Auditor at NASA Center or Contractor Location – Represents the effort to provide dedicated, long term, on-site contract audit services or audit support services of any or all the task areas at a NASA contractor location or NASA Center within the United States. NASA is currently in a full telework status, however any labor is expected to perform onsite as soon as the full telework status is lifted.

3.1.14 Task Area 14: Claim and Termination Audits

Claim Audit - Represents the effort to evaluate the amount of the monetary adjustment related to a claim or equitable adjustment proposal with the goal of providing information regarding the acceptability of proposed or claimed costs and the reliability of contractor data furnished in support of the proposal or claim.

Termination Audit - Represents the effort to develop information and documentation to serve as a basis for reporting to the Termination Contracting Officer (TCO) the allowable costs, settlement expenses, and profit and/or loss under the terminated contract, based on the contractor's proposal and supporting records.

3.2 Work Authorization

All tasks must be authorized by the contracting officer. Task orders are approved by NASA Headquarters and managed by the NASA Shared Services Center. The task orders will describe the specific work requirements and objectives; the deliverables that will be required; the period of performance of the work; performance expectations; and any other special requirements (including travel) necessary to perform the work. Prior to work authorization under a task order, the contractor will provide a fixed price amount for the specific proposed work statement provided by NASA. The fixed price will be evaluated by the contracting officer and, if selected among competing Offerors responding to the task, will be included as the price for the task order.

3.2.1 Travel

The Government will create and maintain a not-to-exceed (NTE) travel CLIN to fund travel needed to conduct a task order audit assignment.

3.3 Program Management

The Contractor must support NASA with program management activities at the program level. The program management activities are those activities the contractor undertakes to successfully monitor, control and direct the activities associated with performance to assure price, schedule, scope and quality risks are addressed in a professional manner.

Program management activities include: managing the customer relationship, establishing quality control checks for work products, managing and integrating any teaming/subcontracting efforts with the prime contractor’s effort, and maintaining qualified personnel and efficient levels of staffing throughout the contract or financial assistance award performance period, including during periods of work load fluctuation. The nature of the work involves periods of varying levels of effort.

3.3.1 Post Audit Support

The Contractor shall provide post audit support to assist the Administrative Contracting Officer in negotiations of the final indirect rate agreement, as needed, after submission and acceptance of the task order deliverables. The Government will create and maintain a not-to-exceed (NTE) CLIN to fund post audit support associated with a completed task order audit assignment.

3.4 Reports

3.4.1 Audit Reports

Unless otherwise stated in a task order, the contractor must produce reports compliant with GAGAS and American Institute of Certified Public Accountants (AICPA) standards with findings, audit opinions, and conclusions documented as appropriate for the type of audit or service. After consideration of the Auditee’s written response to the draft report, the contractor must produce a report expressing an audit opinion (when GAGAS applies) or a disclaimer (for non-audit services).

NASA places emphasis on receiving a quality audit report. NASA considers the characteristics of a quality report as one that satisfies Generally Accepted Government Auditing Standards (GAGAS) and reflects audit report writing guidance detailed in Chapter 10 (Report Writing) of the DCAA Contract Audit Manual.

3.4.1.1 Report Submissions

The Contractor shall submit a draft report and a final report. The draft report shall be clearly marked as a draft. Draft reports shall be submitted to NASA for approval prior to the submission of the final report. When submitting the draft report for incurred cost audits, the Contractor shall submit the corresponding incurred cost submission and Cumulative Allowable Cost Worksheet (CACW) (Excel Version).

When submitting the final report, the Contractor must also submit all final work papers developed in conducting the audit.

All draft and final reports must be written in the most recent version of Microsoft Word and submitted electronically in compliance with the agreed-to task order schedule for each audit. Draft and final reports are considered deliverables under this contract.

The final approved reports should be addressed to the NASA Contract Audit Services Manager with copies to the Contracting Officer (CO) and the Contracting Officer’s Representative (COR). Depending on the requirements of the task assigned, the report may provide the results of agreed upon procedures, and/or express an audit opinion (or disclaimer) on the subject matter of the work performed. The reports will contain schedules and notes as appropriate to fully communicate the results of the work performed. Reports are expected to be professionally written and edited, mathematically correct and inclusive of supporting rationale.

The Contractor agrees that unacceptable work, as determined by the COR, will be corrected at no additional cost to the Government.

Final signature authority for the issued report(s) must be made by a Certified Public Accountant (CPA) with an active license and employed by a peer-reviewed CPA firm.

3.4.2 Monthly Status Report

The Contractor shall submit monthly status letters via email to the CO and COR no later than the 15th day (or the next business day) of each month, reporting on activities of the prior month. The letter must contain at a minimum technical progress, schedule status, and any audit concerns for each assigned task order. The reports will also identify the reporting period (month and year), the awarded contract number, the task order number, the audited vendor name, order number (if applicable), order date, service type (such as incurred cost audit or accounting system review), audit/service description (brief description of services), period of performance start (date task started), and period of performance end (date task ended or is scheduled to end). Schedule status must identify progress against the scheduled completion dates, rationale for any anticipated delays and requested schedule extensions. The monthly status letters will also include the tracking of task order funding status to ensure that the ceiling price of the ID/IQ contract is not exceeded.

The first report must be provided in the second month no later than the 15th day (or the next business day) after award.

3.5 Working Papers

The contractor must develop and maintain complete and accurate working papers on each audit report. In concert with paragraph 3.4.1.1 above, working papers shall be a deliverable as specified in each task order. The working papers must be available for review with the first draft of each audit report submitted, unless otherwise instructed by the COR. Work papers must be available for review by authorized NASA personnel and or representative upon request. All work papers and reports will become the property of NASA; however, as required under professional standards the independent auditor may retain a complete copy of all work papers to support reports produced under this contract.

3.6 Post Award Conference

The contractor must attend a post award conference conducted by the NASA Contracting Officer no later than 45 business days after the date of award of the IDIQ contract. The purpose of this conference is to discuss technical and contracting objectives of the contract. The post award conference will be facilitated, in concert, by the Contracting Officer and the NASA Contract Audit Services Manager, and the appointed Contracting Officer’s Representative (COR). The meeting will include a review of the contract and will address any contractor or NASA questions.

3.7 Communication

All technical communication regarding the audit work shall be through the COR with a copy to the Contracting Officer. All contractual questions regarding the performance of this contract shall be with the CO and any appointed COR and/or Alternate COR of this contract.

3.8 Conflict of Interest

NASA and the contractor will assess potential conflicts of interest between the contractor and the companies to be audited prior to issuance of task orders, as potential conflicts may change over the span of the contract ordering period. All orders will be subject to Organizational Conflict of Interest (OCI) review and the contractor will need to provide disclosure of potential OCI’s. In the event a potential OCI exists, the contractor must submit an OCI Mitigation Plan with its task order to the Contracting Officer for approval.

See the most recent NASA Annual Procurement Report for a current list of potential auditees. See 3.11 for a link to the report.

3.9 Confidentiality and Nondisclosure

After contract award, and prior to commencing a task order to perform contract audit services related to a NASA contractor, the contractor will be required to sign a nondisclosure agreement.

3.10 Safety and Health Plan

Safety and Health Plan shall be required for all auditors performing work on NASA facilities. Requirement for Safety and Health Plan will be included in the Task Order Request for Proposal and submitted within fifteen (15) days after the award of the Task Order and prior to any on-site performance.

3.11 Reference Documents

Federal Acquisition Regulation (FAR) at https://www.acquisition.gov/

NASA FAR Supplement (NFS) at https://www.hq.nasa.gov/office/procurement/regs/NFS.pdf

DCAA Contract Audit Manual (DCAA Manual 7640.1) available at https://www.dcaa.mil/Guidance/CAM-Contract-Audit-Manual/

DCAA standard audit programs available at https://www.dcaa.mil/Guidance/Directory-of- Audit-Programs/

Government Auditing Standards (The Yellow Book), issued by the Comptroller General www.gao.gov/yellowbook

NASA Annual Procurement Reports at https://www.nasa.gov/office/procurement/information

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