Requirements_Overview.doc

Requirement Overview

SCOPE

The Contractor shall provide support services to include Accounting Operations, Financial Management and Budget Execution Support for DARPA with Financial Analysis, Document Preparation, Reporting, Internal and External Accounting Record Reconciliation Support, review of Reported Amounts for Selected Financial Statement Accounts, Assertion Process and Internal Control over Financial Reporting (ICOFR) and Internal Controls over Financial Systems (ICOFS).

OVERVIEW

DARPA Overview. The Defense Advanced Research Projects Agency (DARPA) was created as the Advanced Research Projects Agency (ARPA) by Public Law 85-325 and DoD Directive 5105.41, in February 1958. DARPA is a separate agency under the Office of the Secretary of Defense, reporting to the Director of Defense Research and Engineering. DARPA's technical program offices manage the large majority of the DARPA's funds. The offices manage both broad, basic technology programs and projects that prepare the way for major programs to demonstrate future defense systems.

DARPA Funding. DARPA is a Research and Development (R&D) agency chartered with creating breakthrough technologies for national defense. It is solely funded by the RDT&E, Defense-Wide appropriation and has an annual budget of $3 billion. The agency encourages, funds, and manages research carried out by the military, private industry, and academia to fulfill its mission of avoiding and creating technological surprise. The most important factor that defines the DARPA creative culture is the limited tenure and continual rotation of program managers and office directors. This limited tenure causes an urgency for continuing innovation and to sustain that culture, DARPA needs the fluidity and agility to be able to fund programs quickly and efficiently. There are times when DARPA does not know who the agent or performer is going to be and due to the speed at which DARPA has to operate, the flexibility of using Direct-cite MIPRs is crucial for DARPA’s success.

Program Execution. DARPA relies on the Military Services as joint partners in the technical programs to assist in the transition of programs to the end user, as well as to perform approximately 50% of our contracting. Our specific use of Army, Navy and Air Force changes from year to year as DARPA programs change. DARPA uses external performers (e.g. industry, universities and non-profits) to perform the majority of its research. Approximately 92% of DARPA's total budget is placed on a contract or grant. DARPA maintains over 2,000 active contracts and grants during a fiscal year and issues approximately 3,500 MIPRs a year to 175 different DoD and non-DoD organizations. The remaining 8% of DARPA’s budget covers intramural (or in-house) research agreements internal to DoD and the federal government (e.g. NRL, NASA) and our management headquarters funding for salaries and infrastructure support. Approximately $1.2 billion of DARPA’s topline is issued as Direct-Cite MIPRs to the Army, Navy and Air Force to place on contract or grant. The Military Services serve both as our contracting agents and are vital partners for transition of our technologies. DARPA utilizes a full-scale accounting system, deploying the Defense Agency Initiative (DAI), a DLA owned resource planning enterprise financial management system, in FY 2012.

Finance and Accounting Support. The Defense Finance and Accounting Service (DFAS) is the primary finance and accounting service provider for the DoD. For DARPA, these services include maintaining official accounting records, performing payroll functions, settling travel claims, making contract payments, preparing required status reports, and preparing financial statements. The DFAS Indianapolis Center maintains detailed accounting and financial records for DARPA headquarters' administered funds and summary level information for the remaining funds which are administered by agents in the Military Services, Defense agencies, and civil agencies. Detailed accounting and financial records for agent-administered funds are maintained at the DFAS Centers and operating locations supporting those agents. DFAS Indianapolis uses summary level information from the Defense Departmental Reporting Database-Automated Financial Statements System (DDRS-AFS) to prepare DARPA's financial statements. DFAS Columbus entitles and disburses many contracts containing DARPA funds and serves as a main support organization for our Air Force Agents. The DARPA Comptroller Office (COMP) provides accounting, financial, contractual, systems and other management support for the agency. The functional areas are supported and governed by various statutes, policies, regulations and procedures. Tasks within COMP are often complex and require substantial experience, knowledge and background in a diverse complement of functional areas in order to be performed successfully. COMP is responsible for managing routine financial/accounting tasks as well as numerous other requirements levied upon DARPA by outside entities (primarily the Office of the Secretary of Defense, Office of Management and

Budget and the Defense Finance and Accounting Services).

Automated Systems. DARPA is provided financial and accounting services from a number of systems either owned and operated or just operated by DFAS and other service provider organizations. DARPA uses the DFAS Program Budget Accounting System (PBAS) as the official funds control system to electronically received allotted funds from OUSD(C)-P&B. Other financial systems used to support DARPA and its agents include the Defense Civilian Pay System (DCPS) for civilian pay; Integrated Automated Travel System (IATS) and Defense Travel System (DTS) for travel claim settlements; Integrated Automated Payment System (IAPS), Commercial Automated Payment System-Windows (CAPS-W), MOCAS and Wide-Area-Work-Flow (WAWF) for contract payments; and Defense Cash Accountability System (DCAS) and Automated Disbursing System (ADS) for disbursing. DARPA uses the Momentum Program Office Desktop as the foundation for the integrated DARPA Management Information System (MIS) and for budget planning and analysis.

Chief Financial Officer’s Act Support. In 2017, in accordance with the 2010 National Defense Authorization Act (NDAA), Section 1003, the Financial Improvement and Audit Readiness (FIAR) Directorate, merged the Departments financial improvement and audit objectives with the OMB Circular A-123, Appendix A requirements. Specifically, as defined by the FIAR guidance, DARPA is now required to issue a Statement of Assurance (SOA) on Internal Controls over Financial Reporting (ICOFR), and Internal Controls over Financial Systems (ICOFS) as a subset of its Annual Federal Financial Management Improvement Act (FFMIA) Statement of Assurance (SOA) reporting process. Furthermore, DARPA and its service providers must focus on improving controls and processes supporting information that is most often used by management, while continuing to work toward financial, information technology, and supporting documentation improvements that facilitate the achievement of unmodified audit opinions on its financial statements. To support the Department’s audit priorities and strategy, DARPA is required to perform procedures stipulated in Appendix A in accordance with OMB and as prescribed by the FIAR guidance. The DARPA Manager’s Internal Control Program has overall responsibility for preparation of the paragraphs in the SOA that address the ICOFR/ICOFS and to monitor the FIAR guidance and OMB Circular A-123, Appendix A implementation process.

The FIAR guidance identifies critical capabilities, which must be achieved by each component in order to assert audit readiness. Audit readiness is defined as having the capabilities in place to allow an auditor to scope and perform a full financial statement audit that results in actionable feedback. Assertion of audit readiness is based on overall progress against the critical capabilities as defined by OUSD(C). Implementation of the FIAR methodologies and priorities for DARPA are:

· In compliance with the NDAA, the DoD Components will continue to capitalize on lessons learned to work toward financial improvements that permit all their financial statements to receive unqualified audit opinions, or at a minimum, support the DoD-wide full financial statement audit readiness and sustainment objectives. DoD will also continue to place its primary emphasis on improving financial information and processes so that the information is more useful to managers. Successful audits will be one result of these improvements.

· DoD Components will focus first on improving information and processes supporting auditable statements for the financial information that is most often used to manage the Department. Because budgetary information is used widely and regularly for management, DoD places the highest priority on improving its budgetary information and processes through audits and examinations of the Statement of Budgetary Activity, which will lead to unqualified opinions on the Statements of Budgetary Resources and eventually to full financial statement audit readiness and sustainment. The secondary priority set forth by the FIAR guidance focuses on audit readiness efforts on the remaining financial statements: Balance Sheet (including related footnotes); Statement of Net Cost (and related footnotes); and Statement of Changes in Net Position. DARPA is not considered a property component, therefore emphasis on the existence and completeness of mission critical assets (that is, verifying that records accurately capture the number of each type of weapon system, real property, inventory, and operating materials and supplies) is not as important as the other focus areas.

· DoD 4th Estate (TIER3) Components were directed to undergo examination of the Statement of Budgetary Resources and select Balance Sheet line items in 2017, with follow on examinations to build upon successes and lessons learned. Policy updates related to achieving audit readiness and sustainment capability were incorporated into the FIAR guidance with focus areas such as:

· Incorporating guidance on the appropriate use of sub-allotments

· Aligning the FIAR methodology to merge revised requirements of OMB Circular No. 123, Management’s Responsibility for Enterprise Risk Management and Internal Controls

· Incorporating guidance on requirements of Statement of Standards for Attestation Engagements (SSAE) No. 18 relating to service provider controls

· Property policy and implementation

DESCRIPTION OF REQUIREMENTS

Accounting and Financial Operations Support Services: The performance of the tasks outlined below require: (1) An in-depth knowledge of a Defense Agency’s internal structure, automated financial systems and expertise in programmatic and financial analysis and installation level accounting.

The contractor shall:

· Perform continual finance and accounting assessments of work units within DARPA and document finding in reports. The contractor shall interface, communicate and educate all levels of the Agency’s staff on the findings of the analysis.

· On technical items and system requirements when building system transactions and “trouble shooting” system issues. Assist with the development, application and reporting of finance and accounting data required to operate within DAI.

· Provide support at DARPA Headquarters facility in Arlington, Virginia to research and monitor program execution, accounting records and contract payment files for contracts managed within DARPA’s Contract Management Office (CMO). Ensure that all contracts with pending Unliquidated Obligation (ULO) have their obligations and expenditures recorded correctly in both the accounting and entitlement systems.

· Identify and prepare a corrective action package that recommends a solution to a discrepant condition and describes how the solution should be implemented. Ensure the corrective action package is worked to completion.

· DFAS-Columbus support: provide on-site support at the DFAS Columbus, OH facility with a primary concentration on the Mechanization of Contract Administration Services (MOCAS). Perform contract analysis and document research support for the DARPA Financial Management staff, their support contractor (s), and the DFAS representatives that are performing reconciliations of Unmatched Disbursements (UMDs), Pre-validation and overage ULOs, and support to DARPA Tri-Annual Review (TAR).

· Identify and prepare a corrective action package that recommends a solution to a discrepant condition and describes how the solution should be implemented. Ensure the corrective action package is worked to completion.

· DFAS-Indianapolis support: Identify and reconcile accounting records that are in an “out of balance” condition. Conduct research on DFAS Indianapolis coordinated UMDs, and overage ULOs.

· Identify and prepare a corrective action package that recommends a solution to a discrepant condition and describes how the solution should be implemented. Ensure the corrective action package is worked to completion.

· Provide analysis and corrective actions thrice annually supporting the Comptroller’s TAR.

· DFAS-Indianapolis support: Ensure that all DARPA actions flow through DAI and CAPS-W accurately and within regulatory guidelines by providing direct on-site support within the DFAS Indianapolis Accounts Payable office. Provide policy and/or procedural updates, monitor DARPA agreements, reconcile discrepant conditions (UMDs/Pre-validation errors), recommend corrective actions and follow recommendations through to completion. The objective of this requirement is to

· Act as liaison between the DARPA Financial Management staff, DFAS Mission Support Accountants, support contractor(s), DFAS Columbus, DFAS Indianapolis and DFAS Cleveland. Coordinate with the geographically disbursed teams and implement a workload control procedure to minimize the potential of duplication of effort.

· Perform reviews of Fund Balance with Treasury (FBWT) and maintain all requisite documentation (executive summary, reconciliations, DFAS-Defense Reconciliation & Reporting Tool [DRRT]). Reviews will assess the adequacy of the controls and procedures for recording transactions and determine the reasonableness of the total amounts reported as current-period transactions affecting FBWT. Amounts reviewed will include disbursements, collections, appropriations realized, transfers in, transfers in/out, and other adjustments (rescissions, etc.) of funding authority that affect FBWT. Reviews will be performed each quarter of the Fiscal Year.

· When requested – provide support for an accounting system conversion and reconciliation for successful migration and deployment to an Enterprise Resource Planning upgrade or other financial information/accounting system solution and related audit readiness initiatives by providing data review and documentation to validate data accuracy

· When requested - Provide recommendations to accommodate remediation plans as a result of audit or mock audit findings. The recommendations would require workflow documentation and narrative support to be reviewed and approved by the DARPA Comptroller.

· Provide DARPA a monthly status report that outlines production to include everything from day to day operations to special assignments.

Chief Financial Officer’s Act Support Services The contractor shall:

· Perform audit readiness activities and associated reviews of compliance with laws and regulations, the systems of internal controls and accounting standards, and review financial results and audit reports (when applicable). At minimum two times annually or as otherwise directed by the COR, provide assessments and recommendations for resolution of finance, accounting, accounting systems and auditing issues related to DARPA, and keep an open line of communication between DARPA, its Audit Committee and other responsible entities within the Office of Secretary of Defense (OSD), Comptroller Office.

· Review the adequacy of internal controls over financial reporting, including computerized information system controls and security. Create and maintain business process flow charts and narratives which will include the assessment of associated risks, control activities, environment, information, monitoring, testing weaknesses (dependent or otherwise) as they relate to the reasonable assurance of financial reporting.

· Project staff must utilize Teammate Electronic Workpapers (EWP), a commercial off the shelf product to manage, maintain and store all documentation relative to ICOFR and audit readiness. Must also make available three (3) additional licenses of Teammate EWP exclusively for the use of DARPA staff.

· Create new or review and update the existing permanent file documentation (procedures, processes, and key control points) necessary for DARPA to assert audit readiness, while also identifying significant financial improvements issues where corrective action plans need to be applied, including Complimentary User Entity Controls (CUECs). Complete packages of the permanent file documentation will be maintained and updated at the end of each Fiscal Year.

· Provide support to DARPA when responding to the requirements of OUSD(C)/FIARSD. Provide up-to-date Assessable Unit (AU) documentation of internal controls over financial reporting and systems as required. Areas that should be documented include, but are not limited to: Fund Balance with Treasury, Accounts Receivable, Accounts Payable and Financial Reporting, Contract Pay and Civilian Pay.

Create and maintain DARPA financial reporting objectives (FROs), and the tests of internal controls and key supporting documents (KSDs) needed to demonstrate audit readiness. At least twice annually, provide evidence of sufficient tests of internal controls and key supporting documents included in the scope of its AUs.