Attachment 1_Statement of Work_Audit Closeout Services_RV2.pdf

STATEMENT OF WORK

FOR

Audit Services

Pre-Award, Interim, Forward Pricing and Closeout

Risk Categorization: Exempt

Dated: November 15,2024

Prepared by: Svetlana Drapkin

Reviewed by: Lissette Contes

Approved by: Cheryl Colan

Princeton Plasma Physics Laboratory PO Box 451

Princeton, NJ 08543 609-243-2000

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SOW# PPPL-Procurement-Audit Services

RECORD OF CHANGES

Rev. Date Purpose

0 October 10, 2019 Original SOW

1 November 7, 2019 Update Attachments list

2 December 19, 2019 Updates to Section 2.0, 4.2.4 and 6.0

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1.0 INTRODUCTION AND SCOPE

Princeton Plasma Physics Laboratory (PPPL), a Department of Energy (DOE) Management and Operating (M&O) Contractor, desires to enter into a Basic Ordering Agreement (BOA) for Contract Audit Services in support of the PPPL Procurement Division to perform a broad range of Contract Audit Services including but not limited to Pre-Award, Forward Pricing, and Incurred Cost audits of PPPL flexibly priced subcontracts. The intent of acquiring these services is to ensure that the subcontractor has an accounting system capable of separating out costs specifically for the subcontract and to satisfy the requirements of Department of Energy Acquisition Regulation (DEAR) clauses 970.5232-3 and 970.5244-1 which are incorporated into PPPL’s prime contract.

970.5232-3(c) Audit of subcontractors' records. The Contractor also agrees, with respect to any subcontracts (including fixed-price or unit-price subcontracts or purchase orders) where, under the terms of the subcontract, costs incurred are a factor in determining the amount payable to the subcontractor of any tier, to either conduct an audit of the subcontractor's costs or arrange for such an audit to be performed by the cognizant government audit agency through the Contracting Officer.

970.5244-1(e) Audit of Subcontractors.

(1) The Contractor shall provide for—

i. Periodic post-award audit of cost-reimbursement subcontractors at all tiers; and

ii. Audits, where necessary, to provide a valid basis for pre-award or cost or price analysis.

Services that may be ordered include:

1. Pre-Award Audit – to obtain an understanding of the proposed subcontractor’s accounting system, and to opine as to whether the design of the subcontractor’s system is acceptable for the award of a prospective subcontract. This audit involves only the evaluation of the design effectiveness, not the operating effectiveness of the system.

2. Forward-Pricing Audit – audit of a subcontractor’s 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 a prospective subcontract.

3. Incurred Cost Audit (interim and closeout) – to examine the subcontractor’s cost representations, in whatever form they may be presented (such as interim and final public vouchers, progress payments, incurred cost proposals, termination claims and final overhead claims), and to express an opinion as to whether such incurred costs are reasonable, applicable to the subcontract, determined under generally accepted accounting principles and cost accounting standards applicable in the circumstances, and not prohibited by the subcontract, by statue or regulation, or by previous agreement with, or decision of, the PPPL.

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The Subcontractor shall provide all Contract Audit Services in accordance with the requirements of the Statement of Work (SOW), and any additional detailed audit instructions provided at the time of order.

Contract Audit Services shall be performed in accordance with Generally Accepted Government Auditing Standards (GAGAS), and International Professional Practices Framework (IPPF), which includes the Code of Ethics and the Standards, published by Institute of Internal Auditors (IIA).

PPPL subcontractors requiring audits to be performed include both U.S.-based companies and foreign-based companies. All reports and documentations from audits of foreign companies shall be translated into English.

The work will be ordered on a per audit basis, either as fixed-price, or as time-and-material agreements, as agreed to by the parties, including technical oversite and administration by the PPPL Princeton Technical Representative (PTR).

1.1 Definitions

1.1.1 Basic Ordering Agreement (BOA)

A written instrument of understanding negotiated between PPPL procuring activity and the subcontractor.

A BOA contains:

(1) terms and clauses that will apply to any future orders placed during the BOA’s term;

(2) a description, as specific as practicable, of supplies or services to be provided; and

(3) methods for pricing, issuing, and delivering future orders.

A BOA is not a contract, and does not state or imply any agreement by PPPL to place future Job Orders, does not require or obligate PPPL to issue any minimum number or value of Job Orders, and does not guarantee any minimum or maximum amount of Services or expenditure under the BOA. There is no funding obligated by a BOA and no claims for payment may be made by the subcontractor directly against the BOA.

1.1.2 Job Order

An individual order for supplies or services issued by PPPL pursuant to the terms, conditions, and pricing established in the BOA. Each individual Job Order is a binding contractual instrument and will reference and incorporate the terms and conditions of the BOA and specify the scope of work, delivery schedule, fixed or time-and-material, and funding encumbrance for the individual Job Order.

1.1.3 PPPL Procurement Specialist

The term “PPPL Procurement Specialist” as used herein refers to the person executing this BOA and BOA Job Orders on behalf of PPPL, and other persons authorized to sign PPPL subcontracts acting within the limits of their authority.

1.1.4 Princeton Technical Representative (PTR)

The term “Princeton Technical Representative” as used herein refers to the person responsible to ensure compliance with the technical aspects of the subcontract, on behalf of

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PPPL, and for the day to day issuance of clarifications and guidance as may be required within the scope of the subcontract Statement of Work.

2.0 APPLICABLE DOCUMENTS

All work performed by the Subcontractor shall be subject to the requirements set forth by, but not limited to, the following documents, as applicable and appropriate for each audit.

Generally Accepted Government Auditing Standards (GAGAS). GAGAS is published by the

United States Government Accountability Office International Professional Practices Framework (IPPF), which includes the Code of Ethics and the Standards, published by the Institute of Internal Auditors (IIA) American Institute of Certified Public Accountants (AICPA) standards DCAA Contract Audit Manual (CAM), published by Defense Contract Audit Agency (DCAA) DOE’s Office of Inspector General (OIG) Audit Manual Relevant portions of the following regulations: DEAR, Federal Acquisition Regulations (FAR), and Cost Accounting Standards (CAS) DOE Acquisition Letter No. AL 2014-01: Management and Operating Contractors’

Audit Coverage of Cost-Reimbursement Subcontracts DOE Acquisition Guide Chapter 70.42.102: Management and Operating Contractors’

Audit Coverage of Cost-Reimbursement Subcontracts

3.0 [RESERVED]

4.0 RESPONSIBILITIES

See Section 5.0 for detailed requirements.

4.1 Princeton Plasma Physics Laboratory

4.1.1 PPPL shall communicate and coordinate with the Subcontractor and the subcontractors/suppliers under audit to determine the conditions and scope of the audit and the date and location.

4.1.2 PPPL shall coordinate the following meetings:

Kick-off meeting to discuss the SOW; and Close-out meeting to discuss observations.

4.1.3 PPPL shall obtain appropriate access and releases from the subcontractors/suppliers under audit to permit the Subcontractor access to appropriate records, documents, personnel, and facilities.

4.2 Subcontractor

4.2.1 Annually, the Subcontractor shall certify that staff assigned to each audit shall meet staff qualifications and continuing professional education requirements prescribed by Generally Accepted Government Auditing Standards (GAGAS) and the IPPF. Additionally, if requested by the PTR or their designee, the Subcontractor shall provide documentation to support such certification.

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4.2.2 Subcontractor personnel who are new to PPPL assignments shall be reviewed and approved by the PTR or their designee. No new personnel shall be assigned to PPPL without the written concurrence of the PTR. Note that Subcontractor shall not utilize any lower tier subcontractors or temporary staff without the prior written approval by the PTR or their designee.

4.2.3 The Subcontractor is responsible for complying with all items included within this Statement of Work. No PPPL action or inaction shall relieve the Subcontractor of its responsibility for full compliance with Federal, State, local laws and regulations, and Subcontract requirements.

4.2.4 The Subcontractor shall ensure that confidential or sensitive information and/or documentation including work papers and PPPL or Government property is kept in a locked secured place when not in use by those assigned to work on this SOW by the Subcontractor.

The Subcontractor is also required to ensure that data maintained in electronic format is adequately protected by adhering to PPPL data protection requirements including data encryption.

4.2.5 The Subcontractor’s performance shall follow the criteria with respect to the work performed:

Adherence to the IPPF in the conduct of all work;

Protection of confidential and sensitive information. To the extent that work under this

SOW requires the Subcontractor to be given access to confidential or sensitive information belonging to PPPL or the subcontractor/supplier under audit or its supporting subcontractors, the Subcontractor shall after receipt thereof treat such information as confidential and agrees not to appropriate such information for its own use or disclose such information to third parties unless specifically authorized by PPPL, in writing. The Subcontractor shall assure that each auditor with access to confidential or sensitive information knows the prescribed rules of conduct and is aware that he/she may be subject to criminal penalties for violations of the Privacy Act. The Subcontractor shall obtain written agreement with each auditor permitted access to confidential or sensitive information under this SOW, whereby the auditor agrees not to discuss, divulge, or disclose any such information or data to any person or entity except those persons within the Subcontractor’s organization directly concerned with the performance of this Subcontract who are also authorized or PPPL’s PTR or their designee;

Demonstrate an efficient, effective, qualitative, and responsive audit function;

Ensure that all auditor qualifications, training, and audits performed are in accordance with professional standards;

Demonstrate cooperation and excellent interpersonal skills with PPPL and those subcontractors/suppliers audited at PPPL’s request;

Ensure that the audit program and procedures for all audits are performed to satisfy the requirements of GAGAS and applicable regulations; and Ensure that audit reports are objective, factual, and free from errors and omissions.

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5.0 REQUIREMENTS

5.1 Reports

5.1.1 The Subcontractor shall produce audit reports, with findings and recommendations documented as appropriate for the type of audit. The reports are to be addressed to the Director of Procurement. The Subcontractor shall produce a report expressing an opinion (when GAGAS applies). The reports will contain schedules and notes as appropriate to fully communicate the scope and results of the work performed. Reports are expected to be professionally written and edited, mathematically correct and inclusive of supporting rationale. The reports shall be written in Microsoft Word and submitted electronically in compliance with the agreed to schedule for each audit, noted in the task order. Audit reports are considered deliverables under this subcontract.

5.1.2 In addition to the audit reports, the Subcontractor shall submit a monthly status report

(completed in Microsoft Excel) via electronic mail to the PTR on the 15th day of each month, reporting on activities of the prior month. These shall contain, but not be limited to, the following data:

a list of audits ordered to date, sorted by date ordered, showing their associated subcontract and funding values;

separating travel from labor, labor hours by labor category and associated hourly rate extended prices;

incurred travel at costs in compliance with PPPL General Guideline for Subcontractor Travel;

an assessment of technical progress, schedule status, and any Subcontractor concerns.

The reports will also identify:

the reporting period (month and year);

the awarded subcontract number;

the audited vendor name;

order number (if applicable);

order date;

service type (such as incurred cost audit or accounting system review);

audit description (brief description of services);

period of performance start (date task started);

period of performance end (date task ended or is scheduled to end);

technical progress;

schedule status;

current period actuals and inception to date actuals (hours and dollars incurred);

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The first report shall be provided on the 15th day of the second month after award.

5.2 Work Process

5.2.1 When Auditing Services are desired, the PPPL Procurement Specialist will provide in writing to the Subcontractor a description of the work (type of audit), and request a written cost estimate or price proposal for the performance of the audit either on fixed-price or time-and-material basis.

The Subcontractor is to respond, within five (5) working days, with a schedule and a fixed-price proposal for the performance of the work requirements. The proposal will include an organization plan with the personnel, roles and responsibilities, and the number of hours of effort proposed by job title, e.g. Partner/Principal – 20 hours, Staff Accountant – 40 hours, etc. at the hourly rates agreed to in the BOA. The proposal should also include the basis for other proposed charges, in sufficient detail in order for a determination to be made whether the proposed charges are “fair and reasonable.”

When the parties agree on a price and schedule for the performance of the work, PPPL Procurement will issue to the Subcontractor a written Job Order. Job Orders will be sequentially numbered and will contain, where possible the following:

Description of the Audit

A Statement of Work

Required completion date

The Job Order Fixed Price or Estimated Price

The Subcontractor agrees not to begin work on a project before a Job Order for that work is issued to the Subcontractor.

Authorized work will be under the technical direction of the PTR.

6.0 TEST AND INSPECTION REQUIREMENTS

The Subcontractor shall develop and maintain complete and accurate work papers that document all work performed, support conclusions reached and are consistent with American Institute of Certified Public Accountants (AICPA) standards and in accordance with GAGAS.

At the request of PPPL’s PTR, the Subcontractor will provide, within five (5) working days of the request, a copy of any work papers, notes or other documentation (paper or electronic format) created in performing audits. The Subcontractor shall deliver complete signed work paper files (hard copies and editable electronic files, both in a format previously approved in writing by PPPL), including the Subcontractor’s internal quality assurance review notes, in final form to the PTR or their designee.

Procurement may share work papers with DOE, OIG, and PPPL management, as required. Work papers must be properly indexed and must cross-reference the audit report and any potential findings.

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7.0 QUALIFICATIONS

Subcontractor personnel, including approved lower tier subcontractor personnel, assigned to perform work in accordance with the requirements of the SOW incorporated under a PPPL subcontract shall meet the qualifications, experience and continuing professional educational requirements prescribed by IIA Standards and Code of Ethics as follows:

Bachelors, in accounting, business or related field with a minimum of 2 years of audit experience or the equivalent combination of education and job related experience;

Certified Internal Auditor (CIA) and/or Certified Public Accountant (CPA) a plus;

Strong ability to evaluate and test internal controls;

Ability to organize, plan, prioritize and complete assignments with little supervision and within a prescribed time frame;

Ability to conduct sensitive investigations and maintain confidentiality of information;

Skilled in the use of personnel computer software such as Microsoft Office;

Skilled in the use of Audit Command Language (ACL) software is preferred;

Ability to present findings, observations, ideas and recommendations; and Defense Contract Audit Agency (DCAA) experience is highly desirable;

Willing to travel to subcontractor/supplier sites at either domestic or foreign locations.

8.0 ENVIRONMENT, SAFETY, AND HEALTH

The Subcontractor shall comply with:

the specific PPPL requirements listed in this SOW; and all applicable Federal, State, and local laws, regulations and requirements whether they are or are not specifically listed in the SOW or Subcontract.

9.0 QUALITY ASSURANCE REQUIREMENTS

The Subcontractor shall conduct and provide documentation to the PTR, or their designee, of its own independent peer review of all work performed by the individual auditors. This review may be provided to will be provided to the DOE, OIG, and PPPL management.

10.0 [RESERVED]

11.0 [RESERVED]

12.0 ATTACHMENTS

1. Nondisclosure Form Template

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13.0 INDEPENDENCE, SUBCONTRACTOR PERSONNEL CREDINTIALS,

DOCUMENTATION AND DELIVERABLES

1. Statement of Independence

The Subcontractor shall provide the PTR, or their designee, a written statement certifying that it and its personnel (including the Subcontractor, its principals, and its employees and lower tier subcontractors) are free both in fact and appearance from personal, external, and organizational impairments to independence in all matters relating to the engagement as described in the IPPF.

Specifically, the Subcontractor shall certify that it (1) is not biased because of its past, present, or currently planned interests (financial, contractual, organizational, professional, individual, or otherwise) which relate to the audit(s), (2) is not providing services to PPPL or the subcontractors under audit that may compromise their independence as required by the IPPF, and (3) does not obtain any unfair competitive advantage over other parties by virtue of its performance of this work. After the audit has commenced, the Subcontractor shall immediately notify the PTR, or their designee, of possible impairments to independence.

The Subcontractor shall consider not only whether it is independent and whether its attitudes and beliefs permit it to be independent, but also whether there is anything about its situation, which might lead others to question its independence. Subcontractor and Subcontractor Employee Independence Statements and Nondisclosure forms are required to be signed by each member of the Subcontractor’s proposed audit team. The form templates are included in Attachments 2 to this

SOW.

2. Subcontractor Personnel Credentials

Prior to assigning personnel to PPPL work, the Subcontractor shall submit a biographical statement for each individual, describing that individual’s educational experience (including formal degrees and majors), and relevant employment experience. Employment experience should be arranged in chronological order, starting from most recent and giving start and end dates by month and year.

The PTR, or their designee, shall review this submittal and approve in writing each candidate for assignment before the candidate commences work on the audit.

3. Audit Reports

See Section 5.1.1 for audit reports requirements.

4. Work Papers

See Section 6.0 for work papers requirements.

14.0 FRAUD, ILLEGAL ACTS, AND SYSTEMIC DEFICIENCIES AMOUNTING TO

FRAUD

The Subcontractor is responsible for being aware of the characteristics and types of vulnerabilities and potential illegal acts associated with the engagement in order to identify indications that illegal acts, violations of contract provisions, or abuse may have occurred.

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The Subcontractor shall be alert to the risks of internal control deficiencies in the course of their engagement. Deficiencies in internal controls over compliance exist when the design or operation of a control over compliance do not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a requirements of a DOE or PPPL program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a DOE or PPPL program will not be prevented, or detected and corrected, on a timely basis. In addition to the requirements described above with respect to violations of law and patently unlawful acts, the Subcontractor shall alert the PTR or designee to the existence of known or suspected deficiencies.

If during the course of the engagement, information comes to the Subcontractor’s attention indicating that fraud, illegal acts, or violations of provisions of agreements that could have a material effect on the subject matter or abuse that could be quantitatively or qualitatively material may have occurred, they shall immediately notify the PTR or their designee and confirm the conversations in writing. The Subcontractor shall not discuss the condition with any PPPL personnel or the subcontractor under audit without specific direction from the PTR or their designee. Any further action to be carried out shall be as directed by the PTR or their designee.

Types of situations that need to be brought to the attention of the PTR or their designee are the apparent commission of or intent to commit an illegal or wrongful act or series of acts to achieve a purpose inconsistent with a contract, the law, or public policy in order to obtain money, property, or personal advantage. Specific examples might include, but are not limited to, deceit, cheating, misrepresentation, deliberate misconduct such as destruction of records, concealment of assets, covering up sources of income, and any other conduct that would tend to be misleading or conceal relevant information or data.

15.0 PROTECTION OF CONFIDENTIAL AND SENSITIVE INFORMATION

To the extent that work under the Subcontract requires the Subcontractor be given access to confidential or sensitive information belonging to PPPL or its supporting subcontractors/suppliers, the Subcontractor shall after receipt thereof treat such information as confidential and agrees not to use such information for internal purposes or disclose such information to third parties unless specifically authorized by the PTR, or their designee, in writing. For knowingly disclosing information in violation of the Privacy Act, the Subcontractor and Subcontractor's employees may be subject to the penalties as set in 5 U.S.C. Section 552(i)(I) to the same extent as employees of PPPL.

The Subcontractor shall assure that each auditor with access to confidential and/or sensitive information knows the prescribed rules of conduct and is aware that he/she may be subject to criminal penalties for violations of the Privacy Act. The Subcontractor shall obtain a written agreement (suggested template to be provided by PPPL) with each auditor permitted access to confidential information, whereby the auditor agrees not to discuss, divulge or disclose any such information or data to any person or entity except those persons within the Subcontractor's organization directly concerned with the performance of this Subcontract who are also authorized access.

The Subcontractor shall ensure that confidential information, documentation materials and equipment, including work papers and PPPL property, is kept in a locked, secure place when not in use by Subcontractor staff. The Subcontractor is also required to ensure that data maintained in electronic

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16.0 SECURITY AND TRAINING

This Subcontract will not involve classified information.

Subcontractor auditors shall be familiar with PPPL site access requirements. Subcontractor personnel are responsible for complying with PPPL badge requirements and following computer security requirements if computers are brought onsite. In addition, Subcontractor auditors are responsible for following PPPL policies regarding prohibited articles.

All Subcontractor employees who are expected to be on site at PPPL for more than 40 hours in the course of the Subcontract are required to complete PPPL General Employee Training (GET) in order to receive a PPPL badge and continue their work on the PPPL site.

Prior to assigning an employee to work at the PPPL site, the Subcontractor shall certify whether or not an employee proposed to perform work at PPPL is a citizen of the United States of America. The Subcontractor shall use the attached form letter for this purpose. If a Subcontractor employee is not a U.S. citizen, the Subcontractor shall follow the notification requirements set forth in the form letter.