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DoD Lightens Contractors' Burden on Voluntary Defective Pricing Disclosures

May 7, 2018

On May 4, 2018, the Department of Defense (DoD) issued a final rule (83 FR 19645), effective immediately, amending the Defense Federal Acquisition Regulation Supplement (DFARS) to give DoD contracting officers (COs) more leeway in evaluating contractors’ post-award defective pricing disclosures. To promote voluntary disclosures and reduce paperwork burdens on defense contractors, DoD rejected a proposed requirement to always conduct an audit of a contractor’s voluntary disclosure of defective pricing. Although the proposed rule (80 FR 72699) required DoD COs to request, at a minimum, a limited-scope audit of the affected cost elements, the final rule requires only a discussion between the CO and the Defense Contract Audit Agency (DCAA) to determine whether a limited-scope audit, full-scope audit, or technical assistance is appropriate for the circumstances (i.e., nature or dollar amount of the disclosure). The CO’s discussion with DCAA must cover: (i) the completeness of the contractor’s voluntary disclosure, (ii) the accuracy of the contractor’s cost impact calculation, and (iii) the potential impact on the contractor’s other existing contracts or proposals.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Nicole Owren-Wiest
Partner – Washington, D.C.
Phone: +1.202.624.2863
Payal Nanavati
Associate – Washington, D.C.
Phone: +1.202.624.2580