In March 2024 the Defense Contract Audit Agency (DCAA) released its Report to Congress. The report covers the Agency’s audit activities in FY 2023 and plans for FY 2024. The areas addressed in the report include Forward Pricing, Incurred Cost, Claims and Terminations, Business Systems, Cost Accounting Standards (CAS) & Truth in Negotiations.
In FY 23, DCAA examined $253.6 billion in contract costs, a 3% decrease from FY 22. DCAA issued 2,314 audit reports and identified $5.4 billion in audit exceptions, also a slight decrease. DCAA reported $3.5 billion in net savings (questioned costs sustained, minus the aggregate cost of performing the audits) and a “return on investment” (net savings/aggregate cost) of roughly $5.1 for every $1 spent – increases of 17% and 11%, respectively, from FY 22.
DCAA also monitors the extent to which its exceptions are sustained by the contracting officer (CO). In FY 23, CO’s sustained $3.9 billion of $9.0 billion of exceptions (many of these exceptions come from audit reports issued in prior years). FY 23’s 43% sustainment rate is a slight decrease from 22’s rate of 47%. The table below shows the amount of exceptions and sustainments by audit type.
FY 2023
| Audit Type | Audit Exceptions (in millions) | Exceptions Sustained (in millions) | Percent Sustained |
| Forward Pricing | $4,417 | $2,341 | 53.0% |
| Incurred Cost | $3,828 | $1,221 | 31.9% |
| Claims and Terminations | $509 | $255 | 50.1% |
| Systems, CAS & TINA | $249 | $71 | 28.5% |
| Total | $9,003 | $3,888 | 43.2% |
One of DCAA’s successful initiatives in FY 23 was the automation of Contractor Submission Portal reminder letters. It is estimated to have saved approximately 7,000 administrative hours. Looking ahead to FY 24, DCAA will unveil a new Strategic Plan. The plan emphasizes four strategic priorities: 1) Optimize Value and Customer Service, 2) Cultivate a Premier and Diverse Workforce, 3) Capitalize on Technological Innovations, and 4) Influence the Business Environment. To help enact these items, the agency plans to leverage its new audit management information system, as well as increase its focus on customer relationships and technology.
Our team of professionals has extensive experience working with contractors on all types of DCAA audit matters and is ready to assist with any questions.
The full DCAA Report to Congress can be found here.