The Defense Contract Management Agency (DCMA) is an agency under the U.S. Department of Defense that works directly with defense contractors to ensure government supplies and services are delivered on time, at projected costs, and meet all performance requirements. As part of fulfilling these responsibilities, the DCMA routinely audits its contractors for quality assurance.

During audits, the agency’s mission is to protect the government from acquiring assets that are not of optimum quality, that aren’t performing to required specifications, and that aren’t being delivered on time.

Just as some income tax filers are more likely to be audited than others, some contractors are more likely than others to face a DCMA audit. The likelihood of DCMA selecting your organization for an audit depends on a number of factors.

Odds Increase with the Size of Company and Contract

A larger company that has an ongoing relationship with the government, for example, is more likely to be audited. That said, any organization can be audited, and DCMA does not provide any advanced notice when it is conducting a random audit. Therefore, it’s essential to do everything you can prior to an audit to ensure your organization is in compliance and prepared to pass.

Odds Increase Depending on the Status of your Contract

DCMA representatives routinely visit contractors throughout the life of the contract. They look to identify possible risks, ensure contracts are written to meet government needs and standards, and confirm that all terms and conditions of a contract are being met.

Odds Increase if You Have Failed an Audit in the Past

If you fail to meet the requirements of MIL STD 129 and MIL STD 130  in your next audit or if you have recently failed an audit, you can expect that DCMA will be performing an audit on your organization again in the near future.

Meeting the Basics of Your Contract Obligations

Specifically, when DCMA representatives evaluate government contracts, they are looking to ensure that every asset that you manage or deliver is uniquely identified, labeled, and tracked in accordance with the military and government standards. To that end, DCMA has developed a series of policies and procedures that allow DCMA auditors to systematically assess compliance under two important policies, MIL STD 129 and MIL STD 130.

How to Pass a DCMA Audit

Auditors want to know that all employees understand and adhere to all specifications of the IUID and RFID policies, that physical IUID labeling is being performed to specifications, that the assets are being registered properly, shipments are identified to all military shipment labeling standards and that all subcontractors are supporting the IUID asset identification methodology.

1) Employee adherence: DCMA auditors are looking to verify that all employees involved with IUID asset identification, shipment identification and reporting understand their organization’s processes and consistently support effective implementation of these processes.

2) IUID marking: DCMA auditors are looking to verify that all physical IUID labeling with plates, tags and labels is done in accordance with government standards. Auditors will look at every aspect of IUID markings, from validating that physical markings appear on assets to ensuring those markings are visible and readable by commercial off the shelf scanners.

3) Proof of registration: DCMA auditors are seeking to verify that all assets and shipments are properly registered in the iRAPT (Invoicing, Receipt, Acceptance and Property Transfer) system, the DoD’s web-based system for electronic invoicing, acknowledgement of receipt, and asset acceptance.

4) Subcontractor oversight: DCMA auditors will look to verify that a company’s subcontractors are following all protocols for IUID compliance.

 

Why is accurate tracking data so important?

Being able to reliably and consistently identify, mark, track and report assets through their full lifecycle is essential for passing DCMA audits. But investing in the infrastructure and resources necessary to support accurate tracking data is important for strategic company reasons as well. When you track assets in real time, you are able to identify missing assets and other problems early on, and correct them before being revealed in an audit. Also, if erroneous asset data has been submitted to the IUID Registry or another registration authority, the mistake becomes increasingly complicated and costly to correct.

The DoD has little time or resources to bother with correcting a contractor invoicing error. If you don’t input data correctly, you may not get paid or worse fail your next audit.

Survive Your Next DCMA Audit

For more information on how to prepare for a DCMA Audit – watch A2B Tracking’s latest on-demand webinar: Surviving DCMA – Barcodes, RFID and iRAPT.