No one enjoys the nail-biting experience of being audited by the Defense Contract Management Agency (DCMA). A DCMA auditor will go through all of your government contracts with a fine-toothed comb, looking for any deviations from the DCMA’s exacting requirements and IUID specifications, while you’re trying to make sure you followed all the right processes. Failing a DCMA audit is even worse than going through one. Let’s review the top five most serious problems your company is likely to face as a result of failing IUID compliance:
- Rejected shipments: If a DCMA auditor discovers serious flaws in your asset labeling and registration methods, the assets you’ve already shipped could be sent back to you, costing you time and money – not to mention added scrutiny on your asset tracking process going forward.
- Production lines shut down: A DCMA auditor could immediately issue a full or partial shutdown of your production lines, depending on the severity of deficiencies in your IUID process. This can cause serious delays in shipments to customers and decrease customer satisfaction.
- Damage control: It’s one thing to be required to learn from your mistakes going forward; it’s quite another to be told you must retroactively fix those mistakes. If a DCMA auditor determines existing assets have been labeled incorrectly, you could bear the brunt of adjusting those errors and re-labeling each asset. Fixing existing markings will take additional labor hours and could represent more than a doubling of your workload.
- Loss of future business: If your defense customers find out that you’ve failed a DCMA audit (and they inevitably will), you will become a less appealing choice for their future contract needs. If you work in a competitive industry, a failed audit is a scarlet letter that could damage your business’ growth potential.
- Reduced credibility: Even worse than losing your competitive edge as a result of a failed DCMA audit is becoming discredited by the tightknit Department of Defense community. Depending on how far out of IUID compliance you’re deemed, the DoD contractors whom you depend on for business could see you as too great a risk to ever contract with again.
There are many reasons to do everything you can to pass a DCMA audit. The last thing you want is to fail your audit, as it could lead to rejected shipments, production lines being shut down, a costly requirement to go back and fix asset markings, loss of future contracts, and the DoD contracting community blacklisting you from future work.