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Performance Work Statement (PWS) Request for Quotation SP4703-20-Q-0056 *Note that this sample has been revised from the source document on the Government Point of Entry as necessary to align formatting and applicable FAR procedures.* 1. DEFINITIONSA Qualified Private Auditor (QPA) is a private (non-Government) company that is referred to in this document as the “audit firm,” “the auditor,” or “the Independent Private Auditor (IPA).” A QPA must meet the requirements of Section 803 of the 2018 National Defense Authorization Act (NDAA), including compliance with Generally Accepted Government Auditing Standards (GAGAS), having a current external peer review, being free of any conflicts of interest related to the subject matter under audit, and possessing the necessary independence as required by GAGAS. In addition to Section 803 of the 2018 NDAA, the QPA must possess a current external peer review with a rating of “pass.” If the QPA’s peer review is greater than a year old, the QPA shall provide additional information about the QPA’s system of quality control, including results from ongoing monitoring procedures. The audit firm(s) awarded a task order(s) resulting from this solicitation to perform the audit(s) listed in this solicitation are variously referred to as “the firm”, “the audit firm”, and “the contracted audit firm”. All refer to an audit firm contracted under award(s) resulting from this solicitation. Also in accordance with the 2018 NDAA, the QPA contracted to perform an audit under this PWS shall have no conflict of interest in performing such an audit,; shall possess the necessary independence to perform such an audit, as defined by GAGAS; shall sign a nondisclosure agreement as described in section 6.1 of this document to protect proprietary or nonpublic data; shall access and use proprietary or nonpublic data furnished during the audit only for the purposes stated in the contract; shall take all reasonable steps to protect proprietary and nonpublic data furnished during the audit; and shall not use proprietary or nonpublic data provided to the QPA to compete for Government or nongovernment contracts. The QPA’s assessment of potential conflicts of interest/threats to independence shall take into consideration any existing, ongoing, or planned non-audit services for the auditee or for DCAA. The “third party contractor or grant recipient” is variously referred to in this document as “contractor”, “grantee”, “recipient”, “auditee”, “contractor or grant recipient and other implementing entity.” All refer to an organization to be audited under an award resulting from this solicitation. An “Incurred Cost Submission” is referred to in this document as “contractor submission,” and refers to the certified documents that the third party contractor or grant recipient submits to the Government. The Incurred Cost Submission will be the subject of the audits contracted with the QPAs. The Contracting Officer Representative (COR) is a Defense Contract Audit Agency (DCAA) employee that assists the contracting officer with the technical monitoring and administration of the task order and ensures the audit firm meets all required performance parameters. The COR will act as an intermediary between the audit firm and the contracting officer. 2. BACKGROUND 2.1 Government MissionDCAA, while serving the public interest as its primary customer, performs contract audits for the Department of Defense (DoD) and provides accounting and financial advisory services regarding contracts and subcontracts to all DoD Components responsible for procurement and contract administration. These services are provided in connection with negotiation, administration, and settlement of contracts and subcontracts to ensure taxpayer dollars are spent on fair and reasonable contract prices. The DCAA consists of about 4,800 employees at over 300 locations in the United States, Europe, the Middle East, Asia, and the Pacific. DCAA’s organizational structure consists of three geographical regions, a field detachment to conduct classified work, and four Corporate Audit Directorates (CADs). The DoD annually spends billions of dollars of appropriated funds acquiring goods and services. Acquisitions other than firm-fixed-price (FFP) contracts are generally auditable by DCAA. Per the Federal Acquisition Regulation (FAR) 52.216-7, the Allowable Cost and Payment Clause, contractors are required to submit an annual incurred cost proposal within 180 days after the end of their fiscal year. These proposals are then audited by the Government in order to establish final indirect rates and to determine the “allowability” of direct contract costs.With the December 12, 2017, enactment of Public Law 115-91, DCAA is to acquire and maintain private sector capacity to meet current and future needs for the performance of incurred cost audits. The intent of these contract audit services is to provide DCAA, Defense Contract Management Agency (DCMA) and the Armed Services with information that will assist in contract administration functions. 2.2 Procurement ObjectiveThe purpose of this requirement is to issue task orders to audit firms that are qualified to perform the required audits and possess the necessary specialized audit expertise. These task orders will enable DCAA to fulfill its oversight mission and congressional mandate by monitoring U.S. Government DoD contracts. This Performance Work Statement (PWS) conveys the type and scope of the efforts required for the Qualified Private Auditors to assist the DCAA in its critical mission. 3. SCOPE OF WORK 3.1 GeneralThis PWS describes the audit requirements and activities the audit firm must perform to audit third party U.S. Federal Government contractors and grant recipients who have performed work on DoD contracts and subcontracts. The primary goal of each audit is to ensure the third party contractors and grant recipients’ claimed amounts on unsettled flexibly priced contracts comply, in all material respects, with contract terms pertaining to accumulating and billing incurred amounts. The audit firm shall perform examination attestation engagements in accordance with GAGAS issued by the Comptroller General of the United States, which incorporate by reference the American Institute of Certified Public Accountants’ Statements on Auditing Standards for Attestation Engagements. Details of the anticipated audits are provided in Attachment I to this PWS entitled “Planned Audits.” The audits cover multiple third party contractor or grant recipient submissions received by the DoD. The attachment identifies the period(s) to be audited, the auditable dollar value (ADV) of the submission(s) to be audited, and additional background information. The third party contractor or grant recipient’s Incurred Cost Submission is the subject for the audit. Incurred Cost Submissions present the contractor’s amounts on unsettled flexibly priced contracts for a given period. All currency amounts are stated in U.S. dollars. Each audit will be conducted within 270 calendar days unless further restricted in the Attachment I. If a task order covers more than one audit, the audits must be completed concurrently within 270 days period of performance. Please see Attachment I for more information. 3.2 ResourcesThe audit firm must furnish or provide all personnel, personnel management and supervision, all related internal supporting business functions (including background and “overhead” personnel), materials, supplies, equipment, tools, transportation, training, and facilities to perform the full range of technical and administrative services required by the task order. The audit firm staff assigned to perform the audit(s) must collectively possess adequate professional competence needed to address the audit objectives and perform the work in accordance with GAGAS. The audit firm’s management should assess skill needs to consider whether its workforce has the essential skills that match those necessary to perform the audits. Accordingly, the audit firm shall have a process for recruitment, hiring, continuous development and training, assignment, and evaluation of staff to maintain a competent workforce. The nature, extent, and formality of the process will depend on various factors such as the size of the audit firm, its structure, and its workload. Competence is derived from a blending of education and experience. The audit firm shall have experience conducting GAGAS compliant Incurred Cost Audits. 3.3 Control of Audit Firm EmployeesAudit firm employees must perform work as specified in the task order. The selection, assignment, reassignment, transfer, supervision, management, monitoring, and control of audit firm employees in performance of this requirement is the responsibility and prerogative of the audit firm. The Government will not exercise any supervisory control over the audit firm’s employees in the performance of the work anticipated herein. 3.4 Performance Objectives (Technical)The audit firm shall conduct the audit in accordance with GAGAS. The audit steps should provide reasonable assurance of detecting material misstatements to the subject matter under audit whether due to fraud or error. If evidence of fraud is discovered during the course of the audit, the audit firm must contact DCAA-Office of Inspector (OIG), the DCAA Department of Justice Liaison and the COR immediately and should exercise due professional care in pursuing indications of possible fraud and illegal acts so as not to interfere with potential future investigations or legal proceedings. The audit firm may obtain the contact information of the DCAA OIG and the DCAA Department of Justice Liaison from the COR. A Quality Control Plan shall be established by the audit firm and provided with their proposal. The Quality Control Plan shall be used to monitor performance throughout the performance of the task order. The IPA shall allow the Contracting Officer and the DCAA COR access to the engagement documentation (working papers) at any time during the engagement in order to validate or verify the quality of deliverables. 3.4.1 General ObjectivesThis procurement has three performance objectives. They are (1) planning and performing the audit, (2) preparing and submitting the audit reports, and (3) delivering the final working paper package and negotiation support.3.4.1.1 Planning and Performing the AuditThe audit firm must perform all procedures necessary to meet the audit objective. DCAA will provide notification of the specific incurred cost proposal to be audited by the audit firm to the contracting officer, the audit firm, and the auditee. The IPA firm is not required to perform an adequacy review of the submission. DCAA will complete the adequacy review of the auditee submission, and provide the IPA with the adequate submission and adequacy determination. The audit firm will coordinate with DCAA to obtain any historical information the auditor feels necessary to conduct a GAGAS compliant audit. The auditor will meet with the DCAA in person at the DCAA Field Office to review permanent files, past audit reports related to the auditee, and any other information that is available. The auditor may take notes and request copies of documents from DCAA that significantly impact the ability of the IPA to plan its audit engagement. The audit firm will coordinate with the DCAA Field Office on the method of electronic transmittal of relevant documents, using encrypted email or a Government approved safe site (such as AMRDEC). Prior audits and audit working papers are the property of the Government and only copies relevant to the engagement will be provided. DCAA will provide access to the complete permanent file of the auditee, but will not provide a full copy of it to the IPA. If there is a disagreement between the audit firm and the DCAA field office on what documents should be provided, the DCAA COR will be contacted for resolution. At a minimum, the audit firm shall physically visit the auditee in person at the auditee’s location once, during planning or performing the audit. The auditor is responsible for obtaining all contract information, including contract terms, contract briefs, contract modifications and amendments, etc., for the contract under which the audit is being conducted. DCAA will not provide contract briefs or contract information to the auditor. The auditor is expected to obtain all relevant contract information in order to perform their audit of the incurred cost submission in accordance with GAGAS, which includes ensuring the auditee complied with contract terms. The audit firm shall prepare a written audit plan in MS word or excel format and provide it to the COR, in accordance with Section 4.4 Deliverables. The audit plan shall include a milestone plan of significant deliverables, including the timing of the draft audit report, final audit report, and audit working paper package, as well as the anticipated delivery dates of each deliverable. If the audit firm identifies any potential limitations in the scope of the audit, they must immediately contact the COR. The audit plan shall set forth in reasonable detail the audit procedures the auditor will employ to accomplish the objectives of the audit. The scope of the audit will be the total amount claimed in the auditee submission on unsettled flexibly priced contracts, unless otherwise noted. If the audit firm plans to adjust the scope of the audit to include more or less than the total amount on unsettled flexibly priced contracts, they must notify the COR immediately. The COR will determine whether the adjusted scope of the audit may necessitate a recommendation to the contracting officer for a modification to the contract or an adjustment in price. The final determination of any contract modification or price adjustment resulting from an adjustment to the scope of the audit shall be made by the contracting officer. The form of the audit plan and the extent of its detail will vary with the circumstances of each individual audit. In developing the plan, the auditor shall be guided by the results of the planning considerations and procedures. As the audit progresses, changing conditions may make it necessary to modify the audit plan. Any modification to the audit plan that impacts audit procedures or delivery dates shall be communicated to the COR within 10 business days from the date of the modification. The auditor is solely responsible for coordinating with cognizant audit offices regarding assist audit requests that are required to accomplish the audit objectives. This includes subcontracts, higher tier prime contractors, and segments within the auditee’s organization. The auditor can coordinate directly with the audit office. The COR may facilitate the sharing of contact information for the cognizant offices. The auditor shall monitor all assist audit requests and be able to provide this information to the COR upon request. In performing the audit and executing the audit plan through the auditor’s fieldwork, the auditor shall keep the COR informed, at a minimum, in the monthly reports and at the monthly status meetings (if held), of issues that arise during the audit. If significant, such as previously unknown scope limitations, the auditor should notify the COR within 5 business days. GAGAS requires that the auditor properly oversee the quality and technical competence of the work performed in any audit. It is the audit firm’s responsibility to comply with GAGAS. Audit firm management review is a requirement of the audit plan. During planning and performance of the audit, the auditor should consider communicating directly with individuals and organizations on the distribution of the anticipated audit report, to ensure those individuals are kept apprised of significant events. 3.4.1.2Preparing and Submitting the Audit ReportsThe auditor shall submit draft and final audit reports to the COR. The audit reports shall be prepared in accordance with GAGAS. The reports shall be free of any mathematical, clerical, and grammatical errors. The audit report shall also include all elements required by GAGAS. In addition, the audit report shall include a summary table of the proposed amounts, questioned amounts (audit exceptions), and difference by each major cost element. The audit report shall include all of the elements provided in Attachment II. A Draft Report in MS Word or Excel format shall be transmitted via secure email to the COR at the conclusion of fieldwork. The Draft Report shall include all elements required by GAGAS, including the elements prescribed in Attachment II. The auditor shall submit the Draft Report and obtain approval from the COR prior to conducting an Exit Conference with the auditee. The audit firm shall invite the COR and the DCMA contracting officer to the Exit Conference. A Final Report shall be saved in .pdf format and transmitted via secure email to the COR once authorized and signed by a Partner-level manager within the audit firm. Prior to report authorization, the audit firm shall consider the auditee’s comments and incorporate those comments into the Final Report. The Final Report shall include all elements required by GAGAS, and shall include all elements prescribed in AttachmentII. Audit firm management review of all draft and final audit reports submitted to the Government is a requirement. The IPA shall allow the Contracting Officer and the DCAA COR access to the engagement documentation (working papers) at any time during the engagement in order to validate or verify the quality of deliverables. 3.4.1.3 Delivering the Final Working Paper Package and NegotiationSupportNo Later than 10 business days after the issuance of the Final Report, the auditor shall submit to the COR the Final Working Paper Package through a secure, mutually agreed upon electronic medium. The package shall be sent in a format that is compatible with the common audit software program CaseWare. It is not a requirement that the IPA use CaseWare to manage the working papers during the performance of the audit; however, it is required that the final version of the working paper package be transmitted in a format compatible with CaseWare. The requirement that the audit package is compatible with CaseWare is critical. If changes to the file format need to be made during transmittal of the final working paper package, the auditor is responsible for making those changes and ensuring compatibility. The files shall be sent in a manner in which the file can be archived in “lock-down” mode to prevent edits of working paper documents after issuance. “Lock-down” mode is a common term used in audit software. “Lock-down” mode will include read access to all working papers, but no write or edit privileges to prevent work changing after the issuance of the Final Report. The auditor shall confirm in writing (email is acceptable) that the COR is in receipt of the Final Working Paper Package. Audit firm management review of the final working paper package is a requirement. If requested, the audit firm shall provide negotiation support to the customer after the issuance of the Final Report. The audit firm may include up to 20 labor hours in its pricing for a mid to lower level employee that is the most familiar with any audit findings to provide negotiation support. The customer includes, but is not limited to, representatives from the Defense Contract Management Agency (DCMA) and contracting officers. Negotiation support may include such activities as assisting the customer in understanding the results of the audit or certain portions of the audit findings, calculating rates at the request of the customer, and examining additional information provided by the auditee after the audit report is issued. The negotiation support may encompass face-to-face, telephone, or email exchanges, and may require travel to locations outside the audit firm's local commuting area to attend meetings with customers. The audit firm will not perform inherently governmental functions like establishing final rates or negotiating on behalf of the Government, but the firm will support the customer with their needs to complete these functions. Negotiation support may be performed by low to mid- level staff of the audit firm who are the most familiar with the fieldwork of the assignment. While negotiation support may not be required in all instances (such as when audit reports are issued without questioned costs or with only auditee-concurred questioned costs, or when the customer does not request post-audit support), the IPA shall be available for negotiation support for a period of one year (365 calendar days) after issuance of the final audit report for a total not to exceed 20 work hours during this period. Litigation support services are outside the scope of this requirement. Litigation support services is defined as any action required in response to a court proceeding. Services for litigation support will be contracted separately with the audit firm on an as-needed basis. The audit firm is NOT expected to consider litigation support when pricing this requirement. The IPA shall allow the Contracting Officer and the DCAA COR access to the engagement documentation (working papers) at any time during the engagement in order to validate or verify the quality of deliverables. 3.5 Kick-off MeetingsWithin 7 – 10 business days after the award of a task order, a kickoff meeting will be conducted with representatives from DCAA and the audit firm (in person or via teleconference). The meeting, which is anticipated to last no longer than two hours, will afford audit firm management and staff the opportunity to obtain information about the audit and will reinforce DCAA’s expectations relative to the audit engagement, cost principles, and reporting. This meeting will be arranged by the COR. Travel will not be required for the kickoff meeting. 3.6 Monthly Status Report and Monthly Status MeetingThe audit firm shall submit a written monthly status report to the COR that includes an updated Audit Plan reflecting accurate dates for the deliverables. Monthly status reports shall be by Task Order, and shall include the consolidation of relevant information for all audits under the Task Order. Monthly status reports shall start not later than 30 days after the first Audit Plan is received under the Task Order. The Monthly Status Report shall also include significant issues that have been encountered during the audit process, as well as remedies for completing the audit on schedule. An in-person meeting or telephone conference to discuss the contents of the Monthly Status Report may be held at the request of either the Government or the audit firm. 3.7 Marking and DeliveryAll working papers and work product are considered For Official Use Only (FOUO). FOUO identifies information that is exempt from mandatory release under the provision of the Freedom of Information Act (FOIA). FOUO is not a security classification, it is a protective marking. All documents shall be delivered to the Government electronically. The auditor shall ensure appropriate FOUO markings are made on relevant documents, including but not limited to Audit Reports, calculations of contractor rates and factors, and formal communications to persons and organizations not directly associated with the audit effort.3.8 Audit Firm Use of Subcontractors and Teaming ArrangementsFAR 3.901 defines subcontractor as “any supplier, distributor, vendor, or firm (including a consultant [firm]) that furnishes supplies or services to or for a prime contractor or another subcontractor.” The audit firm may utilize a subcontractor(s) to accomplish the work provided the audit firm discloses information about the subcontractor in its proposal. The proposed subcontractor must be a Qualified Private Auditor (QPA) as defined by the 2018 NDAA, and must meet the requirements of the 2018 NDAA, including compliance with Generally Accepted Government Auditing Standards (GAGAS), having a current external peer review with a “Pass” rating, being free of any threats to independence/conflicts of interest related to the subject matter under audit, and possessing the necessary independence as required by GAGAS. If the subcontractor’s peer review is greater than a year old, the subcontract QPA shall provide additional information about the subcontract QPA’s system of quality control, including results from ongoing monitoring procedures. The subcontract QPA’s assessment of potential threats to independence/conflicts of interest shall take into consideration any existing, ongoing, or planned non-audit services for the auditee or for DCAA. The audit firm is responsible for maintaining documentation of all subcontract QPA peer reviews and subsequent monitoring procedures. The audit firm must demonstrate the responsibility of the proposed subcontractor, as defined in FAR 9.1, which may be subject to verification by the contracting officer prior to issuing a task order. The audit firm is responsible for the management, performance and conduct of its subcontractor(s). All subcontractor employees shall represent themselves to the DCAA field audit office and auditee as representatives of the audit firm. The proposed subcontractor shall sign a non-disclosure agreement prior to commencing any work. In the event a subcontractor(s) is added to the audit team post-award, the audit firm shall submit to the contracting officer all required documentation on the subcontractor(s), and the subcontractor(s)’s compliance with qualification standards shall be pre-screened and approved by the contracting officer prior to the subcontractor(s) commencing any work. Approval of subcontractor(s) shall not be unreasonably withheld. Please see the Solicitation Submission Requirements, specifically the Management Approach section, for additional documentation required to be submitted when a subcontractor is proposed. The audit firm may also utilize “1099” employees, purchased labor, individual consultants, or seasonal employees to accomplish the work provided the audit firm identifies such individual(s) in its proposal and submits the required documentation on the individual(s) in accordance with the Submission Requirements of the solicitation. If “1099” employees, purchased labor, individual consultants, or seasonal employees are used, such individuals shall represent themselves to the DCAA field office and auditee accurately as an employee of the audit firm. These individuals shall not use a different firm or organization name, and if they do they shall be considered a “subcontractor” and must comply with all requirements of paragraph 1 of 3.8 above. All “1099” employees, purchased labor, individual consultants, or seasonal employees shall be free of any conflicts of interest related to the subject matter under audit and shall sign a non-disclosure agreement prior to commencing any work. In the event “1099” employees, purchased labor, individual consultants or seasonal employees are added to the audit team post-award, the audit firm shall submit the subcontract management plan as required by the original solicitation, including but not limited to the employee(s)’s resume or qualification statement to the contracting officer for pre-screening and approval prior to the individual(s) commencing work. The subcontract management plan must be approved by the Contracting Officer prior to the subcontractors beginning work if subcontractors or Contractor Teaming Arrangements are made after award. Approval of such individuals shall not be unreasonably withheld. The audit firm is ultimately responsible for the management, execution, and GAGAS compliance of all subcontractors, consultants, “1099” employees, seasonal employees, and purchased labor. In accordance with FAR 9.603, the Government will recognize the integrity and validity of contractor team arrangements; provided, the arrangements are identified and company relationships are fully disclosed in an offer or, for arrangements entered into after submission of an offer, before the arrangement becomes effective. The Government will not normally require or encourage the dissolution of contractor team arrangements. The IPA and all subcontractors shall allow the Contracting Officer and the DCAA COR access to the engagement documentation (working papers) at any time during the engagement in order to validate or verify the quality of deliverables. The audit firm is responsible for maintaining documentation of all subcontract QPA peer reviews and subsequent monitoring procedures. 4. INSPECTION, ACCEPTANCE, APPROVALS, AND QUALITY ASSURANCE 4.1 Inspection and AcceptancePursuant to FAR 52.212-4, all work described in the PWS to be delivered under this task order is subject to final inspection and acceptance by an authorized representative of the Government. The authorized representative of the Government is the DCAA COR, who is responsible for inspection and acceptance of all services, materials, or supplies to be provided by the audit firm or auditor(s). The IPA shall allow the Contracting Officer and the DCAA COR access to the engagement documentation (working papers) at any time during the engagement in order to validate or verify the quality of deliverables. Unless notice of acceptance or request for revisions is sooner received, the audit plan and draft audit report may be considered accepted within 20 business days of submission to the COR. Written approval/acceptance by the COR is required for the final audit report and the working papers. No automatic acceptance is applicable to the final audit report or working papers. 4.2 Period of PerformanceThe Period of Performance for task order(s) will be 270 calendar days, unless otherwise noted in Attachment I, from the date the DCAA COR transmits the submission to the audit firm. The audit firm shall start work as soon as practicable but no later than 15 days after the issuance of a task order(s) identifying the subject of the audit to the audit firm and transmittal of the incurred cost submission from the Government to the audit firm. The specific period of performance will be clearly stated on each task order. It is the responsibility of the auditee to ensure that all records are available, all accounting entries and adjustments are made, and all other necessary steps are taken to make it possible for the audit firm to perform the work necessary to be able to present the final audit report within the allotted calendar days (which is 270 days unless stated otherwise in Attachment I). The auditor must notify the COR immediately if the auditee fails to produce the records required for the audit.4.3 Place of Performance Audits will be conducted at the auditee’s facilities as well as the IPA’s facilities. While work such as planning, drafting reports, and some analysis can be done at the IPA’s facility, it is expected that the IPA will spend time at the auditee’s physical location for some planning, fieldwork and any other work deemed necessary by the IPA to meet professional standards. Each task order will specify the location of the auditee’s facilities where the audit will be performed. A list of the anticipated audits is provided in Attachment I to this PWS, entitled “Summary of Audits.”4.4 Deliverables and Deliverable ScheduleThe contractor must submit all required report(s)/deliverables in accordance with the following schedule:DeliverablesPWS ReferenceFormatDelivery DateGovernment ActionPayment ScheduleAudit PlanSection 3.4.1.1MS Word Document or Excel30 days from receipt of auditee submissionApproval (Automatic approval after 20 business days)20% of price at time of approvalDraft Audit ReportSection 3.4.1.2MS Word Document or ExcelAs stated in the approved Audit PlanApproval40% of price at time of approvalFinal Audit ReportSection 3.4.1.2Adobe PDFAs stated in the approved Audit Plan Approval20% of price at time of approvalAudit Working Papers Section 3.4.1.3CaseWare Compatible Documents(.ac) As stated in the approved Audit Plan Approval20% of price at time of approvalMonthly Status Reports Section 3.6MS Word Document or other Monthly None NoneIf the audit firm is encountering difficulties in completing the engagement or is unable to meet the timelines required under the task order, the audit firm shall immediately notify the COR.4.5 QUALITY ASSURANCE SURVEILLANCE PLANIn fulfillment of this effort, the audit firm shall provide the deliverables identified in the resultant contract. All deliverables shall be submitted to the COR. The Government QASP will be used as the basis for reviewing each deliverable. All “days” identified in this contract will be business days unless otherwise specified. If deliverables are inadvertently scheduled for a weekend/holiday, then the due date becomes the next business day. The end-of-day for deliverables is 5 PM Eastern Standard Time. Final inspection and acceptance of all work performed, reports and other deliverables will be performed at the place of delivery designated by the DCAA COR. The format for the individual deliverables will be determined through consultation between the DCAA COR and the audit firm or as specified in the measures for form and content published by the PM, if applicable. Products that reflect the audit firm’s analysis and opinion (e.g. studies, analyses) may be in the audit firm’s format, except where the Government has provided a preferred format. Electronic draft documents will be provided in the appropriate Microsoft Office format (e.g. Word or PowerPoint), with the exception of the Final Report and the Final Working Paper Package. If appropriate, the Government may ask that they be provided in compressed or PDF format. The Final Working Paper Package will be delivered in a format that is compatible with the audit software CaseWare. The QASP may be updated from time to time as necessary. In accordance with the QASP, the Government will assign a monthly performance rating to the contractor per the Table below. Based on the performance rating, the Government reserves the right to reduce invoice payments. Note: The application of these performance ratings or failure of the Government to apply these performance ratings does not waive any of the Government’s rights to damages under this contract. 4.5.1 Performance Requirements Summary 4.5.1.1 Performance Requirements. Table 2 in this section provides a summary of all performance requirements, the standard to which the requirement will be measured against, the acceptable quality level, the deliverable reference which can be cross-referenced to the deliverable table in the previous section for the surveillance schedule (as indicated by the deliverable due date), the surveillance method and the incentive. 4.5.1.2 Method of Surveillance. The Government will ensure quality assurance of all tasks with 100% inspection performed by the DCAA COR. During the inspections, the DCAA COR will review for current task completion. 4.5.1.3 Surveillance Schedule. Specific surveillance schedules for task can be found in Table 2. The surveillance staff has two components: 1. Contracting Officer (KO): The primary function of the Contracting Officer, with regard to the surveillance activity, is to authorize changes to the PWS. The Contracting Officer is responsible for ensuring the completion of all work in accordance with the PWS, and the QASP provides a means to accomplish this. The Contracting Officer will rely on the DCAA COR to provide information and recommendations. 2. DCAA Contracting Officer Representative (COR): The DCAA COR’s responsibility is to monitor, inspect, report, and make recommendations to the Contracting Officer regarding the quality of audit firm work performed or not performed. 4.5.2Inspection and Acceptance Criteria 4.5.2.1 Final inspection and acceptance of all work performed, reports and other deliverables will be performed at the place of delivery by the PM and/or DCAA COR. The format for individual deliverables will be determined through consultation between the PM/DCAA COR and the audit firm. Products used to meet formal requirements will be in a specified Government format. All documents, with the exception of the Final Report and Final Working Paper Package, will be provided in the appropriate Microsoft Office format (e.g., Word, PowerPoint, or Excel); if appropriate, the Government may ask that they be provided in compressed or PDF format. The Final Working Paper Package will be delivered in a format compatible with the commonly used audit software CaseWare. 4.5.2.2 General Acceptance Criteria. General quality measures, as set forth below, will be applied to each work product received from the audit firm under this PWS. · Accuracy - Work Products shall be accurate in presentation, technical content, and adherence to accepted elements of style. The Draft Audit Report and Final Audit Report will include all applicable sections as required by the PWS.· Clarity - Work products shall be clear and concise. Any/all diagrams shall be easy to understand and be relevant to the supporting narrative.· Consistency to Requirements - All work products must satisfy the requirements of this Performance Work Statement.· File Editing - All text and diagrammatic files shall be editable by the Government.· Format - Work products must be submitted electronically and in media mutually agreed upon prior to submission.· Timeliness - Work Products shall be submitted on or before the due date specified in this Performance Work Statement or submitted in accordance with a later scheduled date determined by the approved Audit Plan. The Performance Work Statement specifies that the due dates will be established through the first deliverable, the Audit Plan. 4.5.2.3 Performance Measurement Standard/Acceptable Quality Level. The audit firm is expected to meet the following goals. 1. Performance standard is a goal of 90% satisfactorily completing the tasking and meeting timeliness for each project tasking as set forth in the PWS.2. Acceptable quality level is 90% of all taskings/deliverables prepared contain only minor defects or rewrites and 95% are processed within the agreed upon timeframe or milestone(s).3. Audits must be completed in 270 calendar days unless further restricted by the PWS. The 2018 NDAA requires that all audits of DoD contractor incurred cost submissions must be complete within 365 calendar days of the Government’s receipt of the submission, unless a waiver is granted. The audit firm shall notify the COR immediately, and request any waivers that are required, should the audit firm reasonably believe that the audit will not be complete by the 365 congressionally mandated time period. 4.5.2.4 Performance Review and Payments. Based on the general acceptance criteria and goals, the audit firm will be given a monthly rating by the COR/COTR of Green, Yellow or Red as follows below. Performance Payments will be applied based on the Green, Yellow, or Red ratings.Green - Meets the minimum acceptable Quality Level as stated in paragraph 4.5.2.3 above with only minor performance issues. Performance Payment: 100% payment is applied. Deliverables automatically accepted per the PWS are considered “Green” unless further written notice is given. Yellow – Would have met the acceptable Quality Level stated above, except has two or more issues that were major, such as missed milestones, quality levels of tasks/deliverables requiring multiple reviews and rewrites, significant or serious complaints by customer(s) or documents that did not comply with taskings/deliverables set forth in the PWS. Performance Payment: Payment of 95% will be authorized upon resolution of issues. A disincentive of (-) 5% will be applied to the invoice. Red – Below the acceptable Quality Level stated above and performance has been at a level where the Contracting Officer has had to issue one or more notices regarding performance. Monthly performance that continues at the "Red” level will typically be at a level where a termination will be considered if the performance is not improved Performance Payment: Payment of 85% will be authorized upon resolution of issues. A disincentive of (-) 15% will be applied to the invoice.TABLE 2: PERFORMANCE REQUIREMENTS PWS Para # Task TitleDeliverable Reference #, Titleand Acceptable Quality Level Surveillance Methods Performance Review Payment ScheduleSection 3.4.1.1 Audit PlanSection 3.4 – Provide Complete Audit Planincluding a milestoneplan for significantdeliverables.100% COR inspection, approvaland acceptance as described in thePWS.Green, yellow orred ratings to beassignedpursuant toSection 4.5.2.420% of price at time of approval Section3.4.1.2 DraftAuditReport Section 3.4 – ProvideDraft Audit Reportafter fieldwork andmanagement reviewis complete, in MSWord or ExcelDocument.100% CORinspection, approvaland acceptance as described in the PWS. Green, yellow orred ratings to beassignedpursuant toSection 4.5.2.440% of price at time of approval Section3.4.1.2 FinalAuditReport Section 3.4 – ProvideFinal Audit Reportsigned by Partner-level management in.pdf format.100% CORinspection, approvaland acceptance as described in thePWS.Green, yellow orred ratings to beassignedpursuant toSection 4.5.2.420% of price at time of approval Section3.4.1.3 FinalAuditWorkingPaper PackageSection 3.4 – ProvideFinal Audit WorkingPaper Package inCaseWare compatible format.100% CORinspection, approval and acceptance as described in thePWS.Green, yellow orred ratings to beassignedpursuant to Section 4.5.2.420% of price at time of approval 4.5.3 VENDOR QUALITY CONTROL PLAN (QCP). The audit firm shall develop and submit a Quality Control Plan (QCP) within ten (10) business days of contract award. If a modification is needed, the DCAA COR shall notify the audit firm and the Audit firm shall make appropriate modifications and provide a revised QCP within five (5) business days of the COR’s notification. The audit firm’s QCP shall include any details specific to the contract requirements that outline how the deliverables will be met in accordance with the contract requirements. At a minimum, the audit firm’s QCP shall contain the following items: 1. Objectives in Services Summary – including audit firm’s internal Quality Control Plan for GAGAS compliance.2. Review process for each contract deliverable, to include assertion and sustainment work products, to ensure Government acceptance and validation.3. A description of how the records will be kept. Records shall document all inspections and corrective or preventive actions taken.4. A description of how contractor oversight will be conducted to ensure work meets or exceeds PWS requirements. The audit firm shall update the plan as changes occur and changes shall be submitted for review by the DCAA COR on an as needed basis.5.CONTRACT ADMINISTRATION DATA5.1Government Point of ContactNotwithstanding the audit firm’s responsibility for total management during the performance of this contract, the administration of the contract will require coordination between the Government and the audit firm. The individuals included in the solicitation will be the Government’s points of contract during the performance of the contract. Please see the “Contractual Points of Contact” section of the solicitation for the Contracting Officer and COR points of contact.5.2Contracting Officer’s Representative Appointment and AuthorityPerformance of work under this contract is subject to the technical direction of the Contracting Officer’s Representative (COR) identified above, or a representative designated in writing. The term “technical direction” includes, without limitation, liaison with the audit firm on any questions, concerns and activity related to the work performed under this requirement, and serves to ensure that tasks outlined in the work statement are accomplished satisfactorily. Technical direction must be within the scope of this performance work statement.The COR does not have authority to issue technical direction that:(a)Constitutes a change of assignment or additional work outside the specification(s)/statement of work;(b)Constitutes a change as defined in the clause entitled “Changes”;(c)In any manner causes an increase or decrease in the contract price, or the time required for contract performance;(d)Changes any of the terms, conditions, or specification(s)/work statement of the contract;(e)Interferes with the contractor's right to perform under the terms and conditions of the contract; or(f)Directs, supervises or otherwise controls the actions of the audit firm or subcontractor employees.Technical direction may be oral or in writing. The COR must confirm oral direction in writing within five working days, with a copy to the contracting officer.The audit firm must proceed promptly with performance resulting from the technical direction issued by the COR. If, in the opinion of the audit firm, any direction of the COR, or his/her designee, falls within the limitations in (b), above, the audit firm must immediately notify the contracting officer no later than the beginning of the next Government work day.Failure of the audit firm and the contracting officer to agree that technical direction is within the scope of the contract must be subject to the terms of the clause entitled “Disputes.” The audit firm is expected to communicate with the COR throughout the course of the audit to identify and overcome problems and to keep DCAA informed about audit progress. Matters which pose significant threats to the timely completion of the audit must be reported to the COR and the contracting officer immediately. For example, delays created by a lack of cooperation by the funding agency or the audited entity should be reported immediately. Additionally, the audit firm must provide monthly status reports as described inSection 3.6.5.3Government Furnished PropertyThe Government will not furnish any property for the purpose of conducting the work under this PWS.5.4Payment for Unauthorized WorkThe audit firm will not be paid for the performance of work that is not authorized by the contracting officer under the task order(s) or for additional work that is authorized/approved by anyone other than the contracting officer.6.SPECIAL CONTRACT REQUIREMENTS6.1Non-Disclosure StatementAll persons working on the task order will be required to sign a non-disclosure agreement (NDA) prior to commencing any work under the task order. Signed NDAs must be provided to the COR. The NDA includes an independence statement that the audit firm is free of any conflicts of interest with the auditee. The initial NDA will be specific to the auditee. During the audit, additional organizations may become relevant to the audit (including subcontractors, related parties, etc.). The audit firm shall prepare a separate NDA relevant to those organizations, provide a copy to the COR, and then resume work. See Attachment III for an example of an NDA. The QPA’s assessment of potential threats to independence/conflicts of interest shall take into consideration any existing, ongoing, or planned non- audit services for the auditee or for DCAA.6.2Physical Security ExpensesThe audit firm is not entitled to any compensation for delays or expenses associated with complying with the physical security provisions of the awarded contract. Furthermore, nothing in the security provisions of the task order(s) must excuse the audit firm from proceeding with the task order(s) as required.6.3TravelAudit firm expenses for Government authorized travel are included in this contract. Travel expenses will not be priced separately and must be included in the audit firm’s fixed price quote. The audit firm will perform work in the continental United States to fulfill the objectives of the task order. Additional details about the auditee location are in Attachment I.6.4Avoidance and/or Mitigation of Actual or Potential Organizational Conflicts of InterestThe audit firm and authorized subcontractors must comply with all GAGAS independence standards. Auditors may have access to sensitive Government information while performing this work, and may be involved in reviewing and assessing the work of other auditors. There is a potential for organizational conflicts of interest if the audit firm or subcontractors have relationships with firms whose work it will review. To avoid actual or potential organizational conflicts of interest the audit firm and subcontractors, in conjunction with Government scheduling and oversight controls, must be able to mitigate its relationship with a firm whose work it might review during performance of the task order. The QPA’s assessment of potential threats to independence/conflicts of interest shall take into consideration any existing, ongoing, or planned non-audit services for the auditee or for DCAA.6.5Post Award Organizational Conflict of InterestGeneral: The audit firm must have programs in place to identify, report, and mitigate actual and potential conflicts of interest for itself, its employees, subcontractors and consultants. The existence of such programs and the disclosure of known actual or potential conflicts are material performance requirements of this task order.Disclosure: The audit firm must report all actual and potential conflicts of interest pertaining to this task order to the contracting officer, including those that would be caused by a contemplated modification to this task order or another contract or task order. Offerors will be notified of the entity’s name before award, and are required to respond and disclose any known conflicts of interest at that time. Such reports must be in writing (including by email). Upon request, the audit firm must respond to the contracting officer's request for an organizational conflict of interest mitigation plan. Resolution: In the event the contracting officer determines a conflict of interest exists, based on disclosure from the audit firm or from other sources, the contracting officer must take action which may include, but is not limited to, requesting a mitigation plan from the audit firm, excluding the auditing firm from consideration of task order award, terminating part or all of the task order after award, modifying the task order or obtaining a waiver in accordance with applicable law and regulation, including FAR 9.503 as applicable. The QPA’s assessment of potential threats to independence/conflicts of interest shall take into consideration any existing, ongoing, or planned non-audit services for the auditee or for DCAA.6.6Project Management RequirementsThe audit firm shall designate a management level primary point of contact (POC) for the Government who is responsible for the quality of work performed on each audit (whether one or more). The audit firm’s management level POC shall be available to coordinate with Government representatives on a daily basis during normal working hours. This individual will be identified at the kick-off meeting. The audit firm shall provide a competent backup for the management level POC in the event of a temporary absence and a competent replacement for the management level POC in the event of an extended absence (more than two weeks or other time as agreed between the parties). The management level POC must be an employee of the prime contractor and not an employee of an authorized subcontractor or consultant.6.7Information and Work Product RightsThe Government has unlimited right to all information or work products (draft and final versions) prepared by the prime or subcontractor(s) under the task order. No information or work product may be used, published, or distributed by the audit firm without specific written permission from the Government, with the exception of the private audit firm’s GAGAS required external peer review.The Government has the right to use all commercially developed and privately funded information or work products delivered under the task order in accordance with, and subject to, the published agreements and restrictions that accompany that data.6.8Restrictions Against DisclosureWork on this project may require that audit firm and subcontractor personnel have access to information which is subject to the Privacy Act of 1974. Personnel must adhere to the Privacy Act, 5 U.S.C. § 552a and applicable agency rules and regulations when handling this information. Privacy Act information is considered sensitive and appropriate safeguards must be implemented by the audit firm. The audit firm is responsible for ensuring all audit firm and subcontractor personnel are briefed on Privacy Act requirements.6.9Quality Assurance and Quality ControlAudit work will be performed in accordance with the quality assurance and control standards imposed by Generally Accepted Government Auditing Standards and as specified in this PWS.7.LIST OF ATTACHMENTSATTACHMENT ISUMMARY OF AUDITSATTACHMENT IIAUDIT REPORT FORMAT AND PRESENTATION ATTACHMENT ATTACHMENT IIICONTRACTOR EMPLOYEE NON-DISCLOSURE AGREEMENTATTACHMENT I – SUMMARY OF AUDITSThe following summary of audits is an estimate of audits to be conducted by the audit firm. The Government may substitute audits with similar locations and auditable dollar value when necessary.DCAAReference Number*Estimated Auditable Dollar Value (in 000s)Estimated % Sub-contractedEstimated Number of Final Indirect RatesType of Business: Manufacture, Service, or BothAuditee LocationDCAAOffice LocationAuditee Period Under Audit**Task Order PoPType of Audit (GAGASStandards)2019101003772<1,00052%3Computer ProgrammingSanta Barbara, CACamarillo, CA1/1/2019 to12/31/2019120 Calendar DaysAttestation20181010025505,000 to 10,0000%2Aircraft MaintenanceAddison,TXIrving, TX1/1/2018 to12/31/2018120 CalendarDaysAttestation201810100240915,000 to 25,00010%7ManufacturingSacramento, CAFolsom, CA1/1/2018 to12/31/2018120 CalendarDaysAttestation201810100409175,000 to 100,00050%5ServicesBethesda,MDGreenbelt,MD1/1/2018 to12/31/2018150 CalendarDaysAttestation2018101001108150,000 to 200,0002%10Design, Manufacturing,Testing, RepairsMelbourne, FLMelbourne, FL1/1/2018 to12/31/2018180 Calendar DaysAttestation*Auditable Dollar Value (ADV) is an estimate made by the appropriate DCAA field audit office, based upon the prior year history and other relevant factors. ADV is updated after the receipt of the annual incurred cost proposal. **Number of days presented in this column starts when the audit firm receives the adequate incurred cost submission from the DCAA COR. DCAA receives the incurred cost proposal from the contractor and reviews it for adequacy.ATTACHMENT 2 – AUDIT REPORT FORMAT AND PRESENTATIONAll reports prepared by the audit firm must include all elements required by GAGAS, specifically the standards related to attestation engagements for audits. In addition, and in some cases to reiterate critical items required by GAGAS, the following items are required to be included in the draft audit report and final audit report deliverables:1. File Naming Convention: Final Audit Reports shall include the following naming convention: “[DCAA Full Assignment Number] Audit Report on [Contractor Name]’s GFY 20XX Incurred Cost Submission” for example: “01261-2018C10100007 Audit Report on XYZ Company’s 2018 Incurred Cost Submission”2. Cover Page that includes:a. Audit Firm’s nameb. Audit Report reference number provided by CORc. Report Issuance Dated. Title of Audit Report (example: Independent Audit Report on Contractor X’s Proposed amounts on flexibly priced contracts for FY 2018)e. The following special warning notice: “Special Warning: The contents of this audit report must not be released or disclosed, other than to those persons whose official duties require access in accordance with Department of Defense (DoD) regulations. This document may contain information exempt from mandatory disclosure under the Freedom of Information Act. Unauthorized disclosure of proprietary, contractor bid or proposal or source selection information may violate Title 18 United States Code (U.S.C.) Section 1905 and/or Title 41U.S.C. Section 2102. Please see the Audit Report Distribution and Restrictions section of this report for further restrictions.”3. Table of Contents4. Executive Summary that includes:a. General information about the auditee (annual sales, percentage of Government sales, number of employees, facilities, intercompany relationships, and major services and products provided by the company.b. Auditee’s physical address and CAGE Code. The CAGE Can be provided by the COR if not known by the audit firm.c. A general description of why the audit was performed.d. A summary of major findings and questioned costs.5. All elements required by GAGAS for attestation engagements, including but not limited to:a. Management’s Responsibilityb. Auditor’s Responsibilityc. Basis for Audit Opiniond. Audit Opinione. Summary of auditee’s reaction at the Exit Conference6. Distribution Page, includinga. List of relevant audit firm points of contact for the auditb. Signature of Partner-level manager who authorizes the audit reportc. Report distribution: Reports are to be distributed to the customer (ordinarily DCMA) through the DCAA. Distributions shall be coordinated in advance with the CORd. Any applicable report restrictions, including careful consideration of subcontractor or lower-tier proprietary data7. Summary of conclusions by major cost element – In order to ensure consistency for the customer, each audit report must break out the conclusions by major cost element (i.e. Direct Labor, Direct Material, Subcontracts, Overhead Rate, G&A Rate, or any other major cost category). These details must include the total proposed amount, the total amount of any exceptions, and the difference in the total proposed and total exception dollars. Each table demonstrating these amounts must have an explanatory note that includes the reason and criteria for questioning the amounts, the auditee’s response to the conclusions, and the audit firm’s reaction to the auditee’s response. Questioned direct costs must be identified in the report by contract number and delivery order, if applicable. These sections should also include any additional detail required by GAGAS.Attachment III – EMPLOYEE NON-DISCLOSURE AND CONFLICT OF INTEREST STATEMENT--Insert Company Letterhead—[DATE]I, , an employee and authorized representative of (companyname)(hereinafter RECIPIENT), a contractor providing services to the Defense Contract Audit Agency (hereinafter DCAA), and likely to have access to nonpublic information under contract number (hereinafter the Contract), agree to and promise the following:WHEREAS, RECIPIENT is engaged in delivering services to DCAA under the Contract; andWHEREAS, DCAA acknowledges that RECIPIENT will from time to time have, or require, access to such non-public information in the course of delivering the contract services; andWHEREAS, RECIPIENT may be given or otherwise have access to non-public information while providing such services; andWHEREAS, “non-public information” includes such information as proprietary information (e.g., information submitted by a contractor marked as proprietary), advanced procurement information (e.g., future requirements, statements of work, and acquisition strategies), source selection information (e.g., bids before made public, source selection plans and rankings of proposals), trade secrets and other confidential business information (e.g., confidential business information submitted by a contractor), attorney work product, information protected by the Privacy Act (e.g., social security numbers, home addresses, and telephone numbers), and other sensitive information that would not be released by DCAA under the Freedom of Information Act (e.g., program, planning, and budgeting system information);NOW, THEREFORE, RECIPIENT agrees to and promises as follows:RECIPIENT shall not seek access to non-public information beyond what is required for the performance of the contract services;RECIPIENT will ensure that his/her status as a contractor employee is known when seeking access to and receiving such non-public information from government employees; andAs to any non-public information to which RECIPIENT has or is given access, RECIPIENT shall not use or disclose such information for any purpose other than providing the contract services, and will not use or disclose the information for any personal or other commercial purposes; andIf RECIPIENT becomes aware of any improper release or disclosure of such non-public information, RECIPIENT will advise the contracting officer in writing as soon as the disclosure is known.The RECIPIENT agrees to return non-public information provided or given to him/her pursuant to this agreement including any transcriptions by RECIPIENT of non-public information to which RECIPIENT was granted access, if not already destroyed, upon RECIPIENT concluding work under the contract or expiration of the contract, whichever occurs earlier.RECIPIENT understands and acknowledges that any unauthorized use, release, or disclosure of non-public information in violation of this CERTIFICATE will subject the RECIPIENT and the RECIPIENT’s employer to administrative, civil, and/or criminal remedies as may be authorized by law. ATTACHMENT III – EMPLOYEE NON-DISCLOSURE AND CONFLICT OF INTEREST STATEMENTRECIPIENT understands and acknowledges that if, at any time during the course of a procurement, including, but not limited to, the award of contract, modification, or task order in which Recipient had access to any non-public information, Recipient’s participation might result in a real, apparent, possible, or potential conflict of interest, Recipient will immediately report the circumstances to the contracting officer in writing.Employee Signature Date Printed Name Title Employer Name ................
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