The Defense Contract Management Agency (DCMA) will institute a new Defective Pricing Pilot Team, according to a September 30, 2020, memo issued by Kim Herrington, Acting Principal Director of Defense Pricing and Contracting at the Office of the Under Secretary of Defense. The DCMA Defective Pricing Pilot Team will assist Government Procuring Contract Officers (PCOs) in resolving audits initiated by the Defense Contract Audit Agency (DCAA) pursuant to the Truth in Negotiations Act.1

When a PCO receives notice of a DCAA audit dated after September 30, 2020, he or she may request assistance from DCMA in undertaking functions set out in FAR 15.407-1(b), (d), and (e) – determining and reporting whether certified cost or pricing data submitted was in fact defective, concluding whether a contract price reduction is appropriate, and determining the appropriate contract price adjustment.

If DCMA accepts a PCO's request for assistance, the Defective Pricing Pilot Team will have the authority to take all necessary actions to resolve and disposition the DCAA audit, including issuing final decisions and executing price adjustments in coordination with the PCO. Prior to the September 30, 2020, memo, the authority to take these actions resided with the contracting officer alone.

It is not yet clear whether the Defective Pricing Pilot Team will be a centralized national group or whether there will be members of this group in DCMA offices across the globe.

The Defective Pricing Pilot Team may deal with recurring, complex defective pricing issues, so this concentrated expertise and newly granted authority may lead to more expeditious resolution of DCAA defective pricing audits.

The DCMA and DCAA share a common mission to effect successful, cost-efficient procurements, and the success of the DCMA Defective Pricing Pilot Team could mean more function-specific collaborative workflows between the two agencies.2

Read the September 30, 2020 memo here.


1. 10 U.S.C § 2306(a) and 41 U.S.C. § 3501- 3509


Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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