DoD Guidance On Contractor Accounting Changes Stirs Debate: DoD Guidance On Cost Impact Calculations For Unilateral CAP Changes

On October 3, 2023, the Defense Contract Audit Agency (DCAA) issued a Memorandum for Regional Directors (MRD)¹ revising its audit guidance related to the cost impact calculation for unilateral cost accounting practice (CAP) changes. Also, on October 3, 2023, the Defense Contract Management Agency (DCMA) issued a Contracts Executive Directorate (C-Note 24-02)² to contracting officers containing similar guidance for determining whether a contractor's unilateral CAP change has or will result in payment of increased costs, in the aggregate, by the government. These Department of Defense (DoD) publications, the October 3 MRD and the October 3 C-Note (collectively referred to as "DoD guidance" herein), illustrate several scenarios to provide guidance to auditors and contracting officers regarding the extent to which unilateral CAP changes result in increased costs in the aggregate.