SUBPART 242.72--CONTRACTOR MATERIAL
MANAGEMENT AND ACCOUNTING SYSTEM
(Revised October 14, 1998)
242.7200 Scope of subpart.
This subpart provides policies, procedures, and standards for use in the evaluation of a contractor's material management and accounting system (MMAS).
"Material management and accounting system" and "valid time-phased requirements" are defined in the clause at 252.242-7004, Material Management and Accounting System.
DoD policy is for all contractors to have an MMAS that-
(b) Ensures the costs of purchased and fabricated material charged or allocated to a contract are based on valid time-phased requirements;
(c) Maintains a consistent, equitable, and unbiased logic for costing of material transactions; and
(d) Conforms to the standards at 252.242-7004(f) when the contractor has cost-reimbursement or fixed-price contracts exceeding the simplified acquisition threshold, with progress or other contract financing provisions, except when all of the contracts and subcontracts are awarded under the set-aside or Section 8(a) procedures of FAR Part 19.
(2) $30 million or more (but less than $70 million), and the contracting officer determines it to be in the best interests of the Government (e.g., contractor disclosure, demonstration, or other activities indicate significant MMAS problems exist).
(2) Consider whether to apply the disclosure, demonstration, and maintenance requirements to other large business contractors under 242.7203(a)(2) after concurrence from, or at the request of, the administrative contracting officer; and
(3) Not apply the disclosure, demonstration, and maintenance requirements to small businesses, educational institutions, or nonprofit organizations.
(c) The contract auditor shall-
(2) Assess the significance of contractor deficiencies and provide the ACO an estimate of the resulting adverse material impact to the Government; and
(3) Assist the ACO in evaluating the contractor's correction of deficiencies.
(B) Ensures that the team includes appropriate functional specialists (i.e., industrial specialists, engineer, property administrator, auditor, etc.).
(B) Makes every effort to resolve differences regarding questions of fact during the review.
(3) Prepare a review report.
(4) Conduct a review every three years. The ACO, with advice from the auditor, may lengthen or shorten the three-year period based on a risk assessment of the contractor's past experience and current vulnerability.
(ii) If there are deficiencies, the ACO shall request the contractor to provide a written response within 30 days from the date of initial notification.
(iii) If the contractor agrees with the report, the contractor has 60 days to correct any identified deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies.
(iv) If the contractor disagrees, request rationale in the written response.
(ii) The deficiencies are significant enough to result in the reduction or suspension of progress payments or of payments under public vouchers; and
(iii) Proposed corrective actions (if the contractor submitted them) are adequate to correct the deficiencies.
(B) The amount of the impact is immaterial.
(iii) As the contractor implements its accepted corrective action plan, the ACO should reinstate a portion of withheld amounts commensurate with the contractor's progress in making corrections. However, the ACO shall not fully reinstate withheld amounts until the contractor corrects the deficiency, or until the impact of the deficiency becomes immaterial.
(B) Acceptability of the contractor's corrective action plan (if one was submitted) or the need for a corrective action plan; and
(C) Any decision to reduce or suspend progress payments or public vouchers because of significant deficiencies.
(iii) From the time the ACO determines that there is a significant material management and accounting system deficiency until the time the deficiency is corrected, all field pricing reports for that contractor shall contain a recommendation relating to proposed cost or pricing data adjustments necessary to protect the Government's interests.
(ii) Further reduce or suspend progress payments;
(iii) Notify the contractor of the inadequacy of the contractor's cost estimating system and/or cost accounting system;
(iv) Take appropriate contractual action, i.e., disallow charges as unreasonable; and
(v) Issue cautions to contracting activities regarding the award of future contracts.
(b) Are either-
(2) Fixed-price contracts with progress payments or other Government financing.