GSAM

GSAM

Change Number: Change 155 GSAM Case 2021-G525
Effective Date: 08/30/2022

Subpart 542.70 - Audit of Contractor’s Records

542.7001 General.

The OIG Office of Audits audits a contractor’s records if required by law, regulation, or sound business judgment. These audits include periodic or special request audits necessary to determine a contractor’s financial condition, adequacy of its accounting system, and integrity and reliability. The contracting officer should coordinate with technical specialists, finance and audit personnel to achieve the maximum benefits from these audits.

542.7002 Purpose of audit.

The contracting officer may obtain from audits advice or recommendations on the:

      (a)  Propriety of amounts paid, or to be paid, by GSA to a contractor when such amounts are based on a cost or time determination or on variable features related to the results of the contractor’s operations.

      (b)  Adequacy of a contractor’s measures to safeguard Government property in its custody or under its control.

      (c)  Contractor’s compliance with contractual obligations concerning progress payments, advance payments, guaranteed loans, cash return provisions, and price adjustments.

      (d)  Reasonableness of a contractor’s termination settlement proposals.

542.7003 Additional internal controls.

      (a)  The contracting officer should not rely solely on contractual audit rights. The contracting officer should establish internal controls or procedures for any flexible or variable features of these contracts:

           (1)  Cost-reimbursement.

           (2)  Time-and-materials or labor-hour.

           (3)  Requirements or indefinite-quantity.

     For example, for a time-and-materials or labor-hour contract performed at a Government facility or elsewhere, the contracting officer should provide for the review of time records. The contracting officer should provide for this review even if the contractor is subject to supervision by Government personnel.

      (b)  The contracting officer should establish these internal controls or procedures prior to the commencement of contract performance. Use any reasonable and reliable method or procedure that will enable the Government to determine the correctness of the charges for such matters as the time spent on the job and materials or supplies received. If needed, obtain assistance from the Assistant Inspector General for Auditing or the Regional Inspector General for Auditing.

542.7004 Releasing or withholding of audit reports.

The Freedom of Information Act requires the disclosure of Government records subject to certain exceptions. The contracting officer should consult with both the Assistant Inspector General for Auditing and the GSA Office of General Counsel before releasing or withholding a contract audit report.