INFORMATION ON DCAA

INFORMATION ON DCAA
REIMBURSABLE ADDER RATE (RAR)

1. Across the Board Percentage

a. General. Billable time consists of the customer's allocable share of direct audit (auditors GS-12 and below) hours plus an allocable share of "other beneficial effort." The customer's allocable share of direct audit hours is computed by applying an "Across-the Board" percentage. This is described in paragraph b. "Other beneficial effort" is charged through a "reimbursable adder rate" (RAR) factor applied to direct audit hours and is described in paragraph c. We do not bill for the time of grade GM-13 and above or FAO administrative effort because these costs have been included in the billing rate computation.

b. Across-the Board. Across-the Board (ATB) percentages are used to distribute audit effort when an audit work package benefits more than one agency (e.g. 50 percent NASA, 10 percent DOT, 5 percent DOE). These percentages are determined by the relationship of an agency's costs audited to the total costs audited. FAO auditors will include the assumptions and computations used in ATB development in the working papers. These percentages can be revised at any time during the FY should there be significant changes in the composition of the audit workload (i.e. identification of other Federal contracts during the course of the audit, discontinuance of work with an agency, etc.). Regional offices (RCF) should be kept apprised of any significant changes in the percentages allocated to customers. It is not necessary to retroactively adjust billings at year-end to conform with actual percentages.

c. Reimbursable Adder Rate (RAR) Factor. Direct audit hours (5 digit codes 49999 and below) consist of audit work packages that are specifically identifiable to a customer, or several customers (across-the-board), and those that benefit customers but are not readily identifiable to those customers. For example, most proposal type audits can be identified to a specific client and the audit effort is directly allocable. However some audit activities, such as estimating system surveys, are not so readily identified with a specific client and the audit effort can only be allocated on an indirect basis. The development of the RAR factor provides a means of allocating the audit effort associated with audit reviews which are not readily tracked to one or more customers. Prior to FY 1997, there were two Agency-wide factors: one for major contractors, and the other for nonmajor contractors. Beginning in FY 1997, DCAA developed a single Agency-wide RAR factor which is applicable to both major and non-major contractors. The RAR factor is normally computed once a year by Headquarters. The RAR factor to be used for FYs 1998 and 1999 is 22.5%.

Billable time will be identified on the client's billing primarily by contract number(s) (for incurred costs or defective pricing) and by individual REP, FMS case number or other requester reference number (for proposal effort).

d. Agency-wide RAR Factor Guidance. Following is the Agency-wide method and guidance for computing the reimbursable adder rate factor.

2. Implementing Guidance for Agency-wide RAR

a. Audit Activity Codes in RAR Factor Computation

Base Audit Activity Codes.

The base audit activity codes are defined as billable audit activities. Any audit activity under such codes will be established as a reimbursable assignment when the audit provides benefits to a non-DoD (Civilian Agency), or Foreign Military Sale (FMS) client. The billing percentages to be applied to each client will be based on a reasonable allocation method. This method will normally be auditable dollars. If a method other than auditable dollars is used, rationale explaining the method and its reasonableness must be in the audit workpaper package. The RAR factor will be applied to all base reimbursable hours.

Pool Audit Activity Codes.

Pool audit activity codes are not directly billable and will not be established as a reimbursable audit activity in FMIS. These items are billed based on the application of the RAR to the base audit activities.

Non-allocable Audit Activity Codes.

Audit activity has been classified as non-allocable when it is already included in the hourly billing rate, or when it has been determined that only DoD is a beneficiary of the audit activity.

3. Commsition of RAR Factor. The audit activities which comprise the base, pool and nonallocable categories are detailed in the following matrix.

COMPOSITION OF RAR FACTOR

Non- Activity Code and Description		Pool	Base	Allocable
101XX	Major Contractor Incurred Cost		X
102XX	NonMajor Contractor Incurred Cost		X
103XX	Time Sensitive MAARs		X
105XX	Operations Audits		X
106XX	Operations Audits Follow-Up		X
110XX	Financial System & Budget		X
115XX	EDP Audits		X
120XX	Material Audits		X
130XX	Labor Audits		X
140XX	Indirect and ODC Audits		X
150XX	Provisional and Billing Audits		X
170XX	Special Audits		X
190XX	Cost Accounting Standards		X
210XX	Individual Price Proposals		X
220XX	Should Cost / IPT Reviews		X
230XX	Forward Pricing Rate Agreements	X
240XX	Estimating System Reviews	X
250XX	Telephone Rate Requests	X
260XX	Non ADV Contractor Audits	X
270XX	Specified Element Review		X
280XX	Agreed Upon Procedures		X
295Y-X	Catalog Price Audits		X
300XX	Part-Time PLA			X
420XX	Defective Pricing Audits		X
400XX	Supervision and Management			X
410XX	Other Direct Activity	X
430XX	IG, GAO & Congressional Activity			X
480XX	Region/HQs Special Projects			X
480XX	PWT Effort	X
486XX	Suspected Irregular Conduct		X
491XX	Prenegotiations			X
492XX	Negotiations		X
493XX	Board of Contract Appeals Cases		X
495XX	Planning and Programming	X
499XX	Other Direct Activity	X
5XXXX	Auditor Indirect			X
6XXXX	Administrative Indirect			X