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DCAA issues MRD confirming auditors should not verify technical interchanges

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On November 21, 2017, DCAA issued a Memorandum for Regional Directors (MRD) confirming that the Class Deviation 2017-O0010’s abrupt halt to technical interchange requirements as a condition of independent research and development (IR&D) cost allowability applies to auditors. Dentons previously discussed Class Deviation 2017-O0010 and its implications for contractors when the Class Deviation was issued in September 2017.

The MRD expressly applies the Class Deviation to DCAA auditors. It states that no IR&D costs should be questioned if an auditor finds that a technical interchange did not occur. This guidance applies retroactively to all audits performed of fiscal year 2017 costs, as well as current and future audits. The MRD is available on DCAA’s website.