Academic journal article The Government Accountants Journal

Cost/schedule Control Systems Criteria: A Government Process That May Work

Academic journal article The Government Accountants Journal

Cost/schedule Control Systems Criteria: A Government Process That May Work

Article excerpt

Because U.S. taxpayers lack confidence in the government's ability to supervise contracts so that tax dollars are well-spent, the government has developed a process which helps to give its contracting officers and other responsible government employees sufficient information to gauge how well a contractor is meeting contract goals.

This process, known as Cost/Schedule Control System Criteria or C/SCSC, determines if the contractor has information systems in place to monitor and report progress on selected government contracts. Through these systems, the government obtains the summary information necessary to monitor contract performance.

The objective of the C/SCSC is to insure that the information available to both the government and the contractor is comparable. This comparability is enhanced because information summarized for government managers comes from the same systems used by the contractor. To insure that both receive information from the same data base, the government applies C/SCSC to individual contracts. The review process which may take anywhere from several months to several years depending on the contractor's information systems and their complexities, uses established criteria to measure the acceptability of those systems.

It is important for the Defense Contract Audit Agency (DCAA) auditors to understand this system because this system can help in their overall contract responsibilities especially when the government needs to cancel a contract for the government's convenience.

Within the C/SCSC process, a significant part of the information provided to government contract monitors is the contractors' "Estimate to Complete.' This represents the contractor's best estimate of the resources that are necessary to achieve all the contractually agreed-to goals. In order to arrive at this estimate, the contractor's performance measurement system must be able to properly evaluate the status of the work completed and the work-in-process.

The evaluation of the performance of work units or segments of a business is difficult unless there is adequate integration of various areas to include: defining the work, scheduling, budgeting and accumulating reliable information reflecting actual performance. This integration has to be understood before any reliance can be placed on the information that the system provides, such as the "Estimate to Complete."

The C/SCSC represent benchmarks used to evaluate components of the contractor's management information system. These components may include the accounting system, the cost system, the scheduling system and the overall production system. The examination determines whether the information system's components can provide the necessary information for making decisions by either the contractor's managers or government managers. Since this approach can be expensive for the contractor to implement, the C/SCSC are applied only to contracts that meet certain monetary thresholds for the various types of expenditures (for instance, production-type contracts or research and development contracts).

When use of the C/SCSC is considered appropriate, a government review team is assembled to go to the contractor's facility and review specific management areas which have been determined to be essential to contract management.

These C/SCSC specific management areas are:

(1) ORGANIZATION (the system that determines how the contractor is organized to do the work required and how the contractor organizes the work itself);

(2) PLANNING AND BUDGETING (the systems used by the contractor to budget both resources and time to accomplish all the world defined in the preceding section);

(3) ACCOUNTING (the system the contractor has to ensure that adequate cost information flows from the accounting information system to the performance measurement system and provides for an audit trail);

(4) ANALYSIS (the system that governs how the contractor will analyze the results of activity and determine appropriate specific follow-up actions);

(5) REVISIONS AND ACCESS TO DATA (the system the contractor has to ensure that the other affected system will be updated when inevitable changes occur). …

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