August 28, 2000

MEMORANDUM FOR JAMES A. WILLIAMS

FROM: Pamela J. Gardiner /s/ Pamela J. Gardiner

SUBJECT: Incurred Cost Audit TIRNO-95-C-00099

The Defense Contract Audit Agency (DCAA) audited the incurred costs submission. The purpose of the audit was to determine the allowability of direct costs and indirect cost rates and establish audit determined indirect cost rates for Calendar Year 1998.

The DCAA qualified its audit report because the accounting and billing systems were inadequate in part, and the contractor did not comply with four cost accounting standards (CAS). The inadequacies were considered relatively insignificant; however, the impact of the CAS non-compliance could not be determined.

In summary, the DCAA did not find any exceptions to the proposed indirect rates or the direct costs.

The information in this report should not be used for purposes other than that intended without prior consultation with the Treasury Inspector General for Tax Administration regarding its applicability.

If you have any questions, please contact me at (202) 622-6510, or your staff may call Maurice S. Moody, Associate Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs), at (202) 622-8500.

The Office of Inspector General for Tax Administration has no objection to the release of this report, at the discretion of the contracting officer, to duly authorized representatives of the contractor.

The contractor information contained in this report is proprietary information. The restrictions of 18 USC 1905 must be followed in releasing any information to the public.

This report may not be released without the approval of this office, except to an agency requesting the report for use in negotiating or administering a contract with the contractor.

TIGTA Seal removed due to its size.