DFARS 252.242-7005 Contractor Business Systems Interim Rule
Wednesday, May 18th, 2011
This proposed DFARS is out for a third set of comments. While the attached Federal register summarizing the previous
comments on this propose rule is long, it gives some great insight into the position DoD COs will take when determining adequacy of a particular business system and what if any monies will be withheld due to identified inadequacies.
Under this rule:
A) DoD is defining contractor business systems as accounting systems, estimating systems, purchasing systems, earned value management systems (EVMS), material management and accounting systems (MMAS), and property management systems.
B) DoD is implementing compliance enforcement mechanisms in the form of a business systems clause which includes payment withholding that allows contracting officers to withhold a percentage of payments, under certain conditions, when a contractor’s business system contains significant deficiencies. Payments could be withheld on—
- Interim payments under—
Cost–reimbursement contracts;
Incentive type contracts;
Time-and-materials contracts;
Labor-hour contracts;
Progress payments; and
Performance-based payments.
The Discussion and Analysis section of this Federal Register contains a insight into DoD position as it relates to the business systems listed above, the process of determining adequacy, contractor appeals, DCAA audits and follow up audits.
While this is out for comment until July 18th, CO payment withholding due to system inadequacies is part of the future.
Understanding what that means and how to ensure your systems are not caught up in this process are important to the financial wellbeing of your company.
Tim
Click here for a copy of the Federal Register
Get ready for pricing wars
Thursday, April 28th, 2011
A good article by Stan Soloway on measures being taking by DoD to increase its ability to dictate price reasonableness, and drive up the cost of doing business with the Government.
Tim
Click here for a copy of the article
DFARS Case 2010-D026, Display of DoD Inspector General Fraud Hotline Posters,Proposed rule
Friday, March 11th, 2011
The DoD IG has determined that FAR 52.203-14(c), which allows an exemption from posting agency hotline posters if the contractor already has an ethics and conduct awareness program, is not sufficient to protect potential whistleblowers when alleging fraud, waste and abuse by their company.
Under this propose rule the DoD IG wants to supplement the FAR with a DFARS Clause that would make it mandatory for all DoD contractors (regardless of size or adequacy of internal ethics and conduct programs) to display the DoD IG hotline posters.
Comments on the proposed rule should be submitted in writing to the address shown below on or before May 10, 2011, to be considered in the formation of the final rule.
My guess is that regardless of any comments against this propose rule, it will be implemented, so be prepared to post the additional posters and for DCAA to ensure such posters are posted during their audits.
Click here for a link to the Federal Register
