Yesterday we discussed DOE’s decision to withdraw its proposed rules for ensuring contractor business systems are capable of providing timely, reliable information for the management of contracts and programs by contractors and the Department (see Department of Energy Withdraws its Proposed “Business System” Rules). The Department of Defense (DoD) has had similar rules in place through its FAR Supplement (DFARS) for a number of years and although the expectation by now was that DCMA (Defense Contract Management Agency) or DCAA (Defense Contract Audit Agency) would have reviewed or audited those systems for compliance with the standards laid out in the rules, not much has happened. A previous proposal that would require contractors to hire outside auditors to conduct those compliance reviews under the eyes and direction of DCAA were previously withdrawn as unworkable.

Source: PNWC’s Government Contracting Update: Contractors May be Required to Have Third Party Audits Performed on their Business Systems

Back in 2014, not to be outdone by the Defense Department, the Department of Energy proposed its own Contractor Business System rules (see 79 FR 18415). These proposed rules were similar in scope to those being considered and ultimately adopted by DoD. They covered five of DoD’s six business systems: accounting, estimating, purchasing, EVMS and property management. DOE’s contractor business systems did not cover MMAS (Material Management & Accounting Systems), perhaps because DOE’s contractors are not typically in the manufacturing business. The proposed rules included compliance enforcement mechanisms that would, like the DoD rules, allow contracting officers to withhold a percentage of payments when one or more of the business systems contained significant deficiencies.

Source: PNWC’s Government Contracting Update: Department of Energy Withdraws its Proposed “Business System” Rules