New changes to the Defense Federal Acquisition Regulation Supplement rules for contractor business systems are now in effect.
Under the new rules, the government can withhold 5 percent of a contractor’s payment if any of the company’s business systems are found to be “deficient” by the Defense Contract Audit Agency.
Brian Waagner, a partner at Husch Blackwell, wrote about the changes and what they mean for contractors in a post on Contractor Perspective.
Waagner joined In Depth with Francis Rose to discuss the DFARS revisions and, in particular, six changes contractors need to know about.
- New requirements on contractor business systems only apply to new contracts — those awarded after May 2011, when the interim rules were first published.
- The rules only apply to contracts that are also subject to DoD’s cost accounting standards.
- DoD’s final rules state contractor business systems are indicative of contractor responsibility and can be used to discern eligibility for contract awards.
- The 5 percent withholding is not the only remedy available to DoD.
- DCAA’s assessments of contractor business systems aren’t necessarily final.
- Contractors are allowed to challenge assessments of their business systems.
This story is part of Federal News Radio’s daily DoD Report. For more defense news, click here.
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