The Department of Defense Office of Inspector General (“OIG”) recently announced that it was initiating an audit to determine whether agencies within DoD awarded Service-Disabled Veteran-Owned Small Business (“SDVOSB”) set-aside and sole-source contracts to eligible companies. The audit is set to begin this month, and likely will evaluate the number and value of contracts awarded to SDVOSBs under set-asides and sole-source procurements, as well as whether and how agencies confirm that awardees qualify as SDVOSBs at the time of award. The audit, which comes six years after the OIG previously determined that DoD did not have adequate controls in place to ensure the integrity of the SDVOSB set-aside program, signals that SDVOSB eligibility issues are likely to become a greater point of emphasis in future enforcement proceedings.
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Audits
Draft DoD Guidance on SSPs and NIST SP 800-171 – Impact on Bid Protests and Ongoing Contract Performance
By Susan B. Cassidy, Jay Carey & Kayleigh Scalzo on
On April 24, 2018, the Department of Defense (DoD) issued a Notice and Request for Comment on draft guidance that DoD proposes for assessing contractors’ System Security Plans (SSPs) and their implementation of the security controls in NIST Special Publication (SP) 800-171. This includes assessments as part of source selection decisions and during contract performance. DFARS 252.204-7012 requires defense contractors to provide “adequate security” for networks where covered defense information (CDI) is processed, stored, or transmitted. Adequate security means, “at a minimum,” implementing NIST SP 800-171. To demonstrate implementation or planned implementation of the security controls in NIST SP 800-171, contractors must describe in a SSP how the security requirements have been implemented and develop plans of action and milestones (POA&M) that describe how any unimplemented security requirements will be met.
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Incoming! Issuance of 1,000 Notifications Portends Ramp-Up of OFCCP Enforcement Activity
By Jennifer Plitsch & Michael Wagner on
Posted in Audits, Employment
On February 1, the Office of Federal Contract Compliance Programs (OFCCP) issued 1,000 corporate scheduling announcement letters (CSALs) to federal contractors, a move that suggests a renewed emphasis on the agency’s enforcement of anti-discrimination and affirmative action employment laws. CSALs are informal notices that precede the official initiation of an OFCCP compliance evaluation, but the issuance of these letters serves as both a sign of OFCCP’s enforcement posture under the Trump administration and a call to action for the contractor establishments that receive these notifications.
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Pentagon Reverses Course and Rolls Back The IR&D Technical Interchange Rule
By Susan B. Cassidy & Nooree Lee on
On September 14, 2017, the Department of Defense issued a new class deviation that eliminates the requirement on major contractors to engage with the Government in technical interchange meeting prior to the generation of independent research and development (IR&D) costs. This class deviation represents a continuing reversal in position for the Pentagon, which had been moving forward with placing more guiderails for IR&D spending.
The technical interchange meeting requirement was promulgated on November 4, 2016 and required that for IR&D costs to be allowable, major contractors must engage in technical interchange meetings with operational Department of Defense personnel so that “contractor plans and goals for IR&D projects benefit from the awareness of and feedback by a DoD Government employee who is informed of related ongoing and future potential interest opportunities.” This rule generated significant industry concern that the Government would unduly interfere in independent research and development by becoming a de facto approval process. After publication of the final rule, on December 1, 2016, DoD issued a class deviation eliminating the requirement that the technical interchange occur “before IR&D costs are generated.” Further addressing industry concerns, the Undersecretary for Defense for Acquisition, Technology, and Logistics issued a memorandum clarifying that although the DFARS rule required contractors to share their IR&D plans with DoD, the technical interchange meetings did not represent a government approval process for IR&D projects.
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2017 NDAA’s Impact on Audits and Cost Accounting Standards
By Peter B. Hutt II & Justin Golart on
Section 820 of the National Defense Authorization Act for Fiscal Year 2017, Pub. L. No. 114-238, 130 Stat. 2000 (NDAA), makes three significant changes to the federal government’s future method of conducting audits and implementation of Cost Accounting Standards (CAS). First, it empowers contractors to avoid Defense Contract Audit Agency (DCAA) audits by employing private auditors to audit their indirect rates. Second, it provides new requirements intended to reinvigorate the federal government’s existing CAS Board. Finally, it creates a new and independent Defense Cost Accounting Standards (DCAS) Board to implement the Cost Accounting Standards across the Department of Defense (DoD). All of these provisions are due to take effect on October 1, 2018.
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