DFARS Proposed Rule

In a proposed rule issued earlier this month, the Department of Defense (“DoD”) seeks to incorporate into the Defense Federal Acquisition Regulations Supplement (“DFARS”) restrictions on the use of the lowest price technically acceptable (“LPTA”) source selection method from the National Defense Authorization Act (“NDAA”) for Fiscal Years 2017 and 2018.  This proposed rule makes clear that these NDAA-imposed restrictions are not going away any time soon, and that DoD contracting officers need to engage in a thorough and reasoned analysis before conducting an LPTA procurement.
Continue Reading Lowest Price Technically Acceptable Solicitations No Longer Acceptable? Reviewing the Department of Defense’s Proposed Changes to the DFARS

The Department of Defense (DoD) will require contractors to disclose more information about their Independent Research & Development (IR&D) projects before the Government will reimburse IR&D costs, the Pentagon said in a proposed rule issued earlier this week.  The proposed rule, which was previewed in an August 2015 white paper, is the latest sign that DoD is poised to overhaul the regulatory framework that applies to IR&D performed by defense contractors.  Indeed, just last week, DoD issued yet another proposed rule that would change the way proposed IR&D projects are evaluated in DoD procurements.
Continue Reading Defense Contractors Must Share (Even More) Information About Their IR&D Projects Before DoD Will Reimburse IR&D Costs

Pursuant to the Truth in Negotiations Act (TINA), contractors are required to submit current, accurate, and complete cost or pricing data when negotiating certain contracts with the Government.  On November 20, the Department of Defense (DoD) published a proposed rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS).  The change would require DoD contracting officers to request a limited-scope audit if a contractor voluntarily discloses defective pricing,[1] unless a full-scope audit is “appropriate for the circumstances.”  In theory, if the rule is implemented, contracting officer would have the flexibility to focus an audit on the defective portions disclosed by the contractor and not reexamine all previously provided pricing data.  Though the proposed rule appears to be DoD’s attempt to provide limited relief to defense contractors facing significant regulatory burdens under TINA, it is not clear the rule as written will provide any such relief.
Continue Reading DoD Proposes DFARS Changes in Attempt to Promote Voluntary Disclosure of Defective Pricing

On September 17, 2015, Covington hosted a Symposium in the firm’s Washington office focusing on key trends and emerging issues for government contractors. Both Senator John McCain and former Attorney General Eric Holder addressed the procurement and enforcement challenges faced by the government and contractors, and several panels of leading experts discussed a wide variety of topics ranging from cybersecurity developments to contractor responsibility. The full-day program also offered a series of break-out sessions focused on operational business considerations, including the increasing importance of contractor supply chain management.  That topic now appears to have been particularly timely in light of DoD’s September 21, 2015 announcement of a new proposed rule addressing counterfeit electronic parts in contractor supply chains.

The new proposed rule is further implementation of section 818 of the 2012 National Defense Authorization Act (“NDAA”), which required the Secretary of Defense to assess DoD’s “acquisition policies and systems for the detection and avoidance of counterfeit electronic parts.” As discussed below, because the proposed rule would impose new substantive sourcing requirements and apply far more broadly than existing regulations, it would, if adopted, further increase the overall compliance burden on the defense contracting community.
Continue Reading Proposed Counterfeit Parts Rule Envisions New Restrictions, Universal Applicability for DoD Contractors