Earlier this month, Navigant and Venable LLP presented a webinar on “U.S. Federal Regulatory Update: Hot Topics in Government Contracts”. The presenters discussed some of the challenges government contractors face in today’s government contracting environment.
One of today’s government contracting challenges involves the Department of Defense’s proposed interim new Defense Federal Acquisition Regulation Supplement (DFARS) rule regarding improving contractor business systems. These proposed rules will could significantly impact U.S. defense contractors by placing additional regulatory burdens on government contract reporting and compliance processes.
The U.S. government’s position on “business systems” are meant to serve as the initial defense against fraud, waste and abuse, and aim to cut down the risk that the government incurs regarding unallowable or unreasonable expenses. The six business systems identified in the interim rule DFARS Supplement include accounting, estimating, purchasing, material management and accounting, earned value management and property management.
There are best practices government contractors can apply during the business system audit process by DCAA and DCMA. Government contractors should first establish credibility and a professional, non-adversarial rapport with the government audit team at the inception of the audit process. Government contractors should also keep a written record of all data requests, meetings, telephone conversations and questions, and provide auditors with access to documents in an organized and systematic manner including pre‐reviewing documents before providing to auditors, accompany auditors on interviews / floor checks, and providing information in an easy and understandable way.