Redstone Government Consulting Blog | DFARS Business Systems (4)

The purpose of a CPSR is to determine if a contractor’s purchasing system and related internal controls comply with applicable laws and regulations, are effective over compliance with applicable laws and regulations, and are adequate and operating effectively. Contractors should evaluate their purchasing system by using the following regulations and DCMA guidance:

DoD Issued a Final Rule amending the Defense Acquisition Regulation Supplement (DFARS) to require contracting officers to consider Supplier Performance Risk System (SPRS) risk assessments when evaluating a suppliers quote or offer. The final rule is effective March 22, 2023. The Supplier Performance Risk System (SPRS) is the authoritative source to retrieve supplier product and performance information assessments for the DoD acquisition community to use in identifying, assessing, and monitoring unclassified performance.

DoD issued a DFARS Final Rule on Treatment of Incurred Independent Research and Development Costs (DFARS Case 2017-D019). The rule is effective January 31, 2023.

In a saga which conjures up the phrase: “It ain’t over till it’s over” (quotation attributed to the late, great Yogi Berra), the US Court of Appeals for the Federal Circuit (Case 21-2304) in a decision dated 01-3-2023, reversed an ASBCA Decision (60091, et al), the latter having found Raytheon’s policies for tracking potentially unallowable Lobbying and Organization costs to be reasonable, thus allowable.

In order to fulfill project requirements, there are times necessitating that remote employees travel into the contractor’s site of operations for a meeting, special project, training, performance review, etc. The US Department of Labor, Wage and Hour Division, Fair Labor Standards Act (FLSA) states that the time employees spend commuting from home to their normal place of work before the beginning of the workday and from work back home at the end of the workday is not considered compensable time worked and therefore is not time for which employees must be paid. What if the employer wants to compensate remote employees for this travel time? The available guidance doesn’t seem to say an employer can’t pay an employee for this time, and many employers do, however, should they, and what things should an employer consider?

Yes, the door just opened for potential relief from unanticipated inflation on fixed-priced contracts, but what’s beyond the door is still unclear. This year’s National Defense Authorization Act (NDAA) includes Section 822, Modification of Contracts to Provide Extraordinary Relief Due to Inflation Impacts, which builds upon DoD’s September 9, 2022, inflation guidance through use of FAR Part 50, Extraordinary Contractual Actions and the Safety Act, requests submitted to your contracting officer to provide an upward adjustment (increase contract value) and this can be done for prime and subcontractors. Note that this NDAA section does not create an obligation for the Government to pay for unanticipated inflation, but it is a “discretionary” expenditure where the Government may pay for the effects of unanticipated inflation. What remains to be seen is exactly how and how much will be provided to your contract(s).

Effective for tax years after December 31, 2021, companies that have research and development expenditures will be required to amortize their R&D costs instead of deducting them in the current year. So, what is the impact – an increased tax bill beginning in 2022.

The Department of Defense (DoD) released new final rulings on October 28, 2022, but what are they and are they really important? Let’s look at significant ones and what’s important:

Office of Management and Budget (OMB) issued a memorandum dated September 14, 2022, Subject Enhancing the Security of the Software Supply Chain through Secure Software Development Practices. This is a result of the President’s Executive Order on Improving the Nation’s Cybersecurity.

The Department of Justice (DOJ) settled one of the first lawsuits related to alleged cybersecurity fraud by Aerojet Rocketdyne, a defense contractor. So how did it begin. Aerojet Rocketdyne hired an employee as the Senior Director for Cyber Security, Compliance and Controls. The employee asserts that Aerojet misrepresented its compliance with the cyber requirements in DFARS 252.204-7012 when communicating with government officials to obtain DOD and NASA contracts between 2013 and 2015. The employee later refused to sign documents stating Aerojet was compliant with the cybersecurity requirements and reported it to the company’s ethics hotline and filed an internal company report. The employee was terminated and filed a qui tam suit alleging cybersecurity fraud under the False Claims Act.