Redstone Government Consulting Blog | Government Compliance Training (4)

A question we are frequently asked is “Do small contractors really need written policies and procedures in place to pass....”   This is finished with many types of audit - pre-award accounting system, post award accounting system, or even purchasing system?

As a follow-up to our June 2015 blog on the now really infamous OPM computer hack of 2015 (which might actually date back to 2013 based upon the fact that OPM’s story continually changes) we now know that approximately 21 million personnel records have been compromised.  However, we can all sleep better at night knowing that the action was technically not a cyber-attack because there was purportedly no attempt to take over the systems; hence, “merely” infiltrating (hacking) the systems to gain access to sensitive data including that related to background investigation.

In an Executive Orders (EO) issued on Labor Day, President Obama continued to display his willingness to manage the personnel policies of government contractors. This latest EO, one of many directed solely at Government contractors, will require contractors to provide up to seven days paid sick leave (annually) for employees. The EO comes with the typical unsupported rhetoric that “we’ve seen that many companies, including small businesses, support these policies because they understand it’s helpful with recruitment and retention” and a separate assertion “that paid sick leave will improve contractor performance”. Perhaps unintended, but it is noteworthy that the White House did not state that many companies support the notion that paid sick leave will “improve contractor performance”; by implication, the White House could not find any companies which were sufficiently naive to buy-in to that highly speculative and wholly unsupported assertion.

The Fair Labor Standards Act of 1938 (FLSA), which is administered and enforced by the Wage and Hour Division (WHD) of the Department of Labor (DOL) imposes, among other things, minimum wage and overtime pay requirements. It is certainly nothing new and has been a hot topic amongst Human Resources professionals over the past months as President Obama directed the Secretary of Labor to update the regulations. With much speculation and rumblings of possible changes, all have been anxious for the impending proposed rule to be revealed.  

Though multiple legislative efforts have failed in amending Title VII to include sexual orientation and gender-identity to the list of protected classes which cannot be discriminated against, President Obama’s Executive Order (EO) 13672, signed on July 21, 2014, and the subsequent guidance issued by various government agencies leaves government contractors with changes to make in this arena.  Like EO 11246, Equal Employment Opportunity, issued in 1965, it impacts virtually all government contracts with a very low threshold of $10,000 or more in federal contracts or subcontracts.  Exclusions are few and unaltered as currently stated in the regulations, 41 CFR 60-1.5.

Prior to retiring from DCAA, I was involved in developing the 2012 DCAA Requirements Plan for the Huntsville Branch Office. Since one of my Huntsville contractors was a major, I was required to coordinate my plan with the DCAA Contract Audit Coordinator (CAC) in Chicago. The CAC was estimating the Business Systems staffing requirement for ONE major contractor. The estimate was prepared to consider auditing the Accounting and Billing business system requirements using the draft DCAA audit program for the respective systems. The CAC advised me that its estimate of the hours required to complete TWO business system audits across all segments of the ONE major contractor would be 235,000 over a two-year period. This estimate was communicated to DCAA management at the All Managers Meeting in the fall of 2011.

I recently delivered a presentation at the National Contract Management Association (NCMA) World Congress on the July 15, 2014 DoD proposed changes to DFARS business system Rules (DFARS Case 2012-042) for contractor accounting systems, estimating systems, and material management and accounting systems (MMAS).  A public hearing on the proposed changes is scheduled for August 18, 2014 and comments are to be submitted on or before September 15, 2014.  As noted in previous blogs, the new rules do not apply to small businesses or to other DFARS defined business systems (purchasing, EVMS, Government property).

As published in the Federal Register on May 6, 2014 the Department of Defense has issued a final rule amending the DFARS to require certain qualifying contractors to adequately address the detection and avoidance of counterfeit electronic parts.  This was done to implement those sections of the NDAA for fiscal years 2012 and 2013 respectively dealing with the same subject and is effective May 6, 2014.

On April 21, 2014, the DAR editor submitted a proposed new DFARS rule (DFARS Case 2012-042) for Business Systems Compliance to OMB’s Office of Information and Regulatory Affairs (OIRA).  Generally, this is the last step prior to the publication of the new rules.  The full body of the proposed rule has not been published; however, OIRA has published the following abstract on May 23, 2014 as part of its semiannual compilation of all pending federal regulations: