Redstone Government Consulting Blog | Small Business Compliance (8)

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.

A common misconception occurs when the term “DCAA-compliant accounting system” is used to describe a particular brand of accounting software. Sure, some accounting software systems and its components are designed specifically to address compliance with government regulatory requirements. But just because you buy it and use it does not mean you automatically have a compliant accounting system. There are several requirements of the accounting system and its environment that must be in place to ensure DCAA compliance, and there are a multitude of ways to meet these requirements without a significant investment in the purchase, implementation, training, and maintenance of a really expensive accounting system. Small businesses looking forward to bidding on prime, cost-type contracts must maintain DCAA compliance while also being as cost effective as possible to keep indirect rates at a competitive level. There are many options to choose from, and business owners must determine the best fit for their company. Be sure to consider all of the options:

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.

Congratulations! You have won your first prime federal contract – now what do you do?! Unfortunately, regardless of how many contracts a company has won, the focus seems to be on “the win” and NOT how a company is going to manage and administer the contract. Larger companies’ that have been around for years have figured out through the “school of hard knocks” (i.e. Government audits, ACO cure notices, contract terminations, debarments, system inadequacies, etc…), how to comply with all the federal laws and regulations that are inevitably part of the Federal government contract you were just awarded.

Not only do you get to pay for the audit, you get pay for the CPA to support an audit of the audit!

As required by Section 702 of the 2014 Bipartisan Budget Act (BBA) signed by President Obama on December 26, 2013, the June 24, 2014 Federal Register includes an interim rule setting the FAR 31.205-6(p) executive compensation statutory cap at $487K (coincidentally a 49% reduction from the most recent statutory cap of $952,308).   The June 2014 rule notes that it also implements a possible “narrowly targeted” exception to this cost limit for scientists, engineers or other specialists upon an agency determination that such exceptions are needed to ensure that the executive agency has continued access to needed skills and capabilities.  The interim rule also includes a comment period which is for 60 days after the Federal Register publication date (June 24 to August 23, 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:

Robert Eldridge and Michael Steen, Director and Senior Director of Redstone Government Consulting, have been selected to speak at the prestigious National Contract Management Association’s World Congress (NCMAWC). This annual training event for contract management, procurement and acquisition professionals is the largest training event of its kind and will be held at the Gaylord National Hotel and Convention Center in Washington D.C., from July 27-30.

The Department of Energy (DOE) has released its proposed amendments to the Department of Energy Acquisition Regulations (DEAR) which would subject certain DOE contracts to business systems criteria and penalties for failure to maintain adequate internal controls governing those systems.  The proposed rule, published on April 1 2014, makes official a DOE FY 2013 promise of implementing formal regulations which would mirror systems requirements already in place for DOD contracts, those systems of which are defined in DFARS 252.242-7005.

Two recent decisions by the General Accountability Office (GAO) and the ASBCA make it clear that the contractor will be held responsible for incorrect assumptions when they fail to follow up on known inconsistencies or missing information with the government, even when the government is responsible for providing the information.