DFARS 242.75, Contractor Accounting Systems

[Rob]

With the recent consolidation of the former "10 key" business systems into "6 key" business systems, does/would an inadequate assessment under one of the old key business system result in a significant deficiency under the one of the new key business systems, i.e. Contractor Accounting Systems?

To wit, if one of the Control Objectives under the DCAA IT General System Controls Audit Program is not met, in this example - Contingency Plans, and as a result the contractor's IT System was found to be "inadequate" by DCAA, would the CO/DCMA leap to the "unacceptable" determination?

Under DFARS 252.242-7006 Accounting System Administration (a)(3) “Significant deficiency” means a shortcoming in the system that materially affects the ability of officials of the Department of Defense to rely upon information produced by the system that is needed for management purposes

Understand the importance of Contingency Plans, however, a lack of Contingency Plan does not appear to impact the DoD's ability to rely upon information produced by the system?

[here_2_help]

Rob,

Under the new DFARS business systems regime, the only thing that matters (officially) are the adequacy criteria associated with each of the six business systems. Any "significant" deficiency has to be in relation to one of the criteria.

That being said, the fact of the matter is that DCAA has decided, on its own, to revise the official DFARS definition of "significant deficiency" so that nearly any deficiency will be found to be significant. The good news there is that a CO still has to make the final call and have that call reviewed by a Board. The other piece of good news is that, so far, the Review Boards seem to be making reasonable decisions and have had no problem overruling a CO when the reviewers believe there is insufficient basis to support a finding of a "significant deficiency".

Regardless, you should have a corrective action plan in place and be working on it, whenever DCAA alleges some issue, no matter how minor.

Hope this helps.

[1102skier]

here2help - When you state "a Board", what do you mean - as this is the first time I've heard of a formal process.

[here_2_help]

1102skier,

You should read DCMA Policy No. 131, which states (in part)--

1.4.2.3. Contractor Business Systems Review Panel. When the COs final determination disapproves a business system in accordance with the applicable business system clause, the CO shall obtain a higher-level review from the Contractor Business Systems Review Panel prior to notifying the Contractor in writing that the system is disapproved. The CO shall submit, via email to the DCMA-AQ Contractor Business Systems Policy process advocate, a copy of the functional specialist or auditor report, Contractor’s response to the initial determination, and final determination notice, as approved by the CMO Contracts Director and/or the Director of the CACO/DACO Division of the Cost and Pricing Center.

1.4.2.3.1. The purpose of the Panel review is to ensure --

- Significant deficiencies identified in the CO’s initial determination notification and the Contractor’s response have been fully evaluated and discussed by the CO and functional specialist or auditor, and CMO Contracts Director or Director of the CACO/DACO Division of the Cost and Pricing Center, and

- Consistent application of business system criteria and policy requirements.

1.4.2.3.2. The Panel will be composed of the following individuals –

- Chair: Director, Contracts Policy

- Member: Contractor Business Systems Policy Process Advocate

- Member: Specific Business System Policy Process Advocate (e.g., Estimating System Policy)

- Member: Operations Representative (Cost/Pricing Center Representative for CACOs/DACOs)

- Member: Legal Representative (DCMA-GC)

- DCAA HQ Representative, as applicable

Hope this helps.

[BZMANINTEXAS]

Another key point to remember is that the new DFAR clause 252.242-7005 Contractor Business Systems is not automatically or retroactively applicable to your contract, it must, per the FAC (Federal Register Vol. 77 No 37, Friday February 24,2012) be a bilateral modificaiton to incorporate into existing contracts that were issued prior to its release date. This may allow time for potential deficiencies if known to be fixed without having to take a hit on delayed or reduced payments.