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bob7947

National Defense Authorization Act for 2016

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For the 16th straight year, I have done Wifcon.com's analysis of the contracting provisions of the National Defense Authorization Act (NDAA). This version, for FY 2016, took a twist at the last moment and was vetoed for a variety of reasons. That is explained here.

This NDAA may be signed and become law this weekend since the funding has been changed and a different bill number has been passed. I've had it online for about a week and all I need to do is proof it. Since it is already online, why not let you see it while I proof it? I had no reason not too.

If you are in a Civilian agency and think you are free from the NDAA--think again. This is the annual contracting law and it has provisions that will affect your agency and you.

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See Sec. 809. Another advisory panel.

What they should advise is that DOD be freed from the FAR and OFPP and allowed to go back to having its own acquisition system and regulation.

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Sec. 893. Get this:

Effective on the date of the enactment of this Act, the Defense Contract Audit Agency may not provide audit support for non-Defense Agencies unless the Secretary of Defense certifies that the backlog for incurred cost audits is less than 18 months of incurred cost inventory.

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Vern:

If I remember correctly, some improvements to the major defense system sections reversed earlier improvements. Congress no longer kicks rubble around, they stumble through the dust.

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Sec. 887:

Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulatory Council shall prescribe a regulation making clear that agency acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry, so long as those exchanges are consistent with existing law and regulation and do not promote an unfair competitive advantage to particular firms.

I guess OFPP's "myth-busters" memo didn't get the job done.

Be "responsible." Be "constructive." Be consistent with existing law and regulation. Figure out what's "unfair." Good luck with that.

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For the advisory panel in Section 809, I hope the DAU lists all the sections of past NDAA Acts that result in regulations that slow down the acquisition system.

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Bob:

Congress thinks it could manage defense acquisition better than the Executive Branch, so it passes micromanagement laws, which gum up the works.

Everybody, get this through your heads: Defense acquisition is a political process. It is not a business process.

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Bob:

For the advisory panel in Section 809, I hope the DAU lists all the sections of past NDAA Acts that result in regulations that slow down the acquisition system.

Yes. ​And provide the panel with a comprehensive bibliography of the reports of all the previous advisory panels.

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In re my Post #2, I wrote the following in the October 2015 issue of The Nash & Cibinic Report:

The Government actually has three Government acquisition law and policy systems. There is a system for the “ordinary” cabinet departments, independent establishments, and wholly owned government corporations. There is another system for the DOD, which is much more extensive than the one for the ordinary agencies. And there is a third system of sorts, which is composed of the various independent systems of the Government organizations that are not subject to the FAR, such as the Federal Aviation Administration, the Patent and Trademark Office, and the Postal Service. Although some laws apply to all agencies, or nearly all, like the Competition in Contracting Act, and while there is some policy overlap, there are mission-driven differences in implementation, which is why there are different systems. FAR supplementation can address such differences, but when supplementation becomes as extensive as it has for the DOD, what you have is, in effect, a different system.

* * *

The effort to maintain the fiction of a single Government-wide acquisition regulation has stuck us with an unwieldy and unresponsive bureaucracy that has produced a frayed and tattered document with an outdated design based on ill-conceived and outdated policy and which serves no one well. See The Federal Acquisition Regulation: It Doesn't Resolve Problems, 20 N&CR ¶ 6, and The Federal Acquisition Regulations: Can It Be Made A Quality Document?, 16 N&CR ¶ 22. The FAR contains much that has little if any bearing on most civilian agency acquisitions, yet still does not meet all of the Government’s needs with respect to DOD acquisitions. It is time for some regulatory breakout. The Government should free the civilian agencies from laws and policies that have little application or utility for them and free the DOD from the FAR bureaucracy.

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The rules caused by this NDAA will flow down from the regulators during the upcoming year. It will take some time for users to figure them out and by the time the users become comfortable with them, Congress will change the law again.

Everybody, get this through your heads: Defense acquisition is a political process. It is not a business process.

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Stopping us from using DCAA for audits is causing a mess. The original House version last spring allowed a year transition. The version put together in July states that DCAA must stop work for civilian agencies immediately upon the president signing the law. DCAA put us on notice that they will suspend our audits immediately. This means we have wasted a lot of money on unfinished audits some of which may be a week or two from completion. Plus we will have to jump through hoops to contract out our audits. The rush will almost ensure we do a poor job of contracting the services. Then multiply that by several different agencies who currently use DCAA on a reimbursable basis. How kicking us out and removing our funding will help DCAA catch up a backlog is illogical.

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Boof,

The point is that DCAA has limited resources. It is logical to expect DCAA to prioritize the use of its limited resources. Doing work for non-DoD agencies when DoD-required audits are not being performed is not logical.

I agree this direction is disruptive; but it is logical.

H2H

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Having worked for DCAA for 15 years, I somewhat agree with Boof and H2H. As with all agencies, DCAA has limited resources, both personnel and funding. Although DCAA receives an appropriation through the DoD appropriations, a substantial portion of its funding comes through MOUs for audit services with other agencies. This additional funding allows DCAA to hire additional auditors. By potentially cutting off this additional funding source, it is likely that DCAA will have to lay off some auditors unless its appropriation is increased. Looking into the future, the NDAA also calls for a dollar for dollar reduction in DCAA's appropriation when it receives funding from another agency for audit services.

On the other hand, the question has to be asked as to why civilian agencies have not been funding their own audit resources? The IG Act makes agency IGs responsible for conducting audits, including contract audits, for their agencies. Instead of hiring their own contract audit staffs, most civilian agency IGs have been entering into MOUs with DCAA to have DCAA perform this function for the IGs.

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The logic to an Interagency Agreement (IAA) with DCAA is that they have staff permanently assigned to large corporations. They are familiar with that firm and its accounting procedures. They are often in the corporate space and thus there are no travel costs. One of our largest contractors has 35 DCAA auditors in thier HQ. Now our contracted auditors will have to travel and learn thier accounting processes from the bottom up. Thier decisions are likely to vary from what the company has done to satisfy DCAA. It is more cost effective to pay DCAA to do the audits even if they have to hire personnel with our funding.

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Boof:

Now our contracted auditors will have to travel and learn thier accounting processes from the bottom up. Thier decisions are likely to vary from what the company has done to satisfy DCAA. It is more cost effective to pay DCAA to do the audits even if they have to hire personnel with our funding.

True, but too bad. DCAA is the Defense Contract Audit Agency, and Congress has decided that DCAA must work for no one but DOD until it reduces its backlog of DOD work.

This should prompt the civilian agencies to seek funding to develop their own audit resources. Maybe there should be a Civilian Contract Audit Agency.

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Moreover, it's not like agency IG's haven't seen this coming and been warning about the situation. Both DOE OIG and NASA OIG have issued reports expressing alarm and recommending changes to move away from reliance on DCAA.

H2H

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