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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle H - Other Matters

P. L. 114-

House Conference Report. 114-840

(1) by redesignating subsections (c), (d), (e), (f), and (g) as subsections (d), (e), (f), (g), and (h), respectively; and

(2) by inserting after subsection (b) the following new subsection (c):

“(c) Review By Third-Party Independent Auditors.—The review process for contractor business systems pursuant to subsection (b)(2) shall—

“(1) if a registered public accounting firm attests to the internal control assessment of a contractor, pursuant to section 404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262(b)), allow the contractor, subject to paragraph (3), to submit certified documentation from such registered public accounting firm that the contractor business systems of the contractor meet the business system requirements referred to in subsection (b)(1) and to thereby eliminate the need for further review of the contractor business systems by the Secretary of Defense;

“(2) limit the review, subject to paragraph (3), of the contractor business systems of a contractor that is not a covered contractor to confirming that the contractor uses the same contractor business system for its Government and commercial work and that the outputs of the contractor business system based on statistical sampling are reasonable; and

“(3) allow a milestone decision authority to require a review of a contractor business system of a contractor that submits documentation pursuant to paragraph (1) or that is not a covered contractor after determining in writing that such a review is necessary to appropriately manage contractual risk.”.

(c) Amendment To Definition Of Covered Contractor.—Section 893 of such Act is further amended in subsection (g), as so redesignated, by striking “means a contractor” and all that follows and inserting “means a contractor that has covered contracts with the United States Government accounting for greater than 1 percent of its total gross revenue, except that the term does not include any contractor that is exempt, under section 1502 of title 41, United States Code, or regulations implementing that section, from using full cost accounting standards established in that section.”.

(d) Repeal Of Obsolete Deadline.—Section 893 of such Act is further amended in subsection (a) by striking “Not later than 270 days after the date of the enactment of this Act, the” and inserting “The”.

The Senate bill contained a provision (sec. 891) that would amend chapter 137 of title 10, United States Code, to add a new section that would require the Secretary of Defense to develop and initiate a program to improve contractor business systems. The provision would clarify that this program would only apply to those contractors that do more than 30 percent of their business with the federal government and more than 1 percent of their business under cost-type contracts.

The House amendment contained no similar provision.

The House recedes with an amendment that would require the Department of Defense to identify and make public clear business system requirements, allow contractors to submit certification from their third-party independent auditors that their business systems conform to the Department’s business system requirements, and allow a milestone decision authority to require further auditing of business systems to manage contractual risk. The amendment would also specify that business system requirements only apply to contractors that have covered contracts with the United States Government accounting for greater than 1 percent of their total gross revenue and that are not subject to full cost accounting standards pursuant to either section 1502 of title 41, United States Code, or regulations implementing section 1502 of title 41, United States Code.