Business Systems Rule

The Department of Defense (DoD) established, through what is called the “Business Systems Rule,” mandatory requirements for six contractor business systems, through changes to the DOD Federal Acquisition Regulation Supplement (DFARS), for contracts awarded after May 18, 2011. DFARS § 242.70; see also 76 Fed. Reg. 28,856 (May 18, 2011).

The Business Systems Rule requirements reflect a combination of certain requirements that have existed for some time (such as the Cost Accounting Standards (CAS) and material management system requirements) with various criteria that the Defense Contract Audit Agency (DCAA) has attempted to apply for years (but without any authority to do so) and still other criteria that DCAA has sought to impose since the passage of the Sarbanes Oxley Act in 2002 and the effective date of the FAR Mandatory Disclosure Rule in 2008. These requirements may become best practices for all government contracts.

  1. Accounting and Billing Systems
  2. Purchasing System
  3. Estimating Systems
  4. Government Property Management System
  5. Material Management and Accounting System
  6. Earned Value Management System

McKenna Long & Aldridge provide an excellent summary of the systems in their “Business Systems Compliance Guide.”

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