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. 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.
The Rule permits DoD to withhold payments for significant deficiencies in any contractor business system, that’s where Left Brain Professionals adds value to your company – we help reduce the financial risks while improving processes!
(A review of DCAA and DCMA websites will confirm a continuing battle over which agency is responsible for system oversight!)
The 6 business systems (DFARS 242.70)
Link (audit/oversight agency) – additional regulations
- Accounting and Billing Systems (DCAA) – CAS
- Contractor Purchasing System Administration (DCAA)
- Cost Estimating System (DCAA) – CAS
- Contractor Property Management System Administration (DCMA)
- Material Management and Accounting System (DCAA)
- Earned Value Management System (DCMA)