The document discusses new US Department of Defense regulations established in 2011 regarding compliance of government contractors' business systems. It outlines six business systems - accounting, estimating, material management, earned value management, purchasing, and property management - that will be evaluated for compliance with criteria. The Defense Contract Audit Agency provides guidance for auditing these systems to determine if contractors meet the criteria. Oversight is now shared between DCAA and Defense Contract Management Agency.
Internal Controls over Indian Financial ReportingBharath Rao
Corporate Accountability has been gaining its momentum in the Indian Scenario. The Companies Act 2013 has now benchmarked itself to regulations like the Sarbanes-Oxley Act and stresses on the fact the auditor has to give an opinion on the Internal controls that handle Financial Data and are operating effectively. Section 134 and Section 143 of the Companies Act 2013 highlights the requirements for documenting, implementing, enforcing and auditing those internal controls which handle Financial Data.
This article provides an introduction of Internal Controls over Financial Reporting in the Indian perspective.
Internal Controls over Indian Financial ReportingBharath Rao
Corporate Accountability has been gaining its momentum in the Indian Scenario. The Companies Act 2013 has now benchmarked itself to regulations like the Sarbanes-Oxley Act and stresses on the fact the auditor has to give an opinion on the Internal controls that handle Financial Data and are operating effectively. Section 134 and Section 143 of the Companies Act 2013 highlights the requirements for documenting, implementing, enforcing and auditing those internal controls which handle Financial Data.
This article provides an introduction of Internal Controls over Financial Reporting in the Indian perspective.
Insurance Claims Management: Improving Staff Capacity Using BPMCognizant
We show how insurers can use business process management (BPM) to enhance and optimize the capacity of its claims staff through triage to determine whether human intervention is required to adjudicate a given claim, as determined by a workload management solution.
Lecture 16 internal control - james a. hall book chapter 3Habib Ullah Qamar
We started with the need of Internal Control and then What is internal Control and its Objectives of Internal control System.
Assumptions of ICS,Exposures and risks,PDC Model
SOX provision and annual Report
Powering SOX, NERC, FERC Compliance -Energy Industry MetricStream Inc
Case Study: The MetricStream solutions streamline financial control processes for SOX compliance and enable energy companies to comply with FERC and NERC.
Government contractors are under more scrutiny by the DCAA to effectively manage their contracts and stay compliant in a very competitive environment. The challenge for government contractors is adhering to the DCAA regulatory environment while maintaining profitability on your contracts. Understanding the regulatory environment is critical to running profitable contracts that comply with the changing landscape of the DCAA, FAR and CAS regulations. Accounting for key details of a project or contract, including measuring the degree of project completion, remains a huge challenge for government contractors. Join the Raffa Technology team for an update on the regulatory landscape and the best practices for keeping your organization DCAA compliant.
Insurance Claims Management: Improving Staff Capacity Using BPMCognizant
We show how insurers can use business process management (BPM) to enhance and optimize the capacity of its claims staff through triage to determine whether human intervention is required to adjudicate a given claim, as determined by a workload management solution.
Lecture 16 internal control - james a. hall book chapter 3Habib Ullah Qamar
We started with the need of Internal Control and then What is internal Control and its Objectives of Internal control System.
Assumptions of ICS,Exposures and risks,PDC Model
SOX provision and annual Report
Powering SOX, NERC, FERC Compliance -Energy Industry MetricStream Inc
Case Study: The MetricStream solutions streamline financial control processes for SOX compliance and enable energy companies to comply with FERC and NERC.
Government contractors are under more scrutiny by the DCAA to effectively manage their contracts and stay compliant in a very competitive environment. The challenge for government contractors is adhering to the DCAA regulatory environment while maintaining profitability on your contracts. Understanding the regulatory environment is critical to running profitable contracts that comply with the changing landscape of the DCAA, FAR and CAS regulations. Accounting for key details of a project or contract, including measuring the degree of project completion, remains a huge challenge for government contractors. Join the Raffa Technology team for an update on the regulatory landscape and the best practices for keeping your organization DCAA compliant.
The Six Business Systems rules improve the effectiveness of DOD oversight of contractor business systems
- The first line of defense against fraud, waste, and abuse
- Weak business systems increase the risk of, inflated contract prices and cost, paying a cost that are unallowable, unreasonable, and not allocated to the contract, inflated subcontract costs, and property systems that increase the risk of loss
DCAA Consulting's Proven Strategies for Confident Contracting.pdfdcaaconsultant
For businesses engaged in government contracting, compliance with Defense Contract Audit Agency (DCAA) regulations is of the utmost importance. DCAA compliance is contingent upon the SF 1408 pre-award audit and the submission and preparation of incurred cost submissions, both of which are essential components.
The Financial Accounting Standards Board has issued Accounting Standards Update No. 2016-
02, Leases (Topic 842), an Amendment of the FASB Accounting Standards Codification, which outlines changes in the way that lessors are required to report certain monies collected for leased assets. These new lease accounting standards – known as ASC 842 – will go into effect for public companies January 2019 and for private companies and not-for-profits January 2020.
These changes affect the several aspects of lease accounting documentation,Learn What This Means for Your Business
As you grow your business you will soon subcontract to a government prime contractor or prime a contract with the government directly. When you do you understand that your financials are open to being audited by the government to ensure fair and compliant in-voicing. What do you need to know to be “compliant”? Is your accounting system already compliant? This and other questions are worth knowing before that day comes.
By: Gary Henry, McNew & Associates
Please join Amy Hernandez, CPA, JD, Principal at Strategic FAR Advisors, LLC, as she provides invaluable insight on navigating the DCAA waters.
On this webinar you will hear the topics below:
1. Trends in DCAA audits
2. Why certain audits are performed
3. Discussion on the top three audits types
Pre-Award to include the Accounting System audit
Forward Pricing
Incurred Cost
4. How to approach an audit should you have one upcoming
5. How Unanet helps companies by providing a compliant purpose-built Project ERP solution
Similar to Government contract business systems compliance guidance (20)
Planning projects usually starts with tasks and milestones. The planner gathers this information from the participants – customers, engineers, subject matter experts. This information is usually arranged in the form of activities and milestones. PMBOK defines “project time management” in this manner. The activities are then sequenced according to the projects needs and mandatory dependencies.
Increasing the Probability of Project SuccessGlen Alleman
Risk Management is essential for development and production programs. Information about key cost, performance and schedule attributes are often uncertain or unknown until late in the program.
Risk issues that can be identified early in the program, which may potentially impact the program, termed Known Unknowns, can be alleviated with good risk management. -- Effective Risk Management 2nd Edition, Page 1, Edmund Conrow, American Institute of Aeronautics and Astronautics, 2003
Cost and schedule growth for complex projects is created when unrealistic technical performance expectations, unrealistic cost and schedule estimates, inadequate risk assessments, unanticipated technical issues, and poorly performed and ineffective risk management, contribute to project technical and programmatic shortfalls
From Principles to Strategies for Systems EngineeringGlen Alleman
From Principles to Strategies How to apply Principles, Practices, and Processes of Systems Engineering to solve complex technical, operational,
and organizational problems
Building a Credible Performance Measurement BaselineGlen Alleman
Establishing a credible Performance Measurement Baseline, with a risk adjusted Integrated Master Plan and Integrated Master Schedule, starts with the WBS and connects Technical Measures of progress to Earned Value
Capabilities‒Based Planning the capabilities needed to accomplish a mission or fulfill a business strategy
Only when capabilities are defined can we start with requirements elicitation
Starting with the development of a Rough Order of Magnitude (ROM) estimate of work and duration, creating the Product Roadmap and Release Plan, the Product and Sprint Backlogs, executing and statusing the Sprint, and informing the Earned Value Management Systems, using Physical Percent Complete of progress to plan.
Program Management Office Lean Software Development and Six SigmaGlen Alleman
Successfully combining a PMO, Agile, and Lean / 6 starts with understanding what benefit each paradigm brings to the table. Architecting a solution for the enterprise requires assembling a “Systems” with processes, people, and principles – all sharing the goal of business improvement.
This resource document describes the Program Governance Road map for product development, deployment, and sustainment of products and services in compliance with CMS guidance, ITIL IT management, CMMI best practices, and other guidance to assure high quality software is deployed for sustained operational success in mission critical domains.
The Art of the Pitch: WordPress Relationships and SalesLaura Byrne
Clients don’t know what they don’t know. What web solutions are right for them? How does WordPress come into the picture? How do you make sure you understand scope and timeline? What do you do if sometime changes?
All these questions and more will be explored as we talk about matching clients’ needs with what your agency offers without pulling teeth or pulling your hair out. Practical tips, and strategies for successful relationship building that leads to closing the deal.
A tale of scale & speed: How the US Navy is enabling software delivery from l...sonjaschweigert1
Rapid and secure feature delivery is a goal across every application team and every branch of the DoD. The Navy’s DevSecOps platform, Party Barge, has achieved:
- Reduction in onboarding time from 5 weeks to 1 day
- Improved developer experience and productivity through actionable findings and reduction of false positives
- Maintenance of superior security standards and inherent policy enforcement with Authorization to Operate (ATO)
Development teams can ship efficiently and ensure applications are cyber ready for Navy Authorizing Officials (AOs). In this webinar, Sigma Defense and Anchore will give attendees a look behind the scenes and demo secure pipeline automation and security artifacts that speed up application ATO and time to production.
We will cover:
- How to remove silos in DevSecOps
- How to build efficient development pipeline roles and component templates
- How to deliver security artifacts that matter for ATO’s (SBOMs, vulnerability reports, and policy evidence)
- How to streamline operations with automated policy checks on container images
Dev Dives: Train smarter, not harder – active learning and UiPath LLMs for do...UiPathCommunity
💥 Speed, accuracy, and scaling – discover the superpowers of GenAI in action with UiPath Document Understanding and Communications Mining™:
See how to accelerate model training and optimize model performance with active learning
Learn about the latest enhancements to out-of-the-box document processing – with little to no training required
Get an exclusive demo of the new family of UiPath LLMs – GenAI models specialized for processing different types of documents and messages
This is a hands-on session specifically designed for automation developers and AI enthusiasts seeking to enhance their knowledge in leveraging the latest intelligent document processing capabilities offered by UiPath.
Speakers:
👨🏫 Andras Palfi, Senior Product Manager, UiPath
👩🏫 Lenka Dulovicova, Product Program Manager, UiPath
DevOps and Testing slides at DASA ConnectKari Kakkonen
My and Rik Marselis slides at 30.5.2024 DASA Connect conference. We discuss about what is testing, then what is agile testing and finally what is Testing in DevOps. Finally we had lovely workshop with the participants trying to find out different ways to think about quality and testing in different parts of the DevOps infinity loop.
Accelerate your Kubernetes clusters with Varnish CachingThijs Feryn
A presentation about the usage and availability of Varnish on Kubernetes. This talk explores the capabilities of Varnish caching and shows how to use the Varnish Helm chart to deploy it to Kubernetes.
This presentation was delivered at K8SUG Singapore. See https://feryn.eu/presentations/accelerate-your-kubernetes-clusters-with-varnish-caching-k8sug-singapore-28-2024 for more details.
Welcome to the first live UiPath Community Day Dubai! Join us for this unique occasion to meet our local and global UiPath Community and leaders. You will get a full view of the MEA region's automation landscape and the AI Powered automation technology capabilities of UiPath. Also, hosted by our local partners Marc Ellis, you will enjoy a half-day packed with industry insights and automation peers networking.
📕 Curious on our agenda? Wait no more!
10:00 Welcome note - UiPath Community in Dubai
Lovely Sinha, UiPath Community Chapter Leader, UiPath MVPx3, Hyper-automation Consultant, First Abu Dhabi Bank
10:20 A UiPath cross-region MEA overview
Ashraf El Zarka, VP and Managing Director MEA, UiPath
10:35: Customer Success Journey
Deepthi Deepak, Head of Intelligent Automation CoE, First Abu Dhabi Bank
11:15 The UiPath approach to GenAI with our three principles: improve accuracy, supercharge productivity, and automate more
Boris Krumrey, Global VP, Automation Innovation, UiPath
12:15 To discover how Marc Ellis leverages tech-driven solutions in recruitment and managed services.
Brendan Lingam, Director of Sales and Business Development, Marc Ellis
SAP Sapphire 2024 - ASUG301 building better apps with SAP Fiori.pdfPeter Spielvogel
Building better applications for business users with SAP Fiori.
• What is SAP Fiori and why it matters to you
• How a better user experience drives measurable business benefits
• How to get started with SAP Fiori today
• How SAP Fiori elements accelerates application development
• How SAP Build Code includes SAP Fiori tools and other generative artificial intelligence capabilities
• How SAP Fiori paves the way for using AI in SAP apps
Observability Concepts EVERY Developer Should Know -- DeveloperWeek Europe.pdfPaige Cruz
Monitoring and observability aren’t traditionally found in software curriculums and many of us cobble this knowledge together from whatever vendor or ecosystem we were first introduced to and whatever is a part of your current company’s observability stack.
While the dev and ops silo continues to crumble….many organizations still relegate monitoring & observability as the purview of ops, infra and SRE teams. This is a mistake - achieving a highly observable system requires collaboration up and down the stack.
I, a former op, would like to extend an invitation to all application developers to join the observability party will share these foundational concepts to build on:
Securing your Kubernetes cluster_ a step-by-step guide to success !KatiaHIMEUR1
Today, after several years of existence, an extremely active community and an ultra-dynamic ecosystem, Kubernetes has established itself as the de facto standard in container orchestration. Thanks to a wide range of managed services, it has never been so easy to set up a ready-to-use Kubernetes cluster.
However, this ease of use means that the subject of security in Kubernetes is often left for later, or even neglected. This exposes companies to significant risks.
In this talk, I'll show you step-by-step how to secure your Kubernetes cluster for greater peace of mind and reliability.
Why You Should Replace Windows 11 with Nitrux Linux 3.5.0 for enhanced perfor...SOFTTECHHUB
The choice of an operating system plays a pivotal role in shaping our computing experience. For decades, Microsoft's Windows has dominated the market, offering a familiar and widely adopted platform for personal and professional use. However, as technological advancements continue to push the boundaries of innovation, alternative operating systems have emerged, challenging the status quo and offering users a fresh perspective on computing.
One such alternative that has garnered significant attention and acclaim is Nitrux Linux 3.5.0, a sleek, powerful, and user-friendly Linux distribution that promises to redefine the way we interact with our devices. With its focus on performance, security, and customization, Nitrux Linux presents a compelling case for those seeking to break free from the constraints of proprietary software and embrace the freedom and flexibility of open-source computing.
Essentials of Automations: The Art of Triggers and Actions in FMESafe Software
In this second installment of our Essentials of Automations webinar series, we’ll explore the landscape of triggers and actions, guiding you through the nuances of authoring and adapting workspaces for seamless automations. Gain an understanding of the full spectrum of triggers and actions available in FME, empowering you to enhance your workspaces for efficient automation.
We’ll kick things off by showcasing the most commonly used event-based triggers, introducing you to various automation workflows like manual triggers, schedules, directory watchers, and more. Plus, see how these elements play out in real scenarios.
Whether you’re tweaking your current setup or building from the ground up, this session will arm you with the tools and insights needed to transform your FME usage into a powerhouse of productivity. Join us to discover effective strategies that simplify complex processes, enhancing your productivity and transforming your data management practices with FME. Let’s turn complexity into clarity and make your workspaces work wonders!
Climate Impact of Software Testing at Nordic Testing DaysKari Kakkonen
My slides at Nordic Testing Days 6.6.2024
Climate impact / sustainability of software testing discussed on the talk. ICT and testing must carry their part of global responsibility to help with the climat warming. We can minimize the carbon footprint but we can also have a carbon handprint, a positive impact on the climate. Quality characteristics can be added with sustainability, and then measured continuously. Test environments can be used less, and in smaller scale and on demand. Test techniques can be used in optimizing or minimizing number of tests. Test automation can be used to speed up testing.
The Metaverse and AI: how can decision-makers harness the Metaverse for their...Jen Stirrup
The Metaverse is popularized in science fiction, and now it is becoming closer to being a part of our daily lives through the use of social media and shopping companies. How can businesses survive in a world where Artificial Intelligence is becoming the present as well as the future of technology, and how does the Metaverse fit into business strategy when futurist ideas are developing into reality at accelerated rates? How do we do this when our data isn't up to scratch? How can we move towards success with our data so we are set up for the Metaverse when it arrives?
How can you help your company evolve, adapt, and succeed using Artificial Intelligence and the Metaverse to stay ahead of the competition? What are the potential issues, complications, and benefits that these technologies could bring to us and our organizations? In this session, Jen Stirrup will explain how to start thinking about these technologies as an organisation.
Le nuove frontiere dell'AI nell'RPA con UiPath Autopilot™UiPathCommunity
In questo evento online gratuito, organizzato dalla Community Italiana di UiPath, potrai esplorare le nuove funzionalità di Autopilot, il tool che integra l'Intelligenza Artificiale nei processi di sviluppo e utilizzo delle Automazioni.
📕 Vedremo insieme alcuni esempi dell'utilizzo di Autopilot in diversi tool della Suite UiPath:
Autopilot per Studio Web
Autopilot per Studio
Autopilot per Apps
Clipboard AI
GenAI applicata alla Document Understanding
👨🏫👨💻 Speakers:
Stefano Negro, UiPath MVPx3, RPA Tech Lead @ BSP Consultant
Flavio Martinelli, UiPath MVP 2023, Technical Account Manager @UiPath
Andrei Tasca, RPA Solutions Team Lead @NTT Data
Le nuove frontiere dell'AI nell'RPA con UiPath Autopilot™
Government contract business systems compliance guidance
1. !
303.241.9633
"
glen.alleman@niwotridge.com
Government
Contract
Business
Systems
Compliance
Guidance
In
May
of
2011,
the
US
Department
of
Defense
established
the
Business
Systems
Rule,
under
DFARS
242.70.
For
contracts
awarded
after
May
of
2011,
six
business
systems
will
be
evaluated
for
compliance
with
criteria
at
DFARS
252.242-‐7006,
Accounting
System
Administration.
The
final
rule
was
issued
24
February
2012,
1
with
no
substantive
changes
made
from
the
interim
rule
(see
76
Fed.
Reg.
28856
(5/11/11)).
On
March
28,
2012,
the
Defense
Contract
Audit
Agency
(DCAA)
issued
Memorandum
for
Regional
Directors
(MRD)
related
to
revising
audit
guidance
based
on
the
finalized
DFARS
Business
Systems
Rule
(MRD
12-‐
PPS-‐009(R))2
.
The
Business
Systems
Rule
issued
on
February
24,
2012
applies
to
contractors
and
solicitations
covered
by
the
Cost
Accounting
Standards
(CAS).
MRD
12-‐PPS-‐009
provides
revised
guidance
for
the
DCAA
audits
of
contractors’
Accounting,
Estimating,
and
Material
Management
and
Accounting
Systems
(MMAS).
The
Earned
Value
Management,
Purchasing,
and
Property
Management
Systems
are
under
the
purview
of
the
Defense
Contract
Management
Agency
(DCMA).
The
regulation
addresses
and
clarifies
FAR
52.203-‐13,
The
Contractor
Code
of
Business
Ethics
and
Conduct,
commonly
referred
to
as
The
Business
Systems
Rule,
which
sets
forth
substantial
compliance
requirements
for
qualifying
entities.
Should
an
awarded
contract
contain
this
clause,
this
regulation
applies
to
awards
that
are
fixed
price
with
progress
payments
based
on
costs,
or
on
a
percentage
or
stage
of
completion,
cost-‐reimbursement,
incentive,
or
time
and
materials.
Also,
it
may
apply
to
contractors
who
have
Federal
flow
down
contract
provisions
included
within
their
award
contract.
Among
other
requirements,
this
rule
necessitates
an
internal
control
system
that
adheres
to
special
requirements
of
Government
Contracting.
DCAA
continues
to
conduct
its
audits
in
accordance
with
the
DFARS
criteria
established
by
the
Business
Systems
Rule,
with
either
a
clean
opinion
or
a
deficiency
report
being
issued.
Previously,
the
DCAA
performed
audits
according
to
Internal
Control
Audits
Planning
Summary
(ICAPS).
The
Defense
Contract
Audit
Agency
(DCAA)
guidance
regarding
contractor
accounting
system
audits
under
the
Business
Systems
Rule
is
the
most
detailed
statement
to
date
regarding
how
DCAA
plans
to
incorporate
the
six
systems
into
its
audit
program.
This
White
Paper
is
an
amalgam
of
other
documents
and
does
not
provide
legal
opinions
or
advice.
The
meaning,
relevance
and
significance
of
any
particular
consideration
discussed
in
this
White
Paper
to
a
particular
contractor
is
a
function
of
the
contractor’s
circumstances
and
an
assessment
by
qualified
individuals
as
to
what
is
needed
to
comply
with
a
particular
Business
Systems
Rule
requirement
given
the
contractor’s
circumstances.
1
http://www.gpo.gov/fdsys/pkg/FR-‐2012-‐02-‐24/pdf/2012-‐4045.pdf
2
http://www.dcaa.mil/mmr/12-‐PPS-‐009.pdf
Integrating
Six
Business
Systems
Provides
the
Tools
Needed
For
Increasing
the
Probability
of
Contract
Success
# All
elements
of
cost
accounted
for
in
the
right
period
of
performance.
# Basis
of
cost
estimates
derived
from
credible
sources.
# Project
performance
measured
through
physical
percent
complete.
# Procurement
provides
forecasts
of
committed
payments
and
receipt
of
materials.
# Material
and
property
management
traceable
to
cost
basis
and
project
performance.
2. !
303.241.9633
"
glen.alleman@niwotridge.com
WHAT
ARE
THE
SYSTEMS
INVOLVED
HERE?
There
are
three
views
of
Business
Systems
involved
in
this
new
rule.
The
DCAA
and
DCMA
now
share
responsibility.
The
ICAPS
reviews
were
conducted
by
DCAA
to
assess
control
risk
and
impact
risk
on
related
audit
efforts.
These
reviews
focused
in
internal
controls
that
impacted
pricing,
administration,
or
settlement.
ICAPS
3
DCAA
DCMA
Control
Environment
Accounting
System
––
General
IT
System
––
––
Budget
and
Planning
System
Accounting
System
––
Purchasing
System
––
Purchasing
System
Material
System
MMAS
––
Compensation
System
––
––
Labor
System
Accounting
System
––
Indirect
and
ODC
System
Accounting
System
––
Billing
System
––
Earned
Value
Management
Estimating
System
Estimating
System
––
––
––
Government
Property
In
April
of
2012,
guidance
was
provided
by
DCAA
for
auditing
contractor
business
systems
and
contractor
compliance
with
DFARS
252.242-‐7006,
Accounting
System
Administration.
4
The
objective
of
the
new
approach
to
auditing
contractor
business
systems
is
to
determine
if
the
contractor
is
in
compliance
with
the
DFARS
system
criteria.
The
business
system
audits
depend
on
the
contractor’s
compliance
with
the
DFARS
criteria
rather
than
on
the
effectiveness
of
the
contractor’s
internal
controls
or
the
adequacy
of
the
contractor’s
business
systems.
These
six
systems
are:
1. Accounting
and
Billing
–
Contractors
receiving
cost-‐reimbursement,
incentive
type,
time-‐and-‐
materials,
or
labor-‐hour
contracts,
or
contracts
which
provide
for
progress
payments
based
on
costs
or
a
percentage
or
stage
of
completion,
are
required
to
maintain
an
accounting
system.
An
accounting
system
is
required
to
provide
for:
a
sound
internal
control
environment,
accounting
framework,
and
organizational
structure;
proper
segregation
of
direct
and
indirect
costs;
identification
and
accumulation
of
direct
costs
by
contract;
accumulation
of
costs
under
general
ledger
control;
periodic
monitoring,
and
a
timekeeping
system
that
identifies
employees'
labor
by
intermediate
or
final
cost
objectives.
2. Estimating
–
Contractors
with
contracts
awarded
on
the
basis
of
cost
or
pricing
data
are
required
to
maintain
an
estimating
system
that
is
reliable
and
consistent,
produces
verifiable,
supportable,
documented,
and
timely
cost
estimates,
is
consistent
with
and
integrated
with
the
contractor's
related
management
systems,
and
is
subject
to
financial
controls
systems.
For
3
Internal
Control
Audit
Planning
Summary
(ICAPS)
4
http://www.dcaa.mil/mmr/12-‐PAS-‐012.pdf
3. !
303.241.9633
"
glen.alleman@niwotridge.com
those
contractors
who
received
in
their
preceding
fiscal
year
DoD
prime
contracts
or
subcontracts
exceeding
$50
million,
these
contractors
must
disclose
their
estimating
system
in
writing
to
the
Administrative
Contracting
Officer
(ACO).
3. Purchasing
–
The
purchasing
system
requirements
apply
to
cost
reimbursement
contracts;
letter
contracts,
time-‐and-‐materials
contracts,
and
labor-‐hour
contracts
over
the
simplified
acquisition
threshold;
and
fixed
price
contracts
over
the
simplified
acquisition
threshold
under
which
unpriced
contract
actions
are
anticipated.
Contractors
will
be
required
to
maintain
a
purchasing
system
that
meets
the
criteria
set
forth
in
the
rule.
The
criteria
for
purchasing
systems
in
the
clause
DFARS
252.244-‐7001
Contractor
Purchasing
System
Administration
includes
several
new
requirements.
Subparagraph
(c)(16)
of
the
clause
requires
that
the
purchasing
system
must
enable
the
contractor
to
notify
the
Government
of
the
award
of
all
subcontracts
that
include
flowdown
clauses
authorizing
the
Government
to
audit
the
subcontractor
and
ensure
the
performance
of
audits
of
those
subcontractors.
4. Material
Management
–
Except
for
contracts
awarded
to
small
businesses,
educational
institutions,
and
nonprofit
organizations,
the
MMAS
requirements
apply
to
non-‐commercial
item
contracts
over
the
simplified
acquisition
threshold
awarded
on
a
cost-‐reimbursement
basis
or
on
a
fixed
price
basis
with
progress
payments
made
on
the
basis
of
incurred
costs.
5. Government
Property
–
The
property
management
system
requirements
apply
to
cost
reimbursement,
time-‐and-‐material,
and
labor-‐hour
type
contracts
as
well
as
fixed
price
contracts
where
the
Government
will
provide
Government
property.
6. Earned
Value
Management
–
The
EVMS
requirements
apply
to
contractors
that
receive
cost
or
incentive
contracts
valued
at
$20M
or
more
and
other
contractors
as
determined
by
the
Contracting
Office
(CO).
The
Business
Systems
Rule
requires
a
contractor
to
use
(a)
an
EVMS
that
complies
with
the
EVMS
guidelines
in
the
American
National
Standards
Institute/Electronic
Industries
Alliance
Standard
748,
Earned
Value
Management
Systems
(ANSI/EIA-‐748)
and
(b)
management
procedures
that
provide
for
generation
of
timely,
reliable,
and
verifiable
information
for
the
Contract
Performance
Report
(CPR)
and
the
Integrated
Master
Schedule
(IMS)
required
by
the
CPR
and
IMS
data
items
of
the
contract.
If
the
contract
has
a
value
of
$50M
or
more,
the
contractor
will
be
required
to
use
an
EVMS
that
has
been
deemed
acceptable
by
the
Cognizant
Federal
Agency
(CFA).
Any
changes
proposed
by
the
contractor
to
its
EVMS
will
need
to
be
approved
in
advance
by
the
CFA.
The
collection
of
these
six
systems
under
the
Business
Systems
Rule,
has
its
source
in
the
Cost
Accounting
Standards
and
material
management
system
requirements
and
other
criteria
through
the
Defense
Contract
Audit
Agency
(DCAA).
4. !
303.241.9633
"
glen.alleman@niwotridge.com
APPLICABILITY
OF
THE
BUSINESS
SYSTEM
RULE
The
Business
System
Rule
is
applicable
for
each
contract
containing
DFARS
252.242-‐7005.
This
clause
is
required
when
the
contract
is
subject
to
CAS,
whether
full
or
modified
CAS
coverage,
under
48
CFR
9903.201-‐1
and
contains
any
the
following
clauses:
1. DFARS
§
252.215-‐7002,
Cost
Estimating
Systems
Requirements;
2. DFARS
§
252.234-‐7002,
Earned
Value
Management
System;
3. DFARS
§
252.242-‐7004,
Material
Management
and
Accounting
System;
4. DFARS
§
252.242-‐7006,
Accounting
System
Administration;
5. DFARS
§
252.244-‐7001,
Contractor
Purchasing
System
Administration;
or
6. DFARS
§
252.245-‐7003,
Contractor
Property
Management
System
Administration.
ACCOUNTING
AND
BILLING
SYSTEMS
Applies
to
Billing,
Budgeting,
Labor,
Compensation,
Indirect
Costs,
and
EDP
Controls
Clause
has
17
specific
system
requirements
cited
below.
Accounting
and
billing
systems
are
defined
in
DFARS
252.242-‐7002
and
are
applicable
to
all
contracts
subject
to
CAS.
There
are
18
criteria
used
to
determine
when
a
system
needs
to
meet
the
requirements
for
compliance.
While
some
criteria
have
been
in
place
for
a
time,
others
are
new.
These
criteria
are:
1. CAS
coverage
requirements.
2. Consistency
requirements
found
in
CAS
401
and
402.
3. General
cost
measurement
requirements
in
the
CAS
regulations.
4. General
cost
assignment
requirements
in
CAS
406
and
the
CAS
regulations.
5. Accounting
for
unallowable
costs
under
CAS
405.
6. Allocation
requirements
in
CAS
403,
410
and
418,
as
well
as
CAS
405.
7. Tangible
capital
assets
(CAS
404
and
409).
8. Compensated
absences
(CAS
408).
9. Materials
(CAS
411).
10. Pensions
(CAS
412
and
413).
11. Deferred
compensation
(CAS
415).
12. Cost
of
money
(CAS
414
and
417).
13. Insurance
(CAS
416).
14. Independent
research
and
development
(IR&D)
and
bid
and
proposal
(B&P)
costs
(CAS
420).
15. Standard
costs
(CAS
407).
16. CAS
Disclosure
Statement
requirements.
17. CAS
cost
impact
requirements.
18. Other
accounting
requirements.
5. !
303.241.9633
"
glen.alleman@niwotridge.com
PURCHASING
SYSTEM
Requires
Purchasing
and
Subcontracting
System
to
include
make
or
buy
decisions,
vendor
selection
justification,
price
negotiation,
internal
audits,
training,
and
management
reviews.
There
are
24
criteria
that
must
found
for
the
purchasing
system
for
it
to
be
compliant
with
DFARS
252.242.7001(a).
1. Have
an
adequate
system
description
including
policies,
procedures,
and
purchasing
practices
that
comply
with
the
[FAR]
and
[DFARS];
2. Ensure
that
all
applicable
purchase
orders
and
subcontracts
contain
all
flowdown
clauses,
including
terms
and
conditions
and
any
other
clauses
needed
to
carry
out
the
requirements
of
the
prime
contract;
3. Maintain
an
organization
plan
that
establishes
clear
lines
of
authority
and
responsibility;
4. Ensure
all
purchase
orders
are
based
on
authorized
requisitions
and
include
a
complete
and
accurate
history
of
purchase
transactions
to
support
vendor
selected,
price
paid,
and
document
the
subcontract/
purchase
order
files
which
are
subject
to
Government
review;
5. Establish
and
maintain
adequate
documentation
to
provide
a
complete
and
accurate
history
of
purchase
transactions
to
support
vendors
selected
and
prices
paid;
6. Apply
a
consistent
make-‐or-‐buy
policy
that
is
in
the
best
interest
of
the
Government;
7. Use
competitive
sourcing
to
the
maximum
extent
practicable,
and
ensure
debarred
or
suspended
contractors
are
properly
excluded
from
contract
award;
8. Evaluate
price,
quality,
delivery,
technical
capabilities,
and
financial
capabilities
of
competing
vendors
to
ensure
fair
and
reasonable
prices;
9. Require
management
level
justification
and
adequate
cost
or
price
analysis,
as
applicable,
for
any
sole
or
single
source
award;
10. Perform
timely
and
adequate
cost
or
price
analysis
and
technical
evaluation
for
each
subcontractor
and
supplier
proposal
or
quote
to
ensure
fair
and
reasonable
subcontract
prices;
11. Document
negotiations
in
accordance
with
FAR
15.406-‐3;
12. Seek,
take,
and
document
economically
feasible
purchase
discounts,
including
cash
discounts,
trade
discounts,
quantity
discounts,
rebates,
freight
allowances,
and
company-‐wide
volume
discounts;
13. Ensure
proper
type
of
contract
selection
and
prohibit
issuance
of
cost
plus-‐a-‐percentage-‐of-‐cost
subcontracts;
14. Maintain
subcontract
surveillance
to
ensure
timely
delivery
of
an
acceptable
product
and
procedures
to
notify
the
Government
of
potential
subcontract
problems
that
may
impact
delivery,
quantity,
or
price;
15. Document
and
justify
reasons
for
subcontract
changes
that
affect
cost
or
price;
16. Notify
the
Government
of
the
award
of
all
subcontracts
that
contain
the
FAR
and
DFARS
flowdown
clauses
that
allow
for
Government
audit
of
those
subcontracts,
and
ensure
the
performance
of
audits
of
those
subcontracts;
17. Policies
on
conflict
of
interest,
gifts,
and
gratuities;
6. !
303.241.9633
"
glen.alleman@niwotridge.com
18. Perform
internal
audits
or
management
reviews,
training,
and
maintain
policies
and
procedures
for
the
purchasing
department
to
ensure
the
integrity
of
the
purchasing
system;
19. Establish
and
maintain
policies
and
procedures
to
ensure
purchase
orders
and
subcontracts
contain
mandatory
and
applicable
flowdown
clauses,
as
required
by
the
FAR
and
DFARS,
including
terms
and
conditions
required
by
the
prime
contract
and
any
clauses
required
to
carry
out
the
requirements
of
the
prime
contract;
20. Provide
for
an
organizational
and
administrative
structure
that
ensures
effective
and
efficient
procurement
of
required
quality
materials
and
parts
at
the
best
value
from
responsible
and
reliable
sources;
21. Establish
and
maintain
selection
processes
to
ensure
the
most
responsive
and
responsible
sources
for
furnishing
required
quality
parts
and
materials
and
to
promote
competitive
sourcing
among
dependable
suppliers
so
that
purchases
are
reasonably
priced
and
from
sources
that
meet
contractor
quality
requirements;
22. Establish
and
maintain
procedures
to
ensure
performance
of
adequate
price
or
cost
analysis
on
purchasing
actions;
23. Establish
and
maintain
procedures
to
ensure
that
proper
types
of
subcontracts
are
selected,
and
that
there
are
controls
over
subcontracting,
including
oversight
and
surveillance
of
subcontracted
effort;
24. Establish
and
maintain
procedures
to
timely
notify
the
Contracting
Officer,
in
writing
[of
excessive
pass-‐through
concerns]
if
Contractor
changes
subcontracts
after
award
to
>70%
of
total
cost
of
work
performed
and
verify
Contractor
added
value
or
any
subcontractor
increases
value
of
lower-‐tier
subcontracts
to
>70%.
ESTIMATING
SYSTEM
An
acceptable
system
provides
for
use
of
appropriate
source
data,
sound
estimating
judgment,
a
consistent
approach,
and
adherence
to
established
policies
and
procedures.
Prior
DFARS
clauses
required
a
contractor
to
establish,
maintain,
and
comply
with
an
accepted
estimating
system
according
to
DFARS
252.215-‐7002(b).
This
usually
applies
to
contractors
who
have
reached
$50M
or
more
in
the
preceding
fiscal
year.
This
rule
may
apply
to
contractors
who
are
awarded
DOD
prime
contracts
or
subcontracts
of
$10M
or
more
for
which
pricing
or
cost
data
is
required
and
the
ACO
or
PCO
has
determined
the
Business
Rule
would
be
in
the
best
interest
of
the
Government.
The
estimating
system
must
have
5
components,
in
accordance
with
DFARS
252.215-‐7002(a):
1. An
organizational
structure;
2. Established
lines
of
authority,
duties,
and
responsibilities;
3. Internal
controls
and
managerial
reviews;
4. Flow
of
work,
coordination
and
communication;
5. Budgeting,
planning,
estimating
methods,
techniques,
accumulation
of
historical
costs
and
other
analyses
used
to
generate
cost
estimates.
7. !
303.241.9633
"
glen.alleman@niwotridge.com
With
these
five
components
in
place,
the
system
must
meet
the
following
compliance
requirements:
1. Is
maintained,
reliable,
and
consistently
applied;
2. Produces
verifiable,
supportable,
documented,
and
timely
cost
estimates
that
are
an
acceptable
basis
for
negotiation
of
fair
and
reasonable
prices;
3. Is
consistent
with
and
integrated
with
the
Contractor’s
related
management
systems
[e.g.,
accounting
system];
and
4. Is
subject
to
applicable
financial
control
systems.
With
these
four
compliance
requirements
in
place,
the
estimating
must
then
these
four
system
requirements:
1. The
Contractor
shall
disclose
its
estimating
system
to
the
[ACO],
in
writing.
.
.
.
2. An
estimating
system
disclosure
is
acceptable
when
the
Contractor
has
provided
the
ACO
with
documentation
that:
a. Accurately
describes
those
policies,
procedures,
and
practices
that
the
Contractor
currently
uses
in
preparing
cost
proposals;
and
b. Provides
sufficient
detail
for
the
Government
to
reasonably
make
an
informed
judgment
regarding
the
acceptability
of
the
Contractor’s
estimating
practices.
3. The
Contractor
shall—
a. Comply
with
its
disclosed
estimating
system;
and
b. Disclose
significant
changes
to
the
cost
estimating
system
to
the
ACO
on
a
timely
basis.
4. The
Contractor’s
estimating
system
shall
provide
for
the
use
of
appropriate
source
data,
utilize
sound
estimating
techniques
and
good
judgment,
maintain
a
consistent
approach,
and
adhere
to
established
policies
and
procedures.
An
acceptable
estimating
system
shall
accomplish
the
following
[17]
functions
1. Establish
clear
responsibility
for
preparation,
review,
and
approval
of
cost
estimates
and
budgets;
2. Provide
a
written
description
of
the
organization
and
duties
of
the
personnel
responsible
for
preparing,
reviewing,
and
approving
cost
estimates
and
budgets;
.
.
.
3. Ensure
that
relevant
personnel
have
sufficient
training,
experience,
and
guidance
to
perform
estimating
and
budgeting
tasks
in
accordance
with
the
Contractor's
established
procedures.
4. Identify
and
document
the
sources
of
data
and
the
estimating
methods
and
rationale
used
in
developing
cost
estimates
and
budgets;
5. Provide
for
adequate
supervision
throughout
the
estimating
and
budgeting
process;
.
.
.
6. Provide
for
consistent
application
of
estimating
and
budgeting
techniques;
.
.
.
7. Provide
for
detection
and
timely
correction
of
errors;
8. Protect
against
cost
duplication
and
omissions;
9. Provide
for
the
use
of
historical
experience,
including
historical
vendor
pricing
information,
where
appropriate;
10. Require
use
of
appropriate
analytical
methods;
8. !
303.241.9633
"
glen.alleman@niwotridge.com
11. Integrate
information
available
from
other
management
systems;
12. Require
management
review,
including
verification
of
the
company’s
estimating
and
budgeting
policies,
procedures,
and
practices;
13. Provide
for
internal
review
of,
and
accountability
for,
the
acceptability
of
the
estimating
system,
including
the
budgetary
data
supporting
indirect
cost
estimates
and
comparisons
of
projected
results
to
actual
results,
and
an
analysis
of
any
differences;
.
.
.
14. Provide
procedures
to
update
cost
estimates
and
notify
the
Contracting
Officer
in
a
timely
manner
throughout
the
negotiation
process;
15. Provide
procedures
that
ensure
subcontract
prices
are
reasonable
based
on
a
documented
review
and
analysis
provided
with
the
prime
proposal
when
practicable;
.
.
.
16. Provide
estimating
and
budgeting
procedures
that
consistently
generate
sound
proposals
that
are
compliant
with
the
provisions
of
the
solicitation
and
are
adequate
to
serve
as
a
basis
to
reach
a
fair
and
reasonable
price;
17. Have
an
adequate
system
description,
including
policies,
procedures,
and
estimating
and
budgeting
practices
that
comply
with
the
FAR
and
DFARS.
GOVERNMENT
PROPERTY
MANAGEMENT
SYSTEM
Ensure
compliance
with
the
Government
Property
clauses
of
the
contract.
The
Business
System
Rule
requires
all
contractors
maintain
an
acceptable
Government
Property
Management
System
as
described
in
DFARS
252.245-‐7003
for
contracts
containing
flowdown
clause
FAR
52.245-‐1
for
cost
reimbursement,
Time
and
Material,
and,
fixed
price
contracts
when
the
Government
provides
the
materials,
and
FAR
Part
12
and
modifications
that
exceed
the
simplified
acquisition
threshold
when
the
Government
property
is
furnished
or
the
contractor
is
directed
to
acquire
property
that
is
titled
to
the
government.
An
acceptable
Property
Management
System
is
defined
in
DFARS
252.245.7000(c),
with
compliance
requirements
to
maintain
the
property
management
system
as
described
in
FAR
52.245-‐1(f)
MATERIAL
MANAGEMENT
AND
ACCOUNTING
SYSTEM
Describes
the
system
for
planning,
controlling,
and
accounting
for
the
acquisition,
use,
issuing,
and
disposition
of
material.
Must
comply
with
the
Ten
Key
Elements
of
an
adequate
system.
In
certain
circumstances,
the
Government
requires
the
contractor
to
maintain
a
Material
Management
Accounting
System
(MMAS)
in
accordance
with
DFARS
252.242-‐7004(a)(1).
To
be
compliant
the
contractor
must
maintain
a
MMAS
that
1. Reasonably
forecasts
material
requirements;
2. Ensures
that
costs
of
purchased
and
fabricated
material
charged
or
allocated
to
a
contract
are
based
on
valid
time-‐phased
requirements;
3. Maintains
a
consistent,
equitable,
and
unbiased
logic
for
costing
of
material
transactions;
9. !
303.241.9633
"
glen.alleman@niwotridge.com
4. Assess
its
MMAS
and
take
reasonable
action
to
comply
with
the
MMAS
[compliance
criteria];
The
contractor
will
have
policies,
procedures,
and
operating
instructions
that
adequately
describe
how
its
MMAS:
1. Provides
to
the
Administrative
Contracting
Officer
(ACO),
upon
request,
the
results
of
internal
reviews
that
it
has
conducted
to
ensure
compliance
with
established
MMAS
policies,
procedures,
and
operating
instructions;
and
2. Discloses
significant
changes
in
its
MMAS
to
the
ACO
at
least
30
days
prior
to
implementation.
The
compliance
criteria
for
the
MMAS
must
include:
1. System
description
-‐
have
an
adequate
system
description,
including
policies,
procedures
and
operating
instructions
that
comply
with
[FAR]
and
[DFARS];
2. Development
of
requirements
for
materials
-‐
[e]nsure
that
costs
of
purchased
and
fabricated
material
charged
or
allocated
to
a
contract
are
based
on
valid,
timephased
requirements
as
impacted
by
minimum/economic
order
quantity
restrictions.
a. A
98
percent
bill
of
material
accuracy
and
95
percent
master
production
schedule
accuracy
are
desirable
as
a
goal
in
order
to
ensure
that
requirements
are
both
valid
and
time-‐phased.
b. If
systems
have
accuracy
levels
below
these,
the
Contractor
shall
provide
adequate
evidence
that—
i. There
is
no
material
harm
to
the
Government
due
to
lower
accuracy
levels;
ii. The
cost
to
meet
the
accuracy
goals
is
excessive
in
relation
to
the
impact
on
the
Government;
3. System
Monitoring
-‐
Provide
a
mechanism
to
identify,
report,
and
resolve
system
control
weaknesses
and
manual
override.
4. Audit
Trail
-‐
Provide
audit
trails
and
maintain
records
(manual
and
those
in
machine-‐readable
form)
necessary
to
evaluate
system
logic
and
to
verify
through
transaction
testing
that
the
system
is
operating
as
desired;
5. Physical
Inventories
-‐
establish
and
maintain
adequate
levels
of
record
accuracy,
and
include
reconciliation
of
recorded
inventory
quantities
to
physical
inventory
by
part
number
on
a
periodic
basis.
A
95
percent
accuracy
level
is
desirable.
If
systems
have
an
accuracy
level
below
95
percent,
the
Contractor
shall
provide
adequate
evidence
that
–
a. There
is
no
material
harm
to
the
Government
due
to
lower
accuracy
levels;
b. The
cost
to
meet
the
accuracy
goal
is
excessive
in
relation
to
the
impact
on
the
Government;
6. Transfers
–
provide
detailed
descriptions
of
circumstances
that
will
result
in
manual
or
system
generated
transfers
of
parts;
7. Costing
of
Material
Transactions
–
maintain
a
consistent,
equitable,
and
unbiased
logic
for
costing
of
material
transactions.
8. Common
Inventory
Allocations
–
where
allocations
from
common
inventory
accounts
are
used,
have
controls
to
ensure
that:
10. !
303.241.9633
"
glen.alleman@niwotridge.com
a. Reallocations
and
any
credit
due
are
processed
no
less
frequently
than
the
routine
billing
cycle;
b. Inventories
retained
for
requirements
that
are
not
under
contract
are
not
allocated
to
contracts;
c. Algorithms
are
maintained
based
on
valid
and
current
data;
9. Comingling
Inventories
–
[h]ave
adequate
controls
to
ensure
that
physically
commingled
inventories
that
may
include
material
for
which
costs
are
charged
or
allocated
to
fixed-‐price,
cost-‐reimbursement,
and
commercial
contracts
do
not
compromise
requirements
of
any
of
the
[MMAS
compliance
criteria].
Government-‐furnished
material
shall
not
be:
a. Physically
commingled
with
other
material;
or
b. Used
on
commercial
work;
10. Internal
Audits
–
be
subjected
to
periodic
internal
reviews
to
ensure
compliance
with
established
policies
and
procedures.
EARNED
VALUE
MANAGEMENT
Describes
the
company’s
approach
to
program
organization,
scheduling
and
budgeting,
work
authorization,
accounting,
indirect
cost
management,
managerial
analysis,
and
corrective
actions.
The
Business
Systems
Rule
EVMS
requirements
supplement
the
existing
FAR
and
DFARS
EVMS
requirements
applicable
to
contractors
performing
certain
high-‐value
and
complex,
flexibly
priced
development
contracts
as
defined
in
DFARS
252.234-‐7002,
FAR
34.2,
and
DFARS
234.2.
FAR
2.101,
defines
an
EVMS
as
a
project
management
tool
that
effectively
integrates
the
project
scope
of
work
with
cost,
schedule
and
performance
elements
for
optimum
project
planning
and
control.
The
qualities
and
operating
characteristics
of
a
compliant
EVMS
are
described
in
American
National
Standards
Institute/Electronics
Industries
Alliance
Standard
748
(ANSI/EIA‑748),
Earned
Value
Management
Systems.
For
the
Business
Systems
to
be
compliant,
an
acceptable
Earned
Value
Management
System
must
meet:
1. An
Earned
Value
Management
System
(EVMS)
that
complies
with
the
EVMS
guidelines
in
the
American
National
Standards
Institute/Electronic
Industries
Alliance
Standard
748,
Earned
Value
Management
Systems
(ANSI/EIA-‐748);
2. Management
procedures
that
provide
timely,
reliable,
and
verifiable
information
for
the
Contract
Performance
Report
(CPR)
and
the
Integrated
Master
Schedule
(IMS)
as
required
by
the
CPR
and
IMS
data
requirements
of
the
contract.
There
are
six
major
guideline
areas
for
a
compliant
Earned
Value
Management
System.
Each
must
be
in
place
and
applied
to
the
program
for
the
system
to
be
acceptable:
1. Organization
a. Define
the
authorized
work
elements
for
the
program
or
contract.
11. !
303.241.9633
"
glen.alleman@niwotridge.com
b. Identify
the
program
organizational
structure,
including
the
major
subcontractors
responsible
for
accomplishing
the
authorized
work,
and
define
the
organizational
elements
in
which
work
will
be
planned
and
controlled.
c. Provide
for
the
integration
of
the
company’s
planning,
scheduling,
budgeting,
work
authorization
and
cost
accumulation
processes
with
each
other,
and
as
appropriate,
the
program
work
breakdown
structure
and
the
program
organizational
structure.
d. Identify
the
company
organization
or
function
responsible
for
controlling
overhead
(indirect
costs).
e. Provide
for
integration
of
the
program
work
breakdown
structure
and
the
program
organizational
structure
in
a
manner
that
permits
cost
and
schedule
performance
measurement
by
elements
of
either
or
both
structures
as
needed.
2. Planning,
Scheduling,
and
Budgeting
a. Schedule
the
authorized
work
in
a
manner
which
describes
the
sequence
of
work
and
identifies
significant
task
interdependencies
required
to
meet
the
requirements
of
the
program.
b. Identify
physical
products,
milestones,
technical
performance
goals,
or
other
indicators
that
will
be
used
to
measure
progress.
c. Establish
and
maintain
a
time-‐phased
budget
baseline,
at
the
control
account
level,
against
which
program
performance
can
be
measured.
d. Establish
budgets
for
authorized
work
with
identification
of
significant
cost
elements
(labor,
material,
etc.)
as
needed
for
internal
management
and
for
control
of
subcontractors.
e. To
the
extent
it
is
practicable,
identify
the
authorized
work
in
discrete
work
packages,
establish
budgets
for
this
work
in
terms
of
dollars,
hours,
or
other
measurable
units.
Where
the
entire
control
account
is
not
subdivided
into
work
packages,
identify
the
far
term
effort
in
larger
planning
packages
for
budget
and
scheduling
purposes.
f. Provide
that
the
sum
of
all
work
package
budgets
plus
planning
package
budgets
within
a
control
account
equals
the
control
account
budget.
g. Identify
and
control
level
of
effort
activity
by
time-‐phased
budgets
established
for
this
purpose.
h. Establish
overhead
budgets
for
each
significant
organizational
component
of
the
company
for
expenses
that
will
become
indirect
costs.
Reflect
in
the
program
budgets,
at
the
appropriate
level,
the
amounts
in
overhead
pool
that
are
planned
to
be
allocated
to
the
program
as
indirect
costs.
i. Identify
management
reserves
and
undistributed
budget.
j. Provide
that
the
program
target
cost
goal
is
reconciled
with
the
sum
of
all
internal
program
budgets
and
management
reserves.
3. Accounting
Considerations
a. Record
direct
costs
in
a
manner
consistent
with
the
budgets
in
a
formal
system
controlled
by
the
general
books
of
account.
12. !
303.241.9633
"
glen.alleman@niwotridge.com
b. When
a
work
breakdown
structure
is
used,
summarize
direct
costs
from
control
accounts
into
the
work
breakdown
structure
without
allocation
of
a
single
control
account
to
two
or
more
work
breakdown
structure
elements.
c. Summarize
direct
costs
from
the
control
accounts
into
the
contractor’s
organizational
elements
without
allocation
of
a
single
control
account
to
two
or
more
organizational
elements.
d. Record
all
indirect
costs
that
will
be
allocated
to
the
program
consistent
with
the
overhead
budgets.
e. Identify
unit
costs,
equivalent
unit
costs,
or
lot
costs
when
needed
f. For
EVMS,
the
material
accounting
system
will
provide
for:
i. Accurate
cost
accumulation
and
assignment
of
costs
to
control
accounts
in
a
manner
consistent
with
the
budgets
using
recognized,
acceptable,
costing
techniques.
ii. Cost
recorded
for
accomplishing
work
performed
in
the
same
period
that
earned
value
is
measured
and
at
the
point
in
time
most
suitable
for
the
category
of
material
involved,
but
no
earlier
than
the
time
of
actual
receipt
of
material.
iii. Full
accountability
of
all
material
purchased
for
the
program
including
the
residual
inventory.
4. Analysis
and
Management
Reporting
a. At
least
on
a
monthly
basis,
generate
the
following
information
at
the
control
account
and
other
levels
as
necessary
for
management
control
using
actual
cost
data
from,
or
reconcilable
with,
the
accounting
system:
i. Comparison
of
the
amount
of
planned
budget
and
the
amount
of
budget
earned
for
work
accomplished.
This
comparison
provides
the
schedule
variance.
ii. Comparison
of
the
amount
of
the
budget
earned
and
the
actual
(applied
where
appropriate)
direct
costs
for
the
same
work.
This
comparison
provides
the
cost
variance.
b. Identify,
at
least
monthly,
the
significant
differences
between
both
planned
and
actual
schedule
performance
and
planned
and
actual
cost
performance,
and
provide
the
reasons
for
the
variances
in
the
detail
needed
by
program
management.
c. Identify
budgeted
and
applied
(or
actual)
indirect
costs
at
the
level
and
frequency
needed
by
management
for
effective
control,
along
with
the
reasons
for
any
significant
variances.
d. Summarize
the
data
elements
and
associated
variances
through
the
program
organization
and/or
work
breakdown
structure
to
support
management
needs
and
any
customer
reporting
specified
in
the
contract.
e. Implement
managerial
actions
taken
as
the
result
of
earned
value
information.
.
.
.
f. Develop
revised
estimates
of
cost
at
completion
based
on
performance
to
date,
commitment
values
for
material,
and
estimates
of
future
conditions.
5. Revisions
and
Data
Maintenance
a. Incorporate
authorized
changes
in
a
timely
manner,
recording
the
effects
of
such
changes
in
budgets
and
schedules.
.
.
.
13. !
303.241.9633
"
glen.alleman@niwotridge.com
b. Reconcile
current
budgets
to
prior
budgets
in
terms
of
changes
to
the
authorized
work
and
internal
replanning
in
the
detail
needed
by
management
for
effective
control.
c. Control
retroactive
changes
to
records
pertaining
to
work
performed
that
would
change
previously
reported
amounts
for
actual
costs,
earned
value,
or
budgets.
d. Prevent
revisions
to
the
program
budget
except
for
authorized
changes.
e. Document
changes
to
the
performance
measurement
baseline.
With
these
Guidelines
in
place
and
applied
to
the
program,
the
contractor
must
use
the
Earned
Value
Management
System
that
provides
for
generation
of
timely,
reliable,
and
verifiable
information
for
the
Contractor
Performance
Report
(CPR)
and
the
Integrated
Master
Schedule
(IMS)
as
required
by
the
CPR
and
IMS
data
items
of
the
contract,
as
defined
in
DFARS
252.234-‐7002(b)(2).
ENFORCEMENT
OF
THE
SIX
BUSINESS
SYSTEM
RULE
The
Government
has
defined
over
90
Control
Objectives
applicable
to
these
six
business
systems.
Each
Control
Objective
has
further
key
internal
controls
required
to
be
operationally
effective
to
achieve
the
Control
Objective.
A
deficiency
in
the
Control
Objectives
is
a
failure
to
maintain
an
element
of
an
acceptable
[Accounting,
Purchasing,
Estimating,
EVMS,
MMAS,
Government
Property]
system.
Each
deficiency
may
result
in
up
to
5%
withholding
of
contract
payments
until
remediated,
with
cumulative
withholdings
up
to
20%
for
multiple
deficiencies.
Future
and
current
contract
awards
may
have
additional
Government
remedies
or
penalties
applied
for
deficiencies
based
on
system
involved.
Payments
may
be
withheld
on
interim
payments,
progress
payments,
or
performance-‐based
payments
and
the
Federal
Government
has
literally
Hundreds
of
key
internal
controls
to
choose
from
and
to
test.
THE
WITHHOLDING
RULE
The
Business
System
Rules
states
that
contracts
covered
by
the
withholding
provisions
will
be
contracts
subject
to
the
Cost
Accounting
Standards
(CAS).
Small
businesses
will
not
be
subject
to
withholding
under
the
rule,
but
they
may
be
required
to
meet
relevant
requirements
for
compliant
business
systems.
Small
businesses
should
ensure
that
the
self-‐
deletion
is
intact
in
the
flow
downs
in
a
subcontract.
Small
business
should
assess
whether
or
not
they
will
lose
their
CAS
exemption
in
the
near
term
(for
example,
by
organic
growth
or
acquisition)
and
ensure
the
implementation
is
considered
in
future
bids.
The
rule
defines
a
significant
deficiency
as
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.
This
term
is
used
throughout,
and
replaces
phrases
such
as
deficiency
that
adversely
affects
the
system
or
deficiency
that
adversely
affects
the
system,
leading
to
a
potential
risk
of
harm
to
the
Government.
14. !
303.241.9633
"
glen.alleman@niwotridge.com
A
determination
by
the
government
that
a
significant
deficiency
exists
with
a
contractor's
business
system
will
be
grounds
for
issuing
a
notice
of
withholding
of
payment
and
will
require
the
contractor
to
submit
a
corrective
action
plan.
The
rule
allows
for
contractor
response
to
an
initial
finding
of
a
significant
deficiency
and
the
contracting
officer
(CO)
will
have
final
authority
to
determine
whether
a
significant
deficiency
exists.
The
CO
is
required
to
describe
the
deficiency
in
sufficient
detail
to
allow
the
contractor
to
understand
the
deficiency.
The
rule
provides
that
if
a
CO
issues
a
final
determination
that
a
contractor's
business
system
contains
significant
deficiencies,
that
final
determination
that
there
is
a
significant
deficiency
will
include
a
notice
of
payment
withholding.
The
CO
will
be
required
to
make
a
final
determination
that
a
significant
deficiency
exists
before
withholding
will
be
permitted.
The
CO
is
directed
to
withhold
5%
of
amounts
due
from
progress
payments
and
performance-‐based
payments.
The
CO
will
direct
the
contractor
to
withhold
5%
from
its
billings
on
interim
cost
vouchers
on
cost,
labor-‐hour,
and
time-‐and-‐materials
contracts.
The
withholding
will
continue
until
the
CO
determines
that
the
contractor
has
corrected
all
significant
deficiencies.
If
the
contractor
submits,
within
45
days
of
notice
of
the
significant
deficiency
determination,
a
corrective
action
plan,
the
CO
could
determine
to
reduce
the
withholdings
to
2%.
FINAL
POINTS
OF
INTEREST
1. The
business
systems
rule
applies
to
contracts
subject
to
CAS
covered
awards
(modified
and
full
coverage).
2. The
Contractor
business
systems
will
be
considered:
Approved
or
Disapproved.
DCAA
and
DCMA
will
no
longer
issue
audit
opinions
defining
a
system
as
Inadequate
in
part.
3. The
definition
for
the
phrase
Significant
Deficiency
now
means:
A
shortcoming
in
the
system
that
materially
affects
the
ability
of
officials
of
DOD
and
the
Contractor
to
rely
upon
information
produced
by
the
system
that
is
needed
for
management
purposes.
4. A
single
significant
deficiency
in
any
one
of
the
six
business
systems
will
trigger
disapproval
of
that
system
and
implementation
of
withholding
on
invoices.
5. University
Research
Centers
are
excluded
from
the
Business
Systems
Clause.
6. The
DFARS
clause
for
accounting
systems
was
updated
with
the
Final
Rule.
Accounting
systems
subject
to
the
business
systems
clause
now
must
be
reviewed
by
management
or
be
subject
to
internal
system
audits
to
ensure
compliance
with
the
Contractor’s
established
policies,
procedures,
and
practices
in
order
to
be
defined
as
adequate/approved
under
the
newly
enacted
Final
Rule.
7. The
Final
Rule
clarifies
language
providing
for
the
Contracting
Officer
to
make
determinations
based
on
the
evidence
submitted
by
the
Contractor,
that
there
is
a
reasonable
expectation
that
the
Contractor’s
corrective
actions
have
been
implemented
and
are
expected
to
correct
the
significant
deficiencies.
15. !
303.241.9633
"
glen.alleman@niwotridge.com
How
We
Can
Help
You
Comply
With
The
Business
System
Rule
Seeking
FAR
and
CAS
compliance
is
generally
not
a
straightforward
activity.
When
done
correctly,
direct
benefits
from
enhanced
business
processes,
increases
in
sales
and
improved
project
profitability
result.
Our
Professional
Services
provides
an
integrated
product
delivery
and
process
improvement
offering
utilizing
our
Performance
Based
Management
process
that
starts
with
identifying
your
needed
capabilities
for
DCAA
and
DCMA
compliance,
creating
a
master
plan
for
implementation
of
these
capabilities,
execute
that
plan
through
incremental
delivery
of
business
value,
all
the
while
providing
risk
management
and
risk
handling
to
assure
the
success
of
the
project.
Our
four-‐step
business
management
approach
provides
you
with
a
solution
shown
to
increase
compliance.
# Step
1
–
Risk
Assessment
o What
processes
are
in
place
today
for
each
of
the
Six
Business
System?
o Do
these
processes
address
the
needs
of
compliance?
# Step
2
–
Gap
Analysis
o Create
a
process
map
between
the
Six
Business
System’s
Control
Objectives
and
the
existing
work
activities
and
policies
and
procedures
# Step
3
–
Policy
and
Procedure
Documentation
o Identify
gaps
in
existing
policies
and
procedures
o Update
compliance
manual,
Earned
Value
Management
System
Description
and
other
business
process
documentation
# Step
4
–
Implementation
o Deploy
needed
systems
to
meet
Six
Business
System
Rules
o Train
staff
on
policies
and
procedures
using
these
systems