Friday, February 2, 2018

Section 809 Panel Issues First Report

The Section 809 Panel released its first of three reports this week. This 642 page tome can be downloaded here. The Section 809 Panel, you will recall, was named for Section 809 of the 2016 NDAA (National Defense Authorization Act) from which it gained its status and authority. Its objective is to make recommendations that will enable DoD to more consistently buy what it needs in a timely and cost-effective manner.

The Panel stated that its research "unequivocally" proved that the cumbersome, and often one-size-fits-all acquisition process is an obstacle to DoD's ability to access a marketplace that has moved far beyond the captive industrial base of the Cold War era.

This report contains numerous recommendations to update the process by which DoD acquires IT business systems, streamline DoD's cumbersome auditing requirements, address challenges in how the small business community and DoD interact, update commercial buying, clarify definition of personal and non-personal  services, remove statutory requirements for 13 acquisition-related DoD offices, and repeal 20 acquisition-related statutory reporting requirements.

There's plenty of material in this report to keep us busy writing for a long time. But today, we want to focus on recommendations impacting the Defense Contract Audit Agency (DCAA), the Agency that has taken more than its fair share of criticisms lately - some justified, most not - for a lot of the inefficiencies in the current process.

The recommendations concerning DCAA fall into three categories; re-focus on assisting contracting officers, use commercial standards rather than home-grown ones, and find better ways to be more effective and efficient in oversight activities. Here they are.

Enhance DCAA's Focus on the Contracting Officer and Acquisition Team

  • Align DCAA's mission statement to focus on its primary customer, the contracting officer
  • Revise the elements of DCAA's annual report to Congress to incorporate multiple key metrics
  • Provide flexibility to contracting officers and auditors to use audit and advisory services when appropriate.
  • Establish statutory time limits for defense oversight activities.
  • Permit DCAA to use Independent Public Accountants (IPAs) to manage resources to meet time limits.

Use Accepted Commercial Standards and Practices with Objective and Standardized Compliance Criteria

  • Replace system criteria from DFARS 252.242-7006, Accounting System Administration, with an internal control audit to assess the adequacy of contractors' accounting systems.
  • Develop a Professional Practice Guide for DoD's oversight of contractor costs and business systems.
  • Require DCAA to obtain peer review from a qualified external organization

Provide More Effective and Efficient Contract Compliance Oversight

  • Increase coverage of the effectiveness of contractor internal control audits by leveraging IPAs
  • Incentivize contractor compliance and manage risk efficiently through robust risk assessment.
  • Clarify and streamline the definition of and requirements for an adequate incurred cost proposal to refocus the purpose of DoD's oversight.

Many of these are excellent recommendations. We'll unpack some of them in later posts.

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