Sec. 820. Defense cost accounting standards
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Section 1501 of title 41, United States Code, is amended— in subsection (b)(1)(B)(ii), by inserting and, if possible, is a representative of a public accounting firm after systems ; by redesignating subsections
(c)through
(f)as subsections
(f)through (i), respectively; by inserting after subsection
(b)the following new subsections: The Board shall— ensure that the cost accounting standards used by Federal contractors rely, to the maximum extent practicable, on commercial standards and accounting practices and systems; within one year after the date of enactment of this subsection, and on an ongoing basis thereafter, review any cost accounting standards established under section 1502 of this title and conform such standards, where practicable, to Generally Accepted Accounting Principles; and annually review disputes involving such standards brought to the boards established in section 7105 of this title or Federal courts, and consider whether greater clarity in such standards could avoid such disputes. The Board shall meet not less than once each quarter and shall publish in the Federal Register notice of each meeting and its agenda before such meeting is held. The Board shall annually submit a report to the congressional defense committees, the Committee on Oversight and Government Reform of the House of Representatives, and the Committee on Homeland Security and Governmental Affairs of the Senate describing the actions taken during the prior year— to conform the cost accounting standards established under section 1502 of this title with Generally Accepted Accounting Principles; and to minimize the burden on contractors while protecting the interests of the Federal Government. ; and by amending subsection
(f)(as so redesignated) to read as follows: The Administrator, after consultation with the Board— without regard to the provisions of title 5 governing appointments in the competitive service— shall appoint an executive secretary; and may appoint, or detail pursuant to section 3341 of title 5, two additional staff members; and may pay those employees without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5 relating to classification and General Schedule pay rates, except that those employees may not receive pay in excess of the maximum rate of basic pay payable for level IV of the Executive Schedule. . Section 1502(b)(3)(A) of title 41, United States Code, is amended by striking $15,000,000 and inserting $100,000,000 . Section 1501(i) of title 41, United States Code (as redesignated by paragraph (1)), is amended— in paragraph (1), by striking subsection (e)(1) and inserting subsection (h)(1) ; and in paragraph (3), by striking subsection (e)(2) and inserting subsection (h)(2) . Chapter 7 of title 10, United States Code, is amended by adding at the end the following new section: The Defense Cost Accounting Standards Board is an independent board in the Office of the Secretary of Defense. The Board consists of seven members. One member is the Chief Financial Officer of the Department of Defense or a designee of the Chief Financial Officer, who serves as Chairman. The other six members, all of whom shall have experience in contract pricing, finance, or cost accounting, are as follows: Three representatives of the Department of Defense appointed by the Secretary of Defense; and Three individuals from the private sector, each of whom is appointed by the Secretary of Defense, and— one of whom is a representative of a nontraditional defense contractor (as defined in section 2302(9) of this title); and one of whom is a representative from a public accounting firm. A member appointed under paragraph (1)(A) may not continue to serve after ceasing to be an officer or employee of the Department of Defense. The Chief Financial Officer of the Department of Defense, after consultation with the Defense Cost Accounting Standards Board, shall prescribe rules and procedures governing actions of the Board under this section. The Defense Cost Accounting Standards Board— shall review cost accounting standards established under section 1502 of title 41 and recommend changes to such cost accounting standards to the Cost Accounting Standards Board established under section 1501 of such title; has exclusive authority, with respect to the Department of Defense, to implement such cost accounting standards to achieve uniformity and consistency in the standards governing measurement, assignment, and allocation of costs to contracts with the Department of Defense; and shall develop standards to ensure that commercial operations performed by Government employees at the Department of Defense adhere to cost accounting standards (based on cost accounting standards established under section 1502 of title 41 or Generally Accepted Accounting Principles) that inform managerial decisionmaking. Members of the Defense Cost Accounting Standards Board who are officers or employees of the Department of Defense shall not receive additional compensation for services but shall continue to be compensated by the Department of Defense. Each member of the Board appointed from the private sector shall receive compensation at a rate not to exceed the daily equivalent of the rate for level IV of the Executive Schedule for each day (including travel time) in which the member is engaged in the actual performance of duties vested in the Board. While serving away from home or regular place of business, Board members and other individuals serving on an intermittent basis shall be allowed travel expenses in accordance with section 5703 of title 5. Notwithstanding any other provision of law, contractors with the Department of Defense may present, and the Defense Contract Audit Agency shall accept without performing additional audits, a summary of audit findings prepared by a commercial auditor if— the auditor previously performed an audit of the allowability, measurement, assignment to accounting periods, and allocation of indirect costs of the contractor; and such audit was performed using relevant commercial accounting standards (such as Generally Accepted Accounting Principles) and relevant commercial auditing standards established by the commercial auditing industry for the relevant accounting period. The Defense Contract Audit Agency may audit direct costs of Department of Defense cost contracts and shall rely on commercial audits of indirect costs without performing additional audits, except that in the case of companies or business units that have a predominance of cost-type contracts as a percentage of sales, the Defense Contract Audit Agency may audit both direct and indirect costs. . The table of sections at the beginning of chapter 7 of such title is amended by adding after the item relating to section 189 the following new item: 190. Defense Cost Accounting Standards Board. . Not later than December 31, 2019, the Comptroller General of the United States shall submit to the congressional defense committees a report on the adequacy of the method used by the Cost Accounting Standards Board established under section 1501 of title 41, United States Code, to apply cost accounting standards to indirect and fixed price incentive contracts. The amendments made by this section shall take effect on October 1, 2018.