Sec. 891. Contractor business system requirements
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Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section: The Secretary of Defense shall develop and initiate a program for the improvement of contractor business systems to ensure that such systems provide timely, reliable information for the management of Department of Defense programs by the contractor and by the Department at reduced burden and price to the Government and contractor. The program developed pursuant to subsection
(a)shall— include system requirements for each type of contractor business system covered by the program; establish a process for reviewing contractor business systems and identifying significant deficiencies in such systems; identify officials of the Department of Defense who are responsible for the approval or disapproval of contractor business systems; provide for the approval or conditional approval of any contractor business system that does not have a significant deficiency; and provide for— the disapproval of any contractor business system that has a significant deficiency; and reduced reliance on, and enhanced and effective analysis of, data provided by a contractor business system that has been disapproved. The program developed pursuant to subsection
(a)shall not require the use of earned value management systems on other than non-firm fixed-price contracts above the regulatory dollar threshold that have discrete, schedulable, and measurable work scope. The program developed pursuant to subsection
(a)shall provide the following: In the event a contractor business system is conditionally approved or disapproved pursuant to subsection (b)(5), appropriate officials of the Department of Defense will be available to work with the contractor to develop a corrective action plan defining specific actions to be taken to address the significant deficiencies identified in the system and a schedule for the implementation of such actions. An appropriate official of the Department of Defense may withhold a percentage, but no more than 10 percent, of progress payments, performance-based payments, and interim payments under covered contracts from a covered contractor, as needed to protect the interests of the Department and ensure compliance, if one or more of the contractor business systems of the contractor has been conditionally approved or disapproved pursuant to subsection (b)(5) and has not subsequently received approval. Such percentage shall be established in agreement with the contractor at time of contract award or modification. The amount of funds to be withheld under paragraph
(2)shall be reduced if a contractor adopts an effective corrective action plan pursuant to paragraph
(1)and is effectively implementing such plan. The program developed pursuant to subsection
(a)shall provide guidance and training to appropriate government officials on the data that is produced by contractor business systems and the manner in which such data should be used to effectively manage Department of Defense programs. Unless a specific determination in writing has been made by the Milestone Decision Authority, the Department of Defense may only review the contractor business system of a non-covered contractor if the contractor has a cost-type contract with the Department of Defense. Any such review shall be limited to confirming that the contractor uses the same contract business system for its government and commercial work and that the outputs of the contract business system based on statistical sampling are reasonable. Any review conducted under this subsection shall be conducted by a third party commercial auditing firm. In this section: The term contractor business system means an accounting system, estimating system, purchasing system, earned value management system, material management and accounting system, or property management system of a contractor. The term covered contractor means a contractor that— has contracts with the United States Government accounting for not less than 30 percent of its total commercial sales; and has cost-type contracts with the United States Government accounting for not less than 1 percent of its total commercial sales. The term covered contract means a contract that is subject to the cost accounting standards promulgated pursuant to section 1502 of title 41, United States Code, that could be affected if the data produced by a contractor business system has a significant deficiency. The term significant deficiency , in the case of a contractor business system, means a shortcoming in the system that materially affects the ability of officials of the Department of Defense and the contractor to rely upon information produced by the system that is needed for management purposes. . The table of sections at the beginning of such chapter is amended by adding at the end the following new item: 2338. Contractor business system requirements. . The Secretary of Defense may not apply any requirement implemented pursuant to section 893 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 ( Public Law 111–383 ; 10 U.S.C. 2302 note) or any regulation prescribed pursuant to such section to any contractor that is not a covered contractor (as defined in section 2338 of title 10, as added by subsection (a)).
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- Pub. L. 111-383
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