The Department of Defense’s (DoD) goal for procurement is to have an efficient acquisition system that is effective in providing support to the warfighter. The use of commercial item acquisition is seen as one way of achieving this goal, however there are currently varying levels of understanding and consistency within DoD regarding determining commerciality and in determining fair and reasonable prices.
What’s in store for the Defense Contract Audit Agency (DCAA) in Fiscal Year (FY) 2017 you may ask? At a recent NCMA dinner, there were a number of key points discussed by the Director of DCAA that contractors should pay close attention to. Areas of focus included strategic priorities in FY2017, the outcome of the FY2016 National Defense Authorization Act (NDAA), and interests of the DCAA in the FY2017 NDAA.
Last week, members of the House and Senate agreed to retain draft language in the 2015 National Defense Authorization Act (2015 NDAA) bill that would amend Title 10 of the U.S. Code to require “operationally critical” Defense contractors to promptly report “cyber incidents” to the Department of Defense (DoD). The proposed statutory change comes as a result of a yearlong Senate committee investigation into hacking incidents relating to the U.S. Transportation Command (TRANSCOM) – an investigation that revealed over 50 incidents of hacking over a 12-month period ending May 2013, only two of which were reported to TRANSCOM, according to The Washington Post.
Section 1632 of the draft 205 NDAA bill, entitled Reporting on Cyber Incidents with Respect to Networks and Information Systems of Operationally Critical Contractors, requires the Secretary of Defense to designate a DoD component to receive cyber incident reports and to publish procedures by which all operationally critical contractors will timely report such incidents to that DoD component.
Government contractors may feel like they are hanging on to a swinging rope in a tornado now that Congress has hit the reset button on executive compensation for the second time in less than a month. On December 26, 2013, the President signed both the National Defense Authorization Act (NDAA) for fiscal year 2014 and the Bipartisan Budget Act of 2013 (BBA). Both established a new government-wide benchmark compensation levels for all contractor employees at $487,000, marking a nearly 50% decrease in these allowable costs.
It was less than a month ago on December 4, 2013, that OMB increased the current compensation cap from $763,029 to $952,308 for costs incurred on all contracts after January 1, 2012 for contractor employees performing DoD, NASA and Coast Guard contracts – but only to the five most highly paid executives for all other federal agencies. The BBA overrides the earlier enacted provision. This is basically a reset to compensation. The new initial allowable compensation cost cap for all contractor and subcontractor employees on any government cost reimbursement contract is set at $487,000, to be adjusted annually based on the Bureau of Labor Statistics’ Employment Cost Index (ECI).
Over the years, Congress has enacted many whistleblower protection statutes aimed at specific industries to encourage employees in those industries to report fraud, waste, and abuse. All federal government contractors – at every level – should be aware of the newest whistleblower protection statute that went into effect on July 1, 2013. The statute, 41 U.S.C. § 4712, applies to all employees working for federal contractors or subcontractors. As part of the National Defense Authorization Act for Fiscal Year 2013, Congress added a new pilot program for whistleblower protections (and amended the existing program for defense contractors).
41 U.S.C. § 4712 states that an “employee of a contractor, subcontractor, or grantee may not be discharged, demoted, or otherwise discriminated against as a reprisal for” whistleblowing.
The statute defines whistleblowing as making a disclosure “that the employee reasonably believes is evidence of”: