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MANAGEMENT AND FINANCIAL CHALLENGES OF PROPOSED DFARS RULE ON PAYMENT WITHHOLDING OF CONTRACTORS' BUSINESS SYSTEMS DEFICIENCES. Breakout Session # 609 Name: Vic Avetissian , President Avetissian & Associates, LLC NCMA Past National President Date July 20, 2010

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Breakout Session # 609 Name: Vic Avetissian , President Avetissian & Associates, LLC

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Breakout session 609 name vic avetissian president avetissian associates llc

MANAGEMENT AND FINANCIAL CHALLENGES OF PROPOSED DFARS RULE ON PAYMENT WITHHOLDING OF CONTRACTORS' BUSINESS SYSTEMS DEFICIENCES

Breakout Session # 609

Name: Vic Avetissian, President

Avetissian & Associates, LLC

NCMA Past National President

Date July 20, 2010

Time 4:00 - 5:15 PM

1


Contractor s business systems deficiencies

Contractor's Business Systems Deficiencies

DFARS Case 2009-D038 Proposes to Implement Findings by the Commission on

Wartime Contracting on Unsupported Cost Related to Unreliable Business Systems.

The Proposed Rule Mandates 10% Payment Withholding For Each of the Following

Business Systems with Deficiencies:

. Accounting System

. Estimating System

. Purchasing System

. Material Management System (MMAS)

. Property Management System

. Earned Value Management Systems (EVMS)

ACO Will Have Authority to Approve/Disapprove The System

Cumulative Withholding up to 50%

For Unacceptable Risks, 100% Withholding of Payments

Remove Withholding After Correction of Deficiencies is Approved by ACO


Contractor s business systems deficiencies1

Contractor's Business Systems Deficiencies

PROSPECTIVE

The Rule Increases Regulatory Burden Both on the

Government and Contractor by:

Increased Oversight, Audit and Enforcement

Contractor Overhead Cost Increase Due to Audit and Oversight

Financial Impact to the Contractor Cash Flow Due to Withholding

Impact on Small and Mid-Size Business Resources Due to Withholding

Impact on Industrial Base by Creating a Barrier to Entering Into or Remaining As A Government Contractor

Impact on War Fighters Due to Diminished Access to Innovation


Contractor s business systems deficiencies2

CONTRACTOR'S BUSINESS SYSTEMS DEFICIENCIES

PROSPECTIVES

The rule to detect and prevent deficient business systems should:

Provide Clear and Uniform Criteria

Define an Acceptable Business Systems

Establish a Cadre of Experienced and Trained DCAA Staff for Review of Business Systems

Expedite Review and Audit of Business Systems

Establish Process at ACO Level to Address, Resolve and Expedite Questions on System Deficiencies


Presenters

PRESENTERS

Jeffrey Brand

Deputy Executive Director, Commission on Wartime Contracting In Iraq and Afghanistan

Dave Ricci

Executive Director, Contracts, Defense Contract Management Agency

Stan Soloway

President & CEO, Professional Services Council


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