US Defence Contracting and DFARS Compliance

With nearly a $600 billion budget for military expenditure in 2016, the United States is by far the largest market for defence companies. Securing a contract with the Department of Defense (DoD) can lead to years of success, steady payment and growth for everyone within the supply chain.

In order to be in the running for one of these highly lucrative contracts, companies need to stay on top of the latest changes to DFARS and ensure their contracts, systems and processes reflect new requirements

Cyber security is at the forefront of concern for governments world wide. In order to better protect technology, the DoD recently published the new Network Penetration Reporting and Contract for Cloud Services interim rule. By December 2017, companies must, at a minimum, meet the National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171 standards or have an alternative security system approved.

At the same time, the new Better Buying Power (BBP) 3.0 is being finalised. The US government is looking to get the best gain for its money. As currently written, along with other changes, this new version of BBP will increase the burden on companies for getting Independent Research and Development (IR&D) and Contracted Research and Development (CR&D) projects approved along with other changes. Those that want to gain new contracts need to have an action plan in place to compensate for these upcoming changes or get left behind.

Benefits of a DoD contract can vanish without strict compliance to the Federal Acquisition Regulations (FAR) and Defense Federal Acquisition Regulations Supplement (DFARS)

Foreign companies that are part of DoD contracts must juggle various accounting standards from multiple countries, meet the requirements of the Truth in Negotiations Act (TINA) and flow down FAR and DFARS clauses to sub-contractors. Anything less than meeting the high standards of the Defense Contract Management Agency (DCMA) and Defense Contract Audit Agency (DCAA) can lead to suspension of payment and hefty fines.

Preparing for DCMA or DCAA audits is essential for any company contracting with the US Department of Defense. The focus of an audit will vary and you need to be prepared for anything. Find out how to meet changing FAR and DFARS requirements and successfully pass a DCAA audit at C5’s 5th Advanced Forum on US Defence Contracting and DFARS Compliance in Europe.