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Is DOD Business Systems Self-Reporting Imminent?

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The Department of Defense (DOD) may be on the verge of imposing on contractors mandatory self-certification requirements for business systems.  While the actual requirements of DOD’s upcoming business systems update are currently unknown, the rule that the Department of Energy (DOE) recently proposed on April 1, 2014 may well foreshadow future DOD requirements.

DOD is preparing a proposed update to the DFARS business systems rule, DFARS Case 2012-D042.  According to the most recent version of the DFARS case report, this update will revise the existing DFARS business systems clauses “to include contractor reporting and documentation requirements regarding contractor compliance with DFARS business systems criteria.”

Although little is definitively known about the DOD business systems update, the proposed DOE business systems rule issued on April 1, 2014 would require DOE contractors to provide the government with written documentation that each business system meets the relevant system criteria within sixty days of award.  Given the substantial overlap between the DOD and DOE rules, it would be reasonable to assume that DOE likewise obtained its self-reporting requirement from the DFARS update under development.  The updated DOD business system rule therefore may include a requirement similar to the DOE rule that contractors self-assess business systems compliance and report system adequacy determinations to the government.

For contractors, this reporting requirement would impose an enormous obligation on companies to adequately and accurately self-assess business system compliance, and to do so before making any system adequacy representations to DOD.  A draft of the proposed DFARS business systems rule update was sent to the Office of Information and Regulatory Affairs (OIRA) on April 21, 2014, generally the last step before publication unless OIRA disapproves and sends the rule back for rework.