Article

Section 809 Panel Recommendations

May 13, 2019

By: Danielle DeSonia, Manager and John Carpenter, Principal

The Section 809 Panel (“the Panel”) was established in Section 809 of the FY2018 National Defense Authorization Act to address various issues with the current Department of Defense (“DoD”) acquisition policies. The Panel’s goal is to streamline and improve the efficiency, effectiveness, and overall function of acquisition regulations.

Earlier this year, the Panel released Volume Three of its Final Report. Volume Three contains 58 new recommendations in addition to the 40 recommendations previously released in Volume One and Volume Two. While we are not going to attempt to break down all 58 new recommendations, we will highlight a few that we think may be of interest.

  • Recommendation 71 recommends the adoption of a professional practice guide (“PPG”) to support the contract audit practice of DoD, and the independent public accountants DoD may use to meet its contract audit needs. The Panel even provides a draft of the new PPG, which was developed by a panel of experts from various agencies including the Defense Contract Audit Agency, the Defense Contact Management Agency, the Government Accountability Office, the American Institute of Certified Public Accountants and industry representatives. Furthermore, the Panel recommends that DoD establish a PPG Working Group of subject matter experts to maintain and update the guide as accounting guidance changes and evolves over time.
  • Recommendation 81 recommends that DoD clarify and expand the authority to use Other Transaction Agreements (“OTA”) for production. OTAs are flexible transaction procedures not subject to standard procurement regulations. In 2016, Congress removed many restrictions for follow-on productions; thus making OTAs slightly more flexible. The Panel suggests making OTAs even more flexible now will allow the government to conduct business with the industry in more familiar terms and will increase the industry’s willingness to provide the government with the most innovative solutions.
  • Recommendation 92 recommends limiting the number of Federal Acquisition Regulation (“FAR”) and Defense Federal Acquisition Regulation Supplement (“DFARS”) clauses that flow down to commercial subcontracts in addition to consolidating all such requirements into one clause. The Panel further recommends minimizing “government-unique” terms and conditions applicable to commercial purchases. The Panel noted the extent and volume of FAR and DFARS contract clauses create a real or perceived barrier to entry for new government contractors and subcontractors alike.

For information on Recommendation 72 regarding changes to the adequacy of the contractor’s accounting system, please see our blog post “Change in Focus in DOD Accounting System Adequacy Reviews”.

To read the Volume Three Report in its entirety, please visit the Section 809 Panel Website.  For further guidance on any of the new recommendations and how they might affect your business, please contact Cherry Bekaert.