DOE LOOKS TO WITHHOLD PAYMENTS DUE TO BUSINESS SYSTEM ISSUES

Kenneth Fletcher
NS&D Monitor
4/04/2014

The Department of Energy is proposing a new regulation that would allow it to withhold payments if a contractor’s business systems have “significant deficiencies.” That includes the accounting, estimating, purchasing, earned value management and property management systems. “DOE proposes to implement compliance enforcement mechanisms in the form of a business system clause and related clauses that allow contracting officers to withhold a percentage of payments, under certain conditions, when a contractor’s business system contains significant deficiencies,” states a notice of proposed rulemaking posted in the Federal Register this week.

The rule would apply to large business prime contracts worth more than $50 million, and to large business prime contracts worth over $10 million if “the contracting officer determines it to be in the best interest of the Government,” according to the notice. The change would not impact management and operating contracts. “Contractor business systems and internal controls are the first line of defense against waste, fraud, and abuse. Weak control systems increase the risk of unallowable and unreasonable costs on Government contracts,” states the notice. “To improve the effectiveness of DOE’s oversight of contractor business systems, DOE is considering a rule to clarify the definition and administration of contractor business system.” The proposed rule is open to a 60-day comment period.

KNOXVILLE, Tenn. – The National Nuclear Security Administration is exploring changes to its acquisition practices that could make it easier for commercial companies and firms without extensive NNSA experience to compete for work.

B.J. Quigley, NNSA’s senior procurement executive, said at the Energy Technology and Environmental Business Association’s (ETEBA) annual conference last week the agency is examining how it evaluates past performance and whether commercially performed work should receive credit when it is relevant to an NNSA requirement.

“We keep saying we want to do things commercial,” Quigley said during an NNSA business growth opportunities panel. “We have to actually follow through with it.”

Quigley said NNSA is looking at “other ways to do experience” and determining when experience gained outside the federal government could demonstrate relevant expertise. He said the agency is particularly interested in understanding how commercial experience could be considered when a company has performed work similar to an NNSA requirement.

NNSA also is seeking to make its requirements and contracting terms as commercial as possible, while recognizing certain work will continue to require specialized government standards because of the agency’s national security mission.

The agency is also examining acquisition mechanisms including other transaction agreements, master agreements and indefinite-delivery/indefinite-quantity contracts as ways to make procurements more efficient.

Quigley said industry engagement will be important to the effort, noting that NNSA wants to hear from both companies already working with the agency and firms entering the market. “We want to figure out how to do things better,” he said.

Quigley also said NNSA is considering posting more of its open, unclassified contracting requirements on SAM.gov as the agency looks to make procurement opportunities easier for industry to find. He said the agency currently posts federal requirements on SAM.gov, along with some requirements from its management and operating contractors. Companies, however, generally must monitor individual laboratory, plant and site procurement pages for additional opportunities.

“There is an appetite to actually have requirements posted on SAM.gov for all of NNSA,” Quigley said.

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