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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

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

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  1. 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

  2. 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

  3. 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

  4. 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

  5. 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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