Certification Requirements Training

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(No Transcript)
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Managing Subcontractor Compliance
Breakout Session Jeffery A White, C.P.M.,
President/CEO J.A. White Associates, Inc. Date
December 5, 2005 Time 210 p.m.
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• Were drowning in information and starving for
  knowledge.
• -Rutherford D. Rodgers

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Topics

• Defining Risk
• Risk Management Tools
• Risk Management Solutions

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Defining Risk

• Contractor operations expose Government to risk
• Financial
• Quality
• Delivery

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Contractual Relationships
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Risk Management Tools

• Prime Contract
• Terms and Conditions
• Statement of Work
• Subcontracts
• Numerous Laws and Regulations
• Flowdown Clauses
• Truth in Negotiations (FAR Part 15)
• Cost Accounting Standards (FAR Appendix A)
• Right to Audit Clauses (FAR Part 14 and 15)

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Risk Management Tools

• Selection of Subcontract Type FAR Part 16
• Small Business Subcontracting Plans (FAR Part 19)
• Consent to Subcontract (FAR Part 44)
• Advance Notice (FAR Part 44)

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Risk Management Tools

• Sarbanes-Oxley Act
• Make or Buy Program (FAR Part 15)
• Competition in Subcontracting (FAR 52.244-5)
• Proposal Analyses (FAR Part 15)
• Contractor Purchasing System Review (FAR Part 44)

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Risk Management Tools

• Subcontracting for Commercial Items (FAR
  52.244-6)

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CPSR The Customers Review

• Measures How Efficiently and Effectively a
  Contractor Spends Government funds and
• Evaluates Compliance With Government
  Subcontracting Policies, Regulations, and Laws.

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CPSR The Customers Review

• Subcontractors Government business volume
  exceeds 25 million (excluding competitive FFP,
  competitive FFP/EPA contracts/subcontracts, and
  commercial item acquisitions)
• Whenever an Administrative Contracting Officer or
  Procuring Contracting Officer specifies

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CPSR Risk Assessment Basis for Selection

• CPSR Approval History
• Identified by PCO or ACO
• Increased Sales to Government
• Growth
• Pre-Award Surveys
• Major Programs/High Visibility
• Other Audits
• Self Assessment Activities

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CPSR Identification of Risk Factors

• Signs of a Weak Purchasing System Identified
  During Self Assessments
• Inadequate Procurement Lead Time
• Violation of Public Laws
• No or Poorly Written or Implemented Policies
• No or Weak File Documentation
• Lack of Upper Management Commitment to Compliance
  with Procurement Regulations

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Opportunities for Success or Failure

• 98 of firms will not pass their initial CPSR!
• Our proven process has allowed 100 of our
  clients to pass their initial CPSR!

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Impact of an Unsuccessful CPSR on Contractors
Losing The Competitive Marketing Advantage!

• Source Selection Implications
• Past Performance Implications
• Losing A Competitive Proposal
• Loss of Revenue

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Impact of an Unsuccessful CPSR on Contractors
Long-Term External Compliance Oversight Impact

• Defense Contract Audit Agency or Inspector
  Generals (and Other Audit Agencies) Alerted
• Other Audits Will Follow
• Possible Negative Press

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Impact of an Unsuccessful CPSR on
ContractorsProcedural Burdens with Project
Management Impact

• Increase Administrative Contracting Officer
  Surveillance
• Delay in Placing Orders
• Increase Administrative Expenses
• Delayed Billings Collections

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Impact of an Unsuccessful CPSR on
ContractorsCostly Internal Compliance Impact

• Implement Corrective Actions
• Change Processes
• Change Culture
• Implement Training Program
• Prepare for Follow-Up Audit

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Contractor Risk Assessment Self-Governance

• CPSR Training Guide Allows for Self-Governance
• Encourages Contractor Participation in CPSR
• Encourages the Use of Contractor Self-Assessments
  as Part of CPSR Process

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Why Self Governance?

• Pro-Active Compliance
• Legal
• Ethics
• Cost Avoidance
• Pro-Active Process Improvement
• Changing Customer Oversight Environment
• Commercial Focus
• Customer Relations
• Competitive Edge

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Self Governance Process
Market Concept
Develop Audit Plan
Conduct Self Assessments
Develop MOU
Re-visit Audit Plan
Baseline CPSR
Implementation
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Self Governance Process

• Develop Audit Plan
• Audit Frequency
• Audit Duration
• Audit Personnel
• Audit Protocol
• Tools/Reports Formats
• Corrective Action Process

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Self Governance Process

• Conduct Self Assessments
• Could Lead to
• Training Initiatives
• Process Improvements
• Process Re-engineering
• Standardization
• Identification of Staffing Needs

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Self Governance Process

• Self Assessment Methods
• Peer Reviews
• Management Reviews
• Dedicated Audit Teams
• External Resources

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Self Governance Process

• Internal and External Marketing
• Champions Include
• Executives
• CPSR Team Leaders
• ACO
• Management Councils
• DCMA
• DCAA

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Self Governance Process

• Baseline CPSR
• Joint Contractor/Government Review
• Review Validates Self Assessment Efforts
• Ensures Apples-to-Apples Interpretations and
  Processes

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Self Governance Process

• Re-visit/Adjust Audit Plan
• QA Issues
• Sampling Process
• Regulatory Updates
• Review New Processes

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Self Governance Process

• Develop MOU
• Incorporate Audit Plan
• Frequency of Reporting to ACO
• Follow-up Joint Reviews

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Self Governance Process

• Benefits of Implementation
• Real-Time Corrections
• Real-Time Training
• Pro-Active Customer Oversight
• Pro-Active Compliance
• Competitive Advantages

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Presented by
Jeffery A. White, C.P.M. President J.A. White
Associates, Inc. 1341 Garner Lane, Suite
104 Columbia, SC 29210 803.407.1399
x101 803.407.0256 (fax) Jawhite_at_jawhite.com www.ja
white.com