Regulation Highlights Kimberly Heifetz May 15, 2012

Changes in the FAR and DFARS Increased disclosure obligations A result of increased transparency and accountability expected of federal Government agencies by Congress and constituents Heightened expectations flow down to Government contractors and their subcontractors BE PREPARED!

New DFARS Rules on Contractor Business Systems Final rule published February 2012 – allows for review by the cognizant contracting officer, in consultation with cognizant audit agencies and other subject matter experts There are new DFARS clauses (and associated provisions) associated with each of six types of contractor business systems: ◦Accounting ◦Estimating ◦Purchasing ◦Earned value management ◦Material management and accounting ◦Property management systems

New DFARS Rules on Contractor Business Systems, continued The new rules do not apply to all DoD procurements – only to CAS-covered contracts A “significant deficiency” finding can result in corrective action plans, continued monitoring and withholding of a percentage of contractor’s payment ◦Withholdings intended to compensate Government for increased risk, not to impose a penalty

FAR Rule: Personal Conflicts of Interest Effective December 2, 2011, the FAR was amended to prevent personal conflicts of interest by employees of Government contractors who ◦meet the definition of “covered employee” and ◦perform “acquisition function(s) closely associated with inherently governmental functions” Examples include financial interests of the employee (and members of the employee’s family and/or household), other employment or financial relationships (including seeking or negotiating prospective employment or business), gifts and travel. Excludes de minimus interests

Covered Employees Definition: An employee who performs acquisition functions closely associated with inherently governmental functions that are directly tied to support the activities of federal agencies The rule does not cover all employees who work for a Government contractor Subcontractors bear responsibility for their own employees

Applicability This new rule applies to contracts issued on or before the rule’s December 2, 2011, effective date, as well as to task and delivery orders issued on or after that date, even if the contract under which they are executed was awarded before December 2 Mandatory flow-down of the substance of the clause is required for subcontracts that exceed $150,000 and for which subcontractor employees will perform acquisition functions closely associated with inherently governmental functions. Commercial item acquisitions are exempt from the new rule.

Post-Employment Restrictions on Former DoD Officials Government contractors that pursue work with DoD agencies must affirmatively represent that they have fully vetted certain former DoD officials This will not impact offerors’ already existing compliance obligations unless the contractor has not been monitoring its employees to ensure full and current compliance with the post-employment restrictions

Expanded Public Disclosure of Contractor Information Federal Awardee Performance and Integrity Information System (“FAPIIS”) ◦Created in 2010 by statutory mandate to serve as a Government repository for specific information on the integrity and performance of covered contractors and grantees In 2006, the Federal Funding Accountability and Transparency Act mandated that all federal award data be made publicly accessible Section 3010 of the Supplemental Appropriations Act of 2010 requires public access to contractor information reported in FAPIIS, except past performance information

Expanded Disclosure of Contractor Information In January 2011, an interim rule became effective providing for public availability of all information posted on FAPIIS on or after April 15, 2011, except for past performance reviews Final rule effective January 2, 2012 Primary difference between the two: The final rule contains a 14-day contractor review period prior to public posting Requested non-disclosure resolved under applicable FOIA exemptions

Disclosure of Confidential, Proprietary, Technical Data Interim rule issued in March 2011 – authorizes DoD agencies to share with certain types of Government support contractors sensitive information provided in confidence by their prime contractors and other third parties Non-disclosure agreements required to help protect against unauthorized disclosure and use by Government support contractors Effectively expands “limited rights” license outside Government

Contact Information Kimberly Heifetz Thompson Coburn LLP 1909 K Street, N.W., Suite 600 Washington, DC (202)