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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS Subtitle G—Other Matters |
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P. L. 114- |
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SEC. 896. Survey on the costs of
regulatory compliance. (a) Survey.—The Secretary of Defense shall conduct a survey of contractors with the highest level of reimbursements for cost type contracts with the Department of Defense during fiscal year 2014 to estimate industry's cost of regulatory compliance (as a percentage of total costs) with Government-unique acquisition regulations and requirements in the categories of quality assurance, accounting and financial management, contracting and purchasing, program management, engineering, logistics, material management, property administration, and other unique requirements not imposed on contracts for commercial items. (b) Report.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the findings of the survey conducted under subsection (a). The data received as a result of the survey and included in the report shall be aggregated to protect against the public release of proprietary information. |
Survey on the costs of regulatory
compliance (sec. 896) The Senate amendment contained a provision (sec. 879) that would require the Secretary of Defense to conduct a survey of defense contractors with the highest level of reimbursements for cost-type contracts and identify the cost to industry of regulatory compliance with government unique acquisition regulations and requirements that are not imposed on commercial item contracts. The House bill contained no similar provision. The House recedes with a clarifying amendment. Senate Report 114-49 to accompany S. 1376 as it was reported out of the Senate Armed Services Committee. Survey on the costs of regulatory compliance (sec. 879) The committee recommends a provision that would require the Secretary of Defense to survey the top ten contractors with the highest level of reimbursements for cost-type contracts and identify the cost to industry of regulatory compliance with government unique acquisition regulations and requirements that are not imposed on commercial item contracts. The last such survey, known as the Coopers and Lybrand study, was completed for Secretary of Defense William Perry in December 1994. This study, using an activity based costing methodology, found that average acquisition process regulatory compliance costs for defense firms were around 18 percent. The Coopers and Lybrand study was not a comprehensive estimate of all acquisition regulatory costs that industry must comply with, nor did it estimate the costs imposed upon the government to oversee this compliance. Other studies at the time estimated regulatory compliance costs as high as 40 percent of the price paid for a defense contract. No significant study on the costs of regulatory compliance has been conducted since 1994, while in the last two decades new acquisition regulatory requirements, such as the business system rule, have been imposed on industry to the process of acquiring defense unique products. While many of these requirements are designed to protect the taxpayer, the layering of these requirements upon one another may actually be wasting taxpayer dollars rather than achieving their original objectives. In one example where a contractor for a defense program (the Wideband Global satellite) was allowed to adopt more commercial-like practices to lessen the regulatory compliance burden, the government was able to achieve a significant cost reduction of over $150.0 million while achieving the same mission capability. The committee believes that it will be more difficult to make decisions about achieving the right balance in oversight requirements on large defense programs without adequate data on the costs of oversight compliance. |
