DOE backs away from new business system mandates

A proposal to amend the Department of Energy Acquisition Regulation to define requirements for contractors' key business systems has been withdrawn by the agency.

DOE officials gave no reason for the withdrawal in the July 6 Federal Register filing and did not respond to FCW's inquiries.

The definition effort, which would have covered accounting, estimating, purchasing, earned value management and property management systems, began in 2014 and mirrored rules the Defense Department issued to make its contractors' systems more efficient and uniform. DOD ran into some challenges, however, according to those familiar with the effort.

Alan Chvotkin, executive vice president and counsel at the Professional Services Council, said DOE's proposed rule would have applied to only a small percentage of DOE contracts, not including management and operating contracts, such as those used to manage national laboratory research facilities.

"It's a specialized authority unique to DOE and DOD," he added.

Trey Hodgkins, senior vice president of the public sector at the Information Technology Industry Council, said DOD contractors faced financial penalties if their business systems did not comply with the rules, but department officials had trouble knowing whether systems that had already been deployed were compliant.

DOE had proposed implementing a compliance enforcement mechanism that would have allowed contracting officers to withhold a percentage of payments when a contractor's business system had significant deficiencies.

Hodgkins noted that DOE has been working on the proposed rule change for two years and speculated that the decision to withdraw it could be related to compliance issues similar to those DOD faced.

He and Chvotkin said their organizations are not upset about the withdrawal, and the action relieves vendors from complying with a potentially expensive set of rules.

Clarification: This story was updated July 7 to update the applicability of the proposed rule.