Supply chain compliance: The buck stops where?

Did you know that since President Barack Obama took office he has issued over a dozen executive orders that have resulted in at least 16 new regulations for government contractors to adhere to? You can probably think of a few right off the top of your head. New regulations are not only complex, they are expensive. Crowell & Moring estimates that nearly 30 cents of every contract dollar goes toward compliance with unique government regulations.

Amanda Chrisitian is a vice president at CACI and a member of the NCMA board of advisors.
Amanda Chrisitian is a vice president at CACI and a member of the NCMA board of advisors.

It becomes even more complicated when prime contractors are responsible for their suppliers and ensuring they are also adhering to the new regulations. The three that are immediately thought of are:

  • Contractor Counterfeit Electronic Part Detection and Avoidance System — DFAR Clause 252.246-7007, ensures integrity of Defense Department supply chain by implantation of a counterfeit electronic part detection and avoidance system which shall include risk-based policies and procedures.
  • Combating Trafficking Persons — FAR 52.222-50, notifies employees of policy against human trafficking and take appropriate action when violations of policy are discovered.
  • Safeguarding Covered Defense Information and Cyber Incident Reporting — DFARS 252.204-7012, requires contractors and subcontractors to take adequate security measures to protect any covered defense information in/through its networks.

There is no doubt these are all important regulations, but they do bring their own set of challenges to the industry for compliance, especially when a prime has to certify their entire supply chain is also following the rules and regulations. Many questions have been raised as to whether just having a policy, training and flowing down the clauses are enough.

Which leads to several questions:

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  • Where does the buck stop when it comes to compliance with these new regulations?
  • Are prime contractors going to have to start auditing their suppliers?
  • Will suppliers have to allow other companies, competitors in some cases, access to proprietary data?
  • Can a prime really deem another company as having an “adequate system?”

NCMA will address these and other questions along with many other topics will be addressed during a panel discussion on March 18, at NCMA’s Subcontract Management Training Forum. Learn more about the event on the NCMA website.

During the panel, you will be able to listen and participate in the discussion, with five contracts and procurement executives across the industry, about best practices and how they are tackling these complex regulations in their companies.

The conflict or alignment of prime and subcontract management, supply chain and government contract policy and best practice trends toward further intersection and of enhanced importance and relevancy as all parties seek more efficiencies and reduced costs in an ever more competitive environment. Thus, we can anticipate more discussion and action by the executive branch, government agencies and industry in the future. With the vast majority of government contract dollars performed through subcontract, you can count on it!

Amanda Christian is the vice president and corporate director of procurement for CACI and a member of NCMA’s Board of Advisors.

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