oversight

Defense Acquisitions: DOD Needs to Improve How It Communicates the Status of Regulation Changes

Published by the Government Accountability Office on 2019-07-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office
             Report to Congressional Committees




             DEFENSE
July 2019




             ACQUISITIONS

             DOD Needs to
             Improve How It
             Communicates the
             Status of Regulation
             Changes




GAO-19-489
                                                July 2019

                                                DEFENSE ACQUISITIONS
                                                DOD Needs to Improve How It Communicates the
                                                Status of Regulation Changes
Highlights of GAO-19-489, a report
to congressional committees




Why GAO Did This Study                          What GAO Found
Congress has pursued acquisition           The staff of the Defense Acquisition Regulations System are responsible for
reforms to make DOD's acquisition          making changes in the Defense Federal Acquisition Regulation Supplement
process more efficient and timely. Some    (DFARS)—the Department of Defense’s (DOD) regulation augmenting the
statutes have directed DOD to revise or    Federal Acquisition Regulation, which guides government purchases of products
consider revising its acquisition          and services. They begin their process by first tracking legislation that may affect
regulations.                               acquisition regulations before Congress enacts the National Defense
The House Armed Services                   Authorization  Act (NDAA). After enactment, they identify which provisions to
Committee’s report accompanying the        implement   through  regulatory changes and which to implement through other
NDAA for Fiscal Year 2019 included a       means. In certain circumstances, rather than change the DFARS, DOD can issue
provision for GAO to review DOD's          a class deviation, which allows its buying organizations to temporarily diverge
regulatory implementation of acquisition- from the acquisition regulations. The figure below shows the primary means DOD
related provisions in the NDAAs from       uses to implement NDAA provisions, and the mechanisms DOD uses to make
fiscal years 2010 through 2018. This       information on the status of any changes available to the public and others.
report (1) determines how DOD
                                           Department of Defense’s (DOD) Methods to Implement and Report on Actions
implements acquisition-related NDAA
                                           Taken on National Defense Authorization Act (NDAA) Provisions
provisions in the DFARS and
communicates with stakeholders
throughout that process, and (2)
identifies the status of implementation of
provisions enacted in the specified
NDAAs.
To conduct this work, GAO reviewed
DOD documents and interviewed DOD
officials regarding the process for
implementing acquisition-related NDAA
provisions. GAO also analyzed DOD's
data and reports on the implementation
status of provisions enacted in NDAAs
for fiscal years 2010 through 2018. GAO
                                                DOD does not have a mechanism to clearly communicate to Congress, industry,
selected 12 of these provisions as case
studies based on factors such as year
                                                and other interested parties the status of regulatory or other changes based on
enacted and time taken for                      NDAA provisions. Using only publicly-available reports and information, it is
implementation to obtain a mix of older         difficult for an interested party to find the implementation status of any given
and newer provisions, and shorter and           acquisition-related NDAA provision. This is because no single DOD source
longer implementation timeframes.               communicates the status of regulatory or other changes in a manner that links
                                                the changes to specific NDAA provisions. As a result, interested parties are not
                                                always aware of what provisions have been implemented and when. This
What GAO Recommends                             information is important for congressional oversight and to industry for planning
                                                and compliance purposes. Federal internal control standards state that
DOD should develop a mechanism to               management should address the communication expectations of external users.
better communicate the implementation
status of acquisition-related NDAA              GAO found that DOD has taken action to address 180 acquisition-related
provisions, particularly those that direct      provisions since 2010. On average, implementation was completed within 1 year
a change or consideration of a change           from enactment. Some complicated provisions took more than 2 years to
to the DFARS. DOD concurred with the            implement. For example, a fiscal year 2016 NDAA provision, directing a
recommendation.                                 regulatory change for commercial item procurements, took more than 2 years to
View GAO-19-489. For more information,          implement because DOD was reconciling a prior year’s related but different
contact William T. Woods at (202) 512-4841 or   NDAA commercial item provision into one DFARS change.
woodsw@gao.gov.
                                                ______________________________________ United States Government Accountability Office
Contents


Letter                                                                                    1
               Background                                                                2
               DOD Has a Process for Implementing Acquisition-Related NDAA
                 Provisions, but Does Not Clearly Communicate Implementation
                 Status to Stakeholders                                                  4
               DOD Has Taken Action to Address Acquisition-Related Provisions
                 in NDAAs from Fiscal Years 2010-2018, and Time Taken to
                 Implement Averaged Less Than 1 Year                                    11
               Conclusions                                                              17
               Recommendation for Executive Action                                      17
               Agency Comments and Our Evaluation                                       17

Appendix I     Objectives, Scope, and Methodology                                       20



Appendix II    Comments from the Department of Defense                                  24



Appendix III   GAO Contacts and Staff Acknowledgments                                   26


Table
               Table 1: Average Time for First Methods for Implementing
                       National Defense Authorization Act Provisions from Fiscal
                       Years 2010–2018                                                  13

Figures
               Figure 1: General Process for Changing the Defense Federal
                        Acquisition Regulation Supplement (DFARS)                        6
               Figure 2: Implementing and Reporting on Actions Taken on
                        National Defense Authorization Act (NDAA) Provisions            10
               Figure 3: Implementation Status of 180 National Defense
                        Authorization Act Provisions from Fiscal Years 2010-
                        2018 (as of October 31, 2018)                                   12
               Figure 4: Time Taken to Implement 112 National Defense
                        Authorization Act Provisions from Fiscal Years 2010-
                        2018                                                            14




               Page i                                        GAO-19-489 Defense Acquisitions
Abbreviations

DARS                     Defense Acquisition Regulations System
DFARS                    Defense Federal Acquisition Regulation Supplement
DOD                      Department of Defense
LPTA                     Lowest Price Technically Acceptable
NDAA                     National Defense Authorization Act
PGI                      Procedures, Guidance, and Information



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Page ii                                                  GAO-19-489 Defense Acquisitions
                       Letter




441 G St. N.W.
Washington, DC 20548




                       July 11, 2019

                       Congressional Committees

                       Due to changes in national security priorities and the industrial base
                       landscape, the Department of Defense (DOD) must have the ability to
                       acquire and field the products and services needed in the most cost-
                       efficient and timely manner possible. Congress has pursued acquisition
                       reforms to help DOD achieve this objective through annual National
                       Defense Authorization Acts (NDAA) and other statutes. In addition, some
                       provisions in the NDAAs specifically direct DOD to revise or consider
                       revising the Defense Federal Acquisition Regulation Supplement
                       (DFARS).

                       In a report related to the NDAA for Fiscal Year 2019, the House
                       Committee on Armed Services raised questions about perceived delays
                       between enactment of statutes and issuance of regulations in the
                       DFARS. The committee’s report contains a provision for us to review
                       DOD’s process for revising the DFARS. 1 This report (1) determines how
                       DOD implements acquisition-related NDAA provisions and communicates
                       implementation status, and (2) identifies the status of DOD’s efforts to
                       implement acquisition-related NDAA provisions from fiscal years 2010-
                       2018.

                       To determine how DOD implements acquisition-related NDAA provisions,
                       we reviewed the DFARS Operating Guide, DFARS open and closed
                       cases reports, and decision matrices from the Defense Acquisition
                       Regulations System (DARS), which document decisions on implementing
                       NDAA provisions, from fiscal years 2010-2018. We also reviewed NDAAs
                       from fiscal years 2010-2018 to identify provisions that directed DOD to
                       make or consider regulation changes. We focused on Title VIII of the
                       NDAAs, which contains acquisition-related provisions. We also
                       interviewed DARS staff, Defense Acquisition Regulations Council
                       members, and officials from the DOD components—Air Force, Army,
                       Navy, Defense Contract Management Agency, and Defense Logistics




                       1
                           H.R. Rep. No. 115-676, at 142-43 (2018).




                       Page 1                                         GAO-19-489 Defense Acquisitions
             Agency. We compared the DARS rulemaking process with the Standards
             for Internal Control in the Federal Government. 2

             To identify the implementation status of acquisition-related NDAA
             provisions from fiscal years 2010-2018, we analyzed DARS reports that
             include information on the case files associated with the NDAA Title VIII
             provisions from fiscal years 2010-2018. We also analyzed data from the
             Defense Acquisition Regulations Management Information System as of
             October 31, 2018, to determine the number and types of cases by year,
             duration of cases, and relevant NDAA provisions. We asked DARS
             officials to verify the cases we identified. To better understand the
             Defense Acquisition Regulations Council’s recommendations and the
             DARS implementation process, we selected as case studies 12 NDAA
             provisions that directed DOD to make or consider making regulation
             changes. The case study selection criteria included the year the provision
             originated in a NDAA (which allowed us to analyze a mix of older and
             newer provisions) and how long it took provisions to be implemented
             (which allowed us to analyze a mix of shorter and longer cases). For the
             12 selected provisions, we reviewed the associated case files. We found
             the Defense Acquisition Regulations Management Information System
             data to be sufficiently reliable for purposes of reporting on how the DARS
             implemented NDAA provisions concerning acquisition issues. Additional
             details on our scope and methodology are provided in appendix I.

             We conducted this performance audit from August 2018 to July 2019 in
             accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             The Defense Acquisition Regulations Council is responsible for
Background   developing fully coordinated recommendations for revisions to the
             DFARS, which supplements the Federal Acquisition Regulation. The
             Federal Acquisition Regulation provides executive agencies with uniform
             acquisition policies and procedures for acquiring products and services,

             2
              GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
             (Washington, D.C.: Sept. 10, 2014).




             Page 2                                               GAO-19-489 Defense Acquisitions
and is prepared and issued through the coordination of the Defense
Acquisition Regulations Council and Civilian Agency Acquisition Council.
The DFARS contains additional requirements of law, DOD-wide policies,
delegations of Federal Acquisition Regulation authorities, deviations from
Federal Acquisition Regulation requirements, and policies or procedures
that have a significant effect beyond the internal operating procedures of
DOD, or a significant cost or administrative impact on contractors or
offerors. The DFARS is designed to be read in conjunction with the
primary set of rules in the Federal Acquisition Regulation. Stakeholders in
the acquisition process include executive agencies’ program and
contracting officials, members of Congress and congressional staff,
industry and contractors, and members of the public.

Specifically, the Defense Acquisition Regulations Council generally
makes implementation recommendations to DOD, such as when
publication of rules to amend the DFARS is appropriate. 3 DARS staff then
implements the Council’s recommendations. The Defense Acquisition
Regulations Council is composed of the Chair who is also the DARS
Director, Deputy Chair who is also the DARS Deputy Director, and one
policy and one legal representative from each of the following DOD
components:

•   Air Force,
•   Army,
•   Navy,
•   Defense Contract Management Agency, and
•   Defense Logistics Agency. 4



3
 The Under Secretary of Defense for Acquisition and Sustainment delegates authority to
the Principal Director of Defense Pricing and Contracting to develop, coordinate, issue,
and maintain the Federal Acquisition Regulation, DFARS, and supplementing DOD
regulations. The Director of DARS, who reports to the Principal Director, supervises the
activities of the Defense Acquisition Regulations Directorate and is the Chair of the
Defense Acquisition Regulations Council.
4
 The Defense Acquisition Regulations Council is supported by DARS Case Managers who
are responsible for managing DFARS case files. DARS also includes DFARS Committees
or Drafting Teams (comprised of representatives from the DOD components) that
research and draft rule language for potential DFARS changes and for the Defense
Acquisition Regulations Council’s review. The Drafting Teams obtain expert and functional
advice as needed.




Page 3                                                   GAO-19-489 Defense Acquisitions
                           DFARS changes can originate from different sources, including
                           legislation, recommendations from DOD’s Office of the Inspector General,
                           our recommendations, court decisions, executive orders, or policy
                           changes within DOD. DFARS changes that originate from legislation,
                           including NDAAs, are given the highest priority, according to DARS
                           officials.

                           DARS staff has other related responsibilities, including working with
                           civilian agencies in activities connected with promulgating the Federal
                           Acquisition Regulation.


                           DOD has a rulemaking process to change the DFARS that includes
DOD Has a Process          implementing acquisition-related NDAA provisions through regulatory
for Implementing           changes or other methods. The DARS staff is responsible for facilitating
                           the process of making these changes in the DFARS. The staff first
Acquisition-Related        reviews draft legislation that may affect acquisition regulations before
NDAA Provisions, but       Congress enacts the NDAA. After the NDAA is enacted, DARS staff then
                           identifies which provisions require action. The DARS staff coordinates
Does Not Clearly           across the department and provides for public notice of implementation
Communicate                actions when required. However, there is no publicly-available summary
                           reporting of the status of the regulatory changes or other implementation
Implementation             methods linked to specific NDAA provisions. Congress and industry
Status to                  representatives therefore cannot clearly see the status of pending
                           regulatory changes pertaining to acquisition issues addressed in the
Stakeholders               NDAA.


DOD Implements             DOD’s acquisition rulemaking procedures are governed by statute, which
Acquisition-Related NDAA   generally requires agencies to issue a proposed rule for each rulemaking
                           and provide not less than a 30-day public comment period following
Provisions in DFARS and    publication of the proposed rule in the Federal Register. 5 These
by Other Methods           requirements only apply to those DFARS rules that are related to the
                           expenditure of appropriated funds and have either a significant effect
                           beyond the agency’s internal operating procedures or a significant cost or
                           administrative impact on contractors or offerors. However, the
                           requirements may be waived if “urgent and compelling” circumstances

                           5
                            41 U.S.C. § 1707; see also Federal Acquisition Regulation subpart 1.5. The Federal
                           Register is the official daily publication for rules, proposed rules, and notices of federal
                           agencies and organizations. The Rules and Regulations section contains final rules and
                           regulations—those regulatory documents having general applicability and legal effect.




                           Page 4                                                      GAO-19-489 Defense Acquisitions
make compliance with the requirements impracticable. In those instances,
DOD issues an interim rule rather than a proposed rule. The interim rule
is effective on a temporary basis if DOD provides at least a 30-day public
comment period after publishing the interim rule in the Federal Register.
DOD then may issue a final rule after considering any comments
received. As a part of the rulemaking process, the Office of Information
and Regulatory Affairs reviews proposed and final regulations. 6 The time
period for its review is generally limited to 90 days. 7 See figure 1 for an
overview of the DARS’s process to change DFARS rules.




6
 The Office of Information and Regulatory Affairs is part of the Office of Management and
Budget, which is an agency within the Executive Office of the President.
7
 GAO, Department of Defense: Acquisition Rulemaking Practices, GAO-15-423R
(Washington, D.C.: Apr. 17, 2015).




Page 5                                                   GAO-19-489 Defense Acquisitions
Figure 1: General Process for Changing the Defense Federal Acquisition Regulation Supplement (DFARS)




                                       Page 6                                             GAO-19-489 Defense Acquisitions
                             DARS staff can implement the provisions by one or more methods,
                             including the rulemaking process described above and other actions,
                             such as:

                             •   issuing DFARS class deviations, and 8
                             •   changing DFARS Procedures, Guidance, and Information (PGI), a
                                 non-regulatory document that supplements the DFARS. 9

DOD Reviews NDAAs to         Before annual NDAAs are enacted, DARS staff told us that they review
Identify Provisions That     proposed legislation and committee report language to stay abreast of
                             provisions they may have to implement after NDAAs are enacted. DARS
Might Require DFARS
                             staff solicits input on which provisions may require implementation from
Revisions or Other Actions   DOD components and offices, such as the Defense Contract
                             Management Agency, that have a stakeholder interest in many
                             acquisition-related provisions.

                             DARS staff tracks each of these potential changes in case files, which are
                             referred to in this report as cases. DARS staff also can work with other
                             federal agency offices to implement an acquisition-related NDAA
                             provision through a Federal Acquisition Regulation rule change, interim
                             rule change, or class deviation. In some instances, a provision may
                             specify that DOD take other actions, such as holding a public meeting to
                             obtain interested parties’ opinions on an acquisition topic.

                             Upon review of the enacted NDAA, the Defense Acquisition Regulations
                             Council or DARS staff sometimes decides that a provision should be
                             implemented by another DOD office or in other defense acquisition
                             guidance. For example, the DARS staff could determine that a provision
                             only applies to one DOD component and does not require a DFARS

                             8
                              A class deviation is a deviation from the Federal Acquisition Regulation (or agency
                             acquisition regulation, such as the DFARS) that revises how the regulations are applied to
                             specified categories of contract actions. See Federal Acquisition Regulation § 1.404. The
                             Principal Director of Defense Pricing and Contracting is the approval authority within DOD
                             for class deviations, except certain deviations that may be approved by designated senior
                             procurement executives. See DFARS § 201.404(b)(i). The Federal Acquisition Regulation
                             provides that when an agency knows it will require a class deviation on a permanent
                             basis, it should propose an acquisition regulation revision. Federal Acquisition Regulation
                             § 1.404.
                             9
                              The PGI is a companion resource to the DFARS that contains both mandatory internal
                             DOD procedures and non-mandatory internal DOD procedures, guidance, and
                             supplemental information. DFARS § 202.101.




                             Page 7                                                    GAO-19-489 Defense Acquisitions
                             change. In another example, DARS staff could determine that the initially
                             identified provision should be implemented in acquisition guidance, such
                             as DOD Instruction 5000.02. 10 Further, sometimes DARS staff will change
                             implementation methods after having selected one. For example, DARS
                             staff may initially decide to implement a provision with a DFARS change,
                             but upon conducting research to draft the rule change, it may find that the
                             provision would be better implemented with a Federal Acquisition
                             Regulation change.

                             Based on our review of NDAAs from fiscal years 2010-2018, we identified
                             37 explicitly directive provisions—36 that directed DOD to either make or
                             consider making an acquisition-related regulatory change, and one that
                             directed DOD to issue acquisition-related guidance. 11 DARS officials told
                             us that when a provision directs a change or consideration of an
                             acquisition-related regulatory change, the Defense Acquisition
                             Regulations Council and DARS staff give it the highest priority. We
                             confirmed that, in the Defense Acquisition Regulations Management
                             Information System, this priority is reflected by identifying the NDAA as
                             the source of the change in the synopsis field. We confirmed that the 36
                             provisions we identified had NDAA as the source of the change.


The Way the DARS             DARS staff has different ways of communicating changes to the
Publicly Communicates        regulations and other implementation methods to the public.
Actions Makes It Difficult   •    “Significant revisions” to the DFARS must be published in the Federal
to Link to NDAA                   Register. 12 DARS staff also publishes the progress of DFARS
Provisions                        changes in case reports that are available on its website. Case
                                  reports provide a synopsis of each case, which can include the NDAA
                                  provision or other source of the case; describe cases combined to
                                  address more than one provision; or show multiple cases for a single
                                  provision.


                             10
                               DOD Instruction 5000.02 establishes policy that programs follow as they proceed
                             through the defense acquisition cycle.
                             11
                              The scope of our review was provisions included in Title VIII of the Fiscal Year 2010-
                             2018 NDAAs. DARS staff identified acquisition-related provisions outside of Title VIII
                             during this timeframe.
                             12
                              41 U.S.C. § 1707; FAR § 1.501-1 (definition of “significant revisions”); FAR § 1.501-2(b).
                             Significant revisions to the Federal Acquisition Regulation must also be published in the
                             Federal Register.




                             Page 8                                                    GAO-19-489 Defense Acquisitions
•    DARS staff also posts notices of DFARS class deviations and
     revisions to DFARS PGI on its website.
•    DARS staff provides input for regulatory priorities through DOD’s
     publicly-available Unified Agenda. This includes all expected rule
     changes DOD-wide and a Regulatory Plan that identifies the most
     significant regulatory actions DOD expects to issue within the next 12
     months. 13
It is difficult, however, for interested parties, such as Congress and
industry groups, to determine if a provision has been implemented using
only this publicly-available information. This is due, in part, to the fact that
provisions can be implemented through one or multiple methods, and
DARS actions can be reflected in more than one case. For example, if an
interested party, such as a federal contractor, expects to see a change to
the DFARS based on how an NDAA provision is worded, but the DARS
staff implements the provision with a class deviation, the interested party
may not realize that the provision has been implemented by another
method. In addition, DARS staff may consider a provision as implemented
with an action such as a class deviation even if a subsequent case to
change the DFARS is opened later.

We, too, found it difficult to determine the implementation status of
acquisition-related NDAA provisions using only publicly-available reports
and information. DARS staff was able to create a report for us that
showed implementation status by provision. But we were able to
determine and verify the implementation status of these provisions only
after using a combination of the DARS internal reports, publicly-available
reports and information, and data we had requested from the Defense
Acquisition Regulations Management Information System database.

DFARS and Federal Acquisition Regulation open and closed case reports
provide general information on a case, such as the topic and case
number. The reports also provide the status of the case. For example, a
report may say: “Defense Acquisition Regulations Council director tasked
team to draft proposed DFARS rule.” 14 However, the case reports do not

13
 The regulatory plan is a requirement of Executive Order 12866, “Regulatory Planning
and Review,” Sept. 30, 1993. The information is published on www.RegInfo.gov.
14
  DFARS cases are closed when the final DFARS rule is published in the Federal
Register. DFARS cases may be closed without publication of a rule only with the approval
of the Defense Acquisition Regulations Council Director after appropriate consultation with
the Defense Acquisition Regulations Council.




Page 9                                                   GAO-19-489 Defense Acquisitions
                                        provide information on when a regulatory change may be expected. This
                                        information can help companies plan for future business opportunities
                                        and devise the means to ensure compliance with regulations. See figure
                                        2 for an overview of NDAA provision implementation methods and the
                                        mechanisms DOD uses to report status information.

Figure 2: Implementing and Reporting on Actions Taken on National Defense Authorization Act (NDAA) Provisions




                                        Standards for Internal Control in the Federal Government states that
                                        management should externally communicate quality information to
                                        achieve the entity’s objectives. Specifically, available information should
                                        address the expectations of both internal and external users. 15 DARS
                                        staff regularly publishes public status updates on cases, rule changes,
                                        and PGI changes. However, there is no readily available mechanism for
                                        external stakeholders, such as Congress and industry representatives, to
                                        determine the implementation status of any particular legislative
                                        provision. This is because the status updates published by the DARS
                                        staff do not provide the complete implementation status listed by specific
                                        legislative provisions. Without communicating the implementation status
                                        of legislative provisions, Congress lacks information for oversight of
                                        acquisition reforms, and federal contractors lack visibility into how and
                                        when changes will occur. For example, the House Armed Services
                                        Committee expressed its oversight interest in a provision passed in 2013


                                        15
                                             GAO-14-704G.




                                        Page 10                                           GAO-19-489 Defense Acquisitions
                            that was not implemented in the DFARS until 2018. 16 Additional
                            information on the status of the DFARS change may have been helpful to
                            the committee’s oversight activities. In another example, industry
                            expressed concern about the status of a regulation implementing a fiscal
                            year 2017 NDAA provision related to the lowest price technically
                            acceptable (LPTA) source selection process in order to plan for
                            responding to solicitations following implementation of the rule. 17


                            DARS staff identified 180 NDAA provisions from fiscal years 2010-2018
DOD Has Taken               that potentially required an acquisition-related regulatory change or
Action to Address           another action. DARS staff and other DOD entities have taken some type
                            of action to address all these provisions. Our analysis showed that 112 of
Acquisition-Related         the provisions had been implemented. The timeframe for implementation
Provisions in NDAAs         was, on average, just under 1 year. Some implementation efforts took
                            longer than a year for a variety of reasons, such as reconciling multiple
from Fiscal Years           years of NDAA requirements or dealing with highly complex topics. The
2010-2018, and Time         remaining legislative provisions are either in the process of being
                            implemented or DARS staff determined that a regulatory change was not
Taken to Implement          needed. DARS staff prioritized those provisions that expressly directed
Averaged Less Than          DOD to change or consider an acquisition-related regulatory change.
                            DARS documentation showed that some of the implementation deadlines
1 Year                      in statute were shorter than the time periods that DARS generally allows
                            for the rulemaking process, including public comment and outside agency
                            review.


DARS Staff Identified and   Following its process, DARS staff identified 180 NDAA provisions from
Addressed 180               fiscal years 2010-2018 that potentially required an acquisition-related
                            regulatory change or another implementation action. 18 We found that
Acquisition-Related NDAA
                            DARS staff and, in a few instances, other DOD entities have taken action
Provisions                  to address all of those provisions. See figure 3 for the implementation
                            status of all 180 provisions distributed by NDAA fiscal year.
                            16
                                 H.R. Rep. No. 115-676, at 142 (2018).
                            17
                               When awarding a contract competitively, DOD may use the LPTA process, under which
                            the lowest price is the determining factor when selecting among technically acceptable
                            offers. GAO, Defense Contracting: DOD Should Clarify Criteria for Using Lowest Price
                            Technically Acceptable Process, GAO-19-54 (Washington, D.C.: Nov. 13, 2018).
                            18
                               DARS staff took a total of 244 actions, such as class deviations and DFARS changes, in
                            response to the 180 provisions. In response to all sources of DFARS changes during this
                            same time, DARS staff opened a total of 412 cases.




                            Page 11                                                 GAO-19-489 Defense Acquisitions
Figure 3: Implementation Status of 180 National Defense Authorization Act Provisions from Fiscal Years 2010-2018 (as of
October 31, 2018)




                                         1
                                          Two provisions counted as “In-progress” were partially implemented by DFARS rule changes that
                                         addressed specific paragraphs only, rather than the full provision.


DARS Staff Implemented                   We found that DARS officials opened cases within 30 days of NDAA
112 Provisions within 1                  enactment, on average, for the acquisition-related NDAA provisions from
                                         fiscal years 2010-2018. 19 For the 112 of 180 provisions that have been
Year of NDAA Enactment,
                                         implemented, DOD completed the first implementation actions on
on Average                               average within 1 year. DARS staff frequently used a combination of
                                         methods to implement provisions, such as using an interim DFARS rule
                                         followed by a final rule. When two or more implementation actions are
                                         taken, DARS officials generally consider the first action as the action that
                                         implements the provision. If a class deviation, interim DFARS rule, or PGI
                                         is issued to address an NDAA provision, the DARS staff considers it
                                         implemented even if additional actions—such as issuing a final DFARS
                                         rule—are still being pursued. We used the same approach for our
                                         analyses for determining the implementation status of provisions and time
                                         19
                                            Average based on analysis of case files for 179 of the 180 provisions. One provision of
                                         the 180 did not have a case file even though the DARS staff took action to address the
                                         provision.




                                         Page 12                                                      GAO-19-489 Defense Acquisitions
                                                              taken to complete implementation. See table 1 below for the average time
                                                              to complete the first action to implement the 112 NDAA provisions.

Table 1: Average Time for First Methods for Implementing National Defense Authorization Act Provisions from Fiscal Years
2010–2018

Implementation                                                                              Number of provisions                          Number of days
                                                                                                                                                         a
method                                                                                    implemented by method                         taken on average
Defense Federal Acquisition Regulation                                                                       28                                         506
Supplement (DFARS) final rule
DFARS Interim Rule                                                                                           24                                         322
DFARS Procedures, Guidance,                                                                                   3                                         362
and Information change
                      b
Class deviation                                                                                              37                                         187
Public Meeting, Policy Memorandum,                                                                            3                                         361
or Report
Federal Acquisition Regulation                                                                               10                                         526
final rule
Federal Acquisition Regulation                                                                                7                                         377
Interim Rule
Total                                                                                                       112                                         347
Source: GAO analysis of Defense Acquisition Regulation Management Information System data. I GAO-19-489.
                                                              a
                                                               Calculation of averages was based on the number times the implementation method was used as
                                                              the first action out of 112 implemented provisions.
                                                              b
                                                               DFARS and Federal Acquisition Regulation class deviations.




                                                              Page 13                                                       GAO-19-489 Defense Acquisitions
                                        Figure 4 shows the distribution of time taken to implement all 112 NDAA
                                        provisions.

Figure 4: Time Taken to Implement 112 National Defense Authorization Act Provisions from Fiscal Years 2010-2018




                                        Some implementation efforts took longer than a year for a variety of
                                        reasons. Publishing an interim DFARS rule generally took less than a
                                        year, while publishing a final DFARS rule change took closer to 2 years
                                        on average. In the selected DFARS cases studied, we found examples
                                        where DOD had to reconcile multiple years of NDAA requirements or
                                        manage complex topics, which we have similarly reported on as reasons
                                        that influence the time needed to issue regulations in past work. 20

                                        •   Reconciling Multiple Years of NDAA Requirements:
                                            Congress directed DOD to revise the DFARS to reflect updated
                                            requirements related to procuring commercial items in section 851 of
                                            the fiscal year 2016 NDAA. Congress included a deadline of 180 days

                                        20
                                           GAO, Federal Rulemaking: Improvements Needed to Monitoring and Evaluation of
                                        Rules Development as Well as to the Transparency of OMB Regulatory Reviews,
                                        GAO-09-205 (Washington, D.C.: Apr. 20, 2009).




                                        Page 14                                              GAO-19-489 Defense Acquisitions
    from the NDAA enactment, but the DFARS update was not completed
    until nearly 800 days after enactment. Our review of DARS case files
    showed that the DARS staff prioritized implementing the provision, but
    decided to address a related NDAA provision from 2013 through a
    single DFARS rule change. In this instance, multiple NDAAs included
    provisions the DARS staff viewed as closely related. As a result,
    developing language that reconciled the requirements for all of these
    provisions took additional time and effort. DARS officials told us that
    they came close to publishing a commercial items rule earlier, but
    started over because subsequent NDAA provisions included
    requirements related to commercial items.
•   Managing Complex Topics:
    Congress directed DOD to revise the DFARS regarding the use of the
    LPTA source selection process in section 813 of the NDAA for fiscal
    year 2017. Congress included a deadline of 120 days from enactment
    in the provision, which DARS staff was unable to meet due to the
    complexity of the issue and additional requirements added by a
    subsequent NDAA. Following enactment of the 2017 NDAA, DARS
    staff developed a proposed rule that would have implemented
    relevant NDAA sections in under a year. However, prior to publishing
    that rule, the NDAA for fiscal year 2018 was enacted and contained
    added LPTA requirements. After the 2018 NDAA was enacted, DARS
    staff combined all of its related LPTA cases into a new DFARS case
    and made adjustments to the proposed rule it had been developing.
    The DARS staff responsible for updating the previous proposed rule
    requested five extensions from DARS leadership between January
    and March 2018 to update documentation to address the fiscal year
    2018 provisions and prepare additional analyses. After months of
    coordination and reviews, DARS staff published a proposed rule in
    December 2018 with a 60-day comment period. Sixteen formal
    submissions were received by the February 2019 deadline. The
    DARS staff is currently reviewing those comments and drafting a final
    rule, which must still go through multiple reviews before it can be
    published in the Federal Register.
•   Other:
    Congress directed DOD to consider revising the DFARS regarding an
    extension of contractor conflict of interest limitations in section 829 of
    the NDAA for fiscal year 2013. This provision has been in the process
    of implementation due to a determination that this rule should be
    informed by a pending Federal Acquisition Regulation change. In this
    instance, Federal Acquisition Regulation principals opened a case to
    implement the provision in the Federal Acquisition Regulation 7
    months after NDAA enactment, and DARS officials agreed to draft the



Page 15                                          GAO-19-489 Defense Acquisitions
     rule change that would implement the provision. DARS staff published
     a proposed rule in the Federal Register for public comment
     approximately 8 months later. However, DARS staff informed us that
     a few weeks after the public comment period, Federal Acquisition
     Regulation officials directed them to suspend its activities until a
     separate, related Federal Acquisition Regulation rule on “closely
     associated with inherently governmental functions” was finalized.
     However in August of 2018, section 829 of the NDAA for fiscal year
     2013 was repealed by section 812(b)(4) of the NDAA for fiscal year
     2019.
We identified 36 provisions, a subset of the 180, that expressly directed
DOD to make or consider making an acquisition-related regulatory
change, as well as one provision that directed DOD to issue guidance.
DARS staff implemented 22 of the 37 provisions in about 13 months on
average. 21 Of the 37 provisions, 32 had statutory deadlines, ranging from
30 to 365 days after enactment. The DARS documentation showed that
the DARS staff prioritized these NDAA provisions by noting the deadlines,
but generally did not implement them by the deadline. We found that:

•    DARS staff met the deadlines in eight of 32 instances. In those eight
     instances, the actions completed were relatively simple, and DARS
     staff determined that a public comment period was not required. For
     example, DARS staff changed the DFARS to implement section 801
     of the fiscal year 2018 NDAA—which required DOD to revise the
     DFARS to include three specific statements about DOD acquisitions—
     in 143 days, ahead of Congress’s 180-day deadline.
•    Four provisions had deadlines for implementation of 60 days or less.
     For example, sections 841 and 842 in the fiscal year 2012 NDAA
     called for changes to be made to the DFARS within 30 days. The
     short deadlines allowed for fewer days than DARS staff allocate for
     public comment (minimum of 30 days, by law) and outside agency
     review (no more than 90 days, by executive order). Deadlines that did
     not allow for these activities as well as time to draft language were
     typically not met.


21
  One of the 37 provisions, section 883 of the fiscal year 2017 NDAA, required DFARS
changes if the Secretary of Defense exercises authority under that section to carry out a
pilot program for distribution support and services for weapon systems contractors. DARS
staff determined that because the Secretary of Defense has not exercised this authority,
the provision does not require action at this time. DARS staff is in the process of
implementing the remaining 14 provisions.




Page 16                                                 GAO-19-489 Defense Acquisitions
                     DARS is responsible for developing and maintaining DOD acquisition
Conclusions          regulations, which may include implementing acquisition-related NDAA
                     provisions. The DARS staff has internal tools to track, manage, and
                     communicate the status of DFARS changes, including implementation of
                     NDAA provisions. However, DOD’s DFARS change process does not
                     have a reporting mechanism to clearly communicate to Congress,
                     industry, and other interested parties the status of regulatory or other
                     changes linked to specific NDAA provisions. Without a mechanism to
                     better communicate DOD’s actions to implement NDAA provisions,
                     stakeholders potentially affected by reforms may be unaware of what and
                     when changes may be implemented. Given the actions and length of time
                     that it may take to implement provisions and see a change reflected in the
                     DFARS or elsewhere, stakeholders would benefit from knowing the status
                     of DOD’s actions before implementation has been completed in order to,
                     for example, prepare for compliance.


                     We are making the following recommendation to the Secretary of
Recommendation for   Defense to ensure that the Director of the Defense Acquisition
Executive Action     Regulations System:

                     Develop a mechanism to better communicate to all stakeholders the
                     implementation status of acquisition-related NDAA provisions, particularly
                     those provisions that direct a change or consideration of a change to the
                     DFARS. (Recommendation 1)


                     We provided a draft of this report to DOD for comment. DOD concurred
Agency Comments      with our recommendation to develop a mechanism to better communicate
and Our Evaluation   to all stakeholders the implementation status of acquisition-related NDAA
                     provisions. The department said it will develop a matrix reflecting the
                     implementation status of acquisition-related NDAA provisions and post
                     the matrix on the Defense Pricing and Contracting public website. DOD’s
                     written comments on the report are reprinted in appendix II. DOD also
                     provided technical comments, which we incorporated as appropriate.




                     Page 17                                        GAO-19-489 Defense Acquisitions
We are sending copies of this report to the Acting Secretary of Defense;
the Under Secretary of Defense for Acquisition and Sustainment; the
Secretaries of the Air Force, Army, and Navy; the Director, Defense
Acquisition Regulations System; appropriate congressional committees;
and other interested parties. This report will also be available at no
charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please
contact me at (202) 512-4841 or by e-mail at woodsw@gao.gov. Contact
points for our Offices of Congressional Relations and Public Affairs may
be found on the last page of this report. GAO staff that made key
contributions to this report are listed in appendix III.




William T. Woods
Director,
Contracting and National Security Acquisitions




Page 18                                          GAO-19-489 Defense Acquisitions
List of Committees

The Honorable James M. Inhofe
Chairman
The Honorable Jack Reed
Ranking Member
Committee on Armed Services
United States Senate

The Honorable Richard Shelby
Chairman
The Honorable Richard Durbin
Ranking Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Adam Smith
Chairman
The Honorable Mac Thornberry
Ranking Member
Committee on Armed Services
House of Representatives

The Honorable Peter Visclosky
Chairman
The Honorable Ken Calvert
Ranking Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives




Page 19                         GAO-19-489 Defense Acquisitions
Appendix I: Objectives, Scope, and
              Appendix I: Objectives, Scope, and
              Methodology



Methodology

              A House Armed Services Committee report related to the National
              Defense Authorization Act (NDAA) for Fiscal Year 2019 included a
              provision for us to review the Department of Defense’s (DOD) process for
              revising the Defense Federal Acquisition Regulation Supplement
              (DFARS), among other things. 1 This report (1) determines how DOD
              implements acquisition-related NDAA provisions and communicates
              implementation status, and (2) identifies the status of DOD’s efforts to
              implement acquisition-related NDAA provisions from fiscal years 2010-
              2018.

              To determine how DOD implements acquisition-related NDAA provisions,
              we reviewed DOD documents and supplemented our work with interviews
              with relevant DOD officials. Specifically, we reviewed the DFARS
              Operating Guide, January 2015; presentation on the Defense Acquisition
              Regulations System Rulemaking Process, DFARS open and closed
              cases reports, Federal Acquisition Regulation open and closed cases
              reports; decision matrices from the Defense Acquisition Regulations
              System (DARS), which document decisions on implementing NDAA
              provisions from fiscal years 2010-2018; and other applicable reports and
              information on provisions and cases from the DARS staff and the
              Defense Acquisition Regulations Council. We also referenced our past
              reports on DFARS rulemaking; U.S. Code on Publication of proposed
              regulations; the Federal Acquisition Regulation Operating Guide, July
              2015; Federal Register notices related to DOD rulemaking; and the news
              listing on the DARS website. 2 We adopted the DARS use of the term
              “implementation,” which includes both regulatory action as well as other
              actions, such as public meetings or a report.

              We interviewed DOD officials that are involved in the DFARS rulemaking
              process. Specifically, we interviewed members of the Defense Acquisition
              Regulations Council and DARS staff, including the Chair and Deputy
              Chair, the Regulatory Control Officer that prepares rules for submission to
              the Office of Information and Regulatory Affairs within the Office of
              Management and Budget, and DFARS case managers. We also
              interviewed officials from the DOD components—Air Force, Army, Navy,
              Defense Contract Management Agency, and Defense Logistics Agency.

              1
                  H.R. Rep. No. 115-676, at 142-43 (2018).
              2
               GAO, Department of Defense: Acquisition Rulemaking Practices, GAO-15-423R
              (Washington, D.C.: Apr. 17, 2015). 41 U.S.C. § 1707. Https://www.acq.osd.mil/dpap/dars/,
              accessed on May 20, 2019.




              Page 20                                                 GAO-19-489 Defense Acquisitions
Appendix I: Objectives, Scope, and
Methodology




We interviewed industry representatives from the Aerospace Industries
Association, National Defense Industrial Association, and the
Professional Services Council.

We compared the DARS process with the Standards for Internal Control
in the Federal Government. 3 Specifically, we reviewed DOD’s public
reports of its implementation actions with internal control principle 15:
“management should externally communicate the necessary quality
information to achieve the entity’s objectives.” Stakeholders in the
acquisition process include executive agencies’ program and contracting
officials, members of Congress, congressional staff, industry, contractors,
and members of the public.

The DARS staff provided a complete data extract of Defense Acquisition
Regulations Management Information System as of October 31, 2018, to
document the acquisition-related NDAA provisions that DARS staff
identified as potentially requiring implementation. The Defense
Acquisition Regulations Management Information System is the DARS
database to track the status of individual cases that are associated with
DARS rulemaking actions. We analyzed the data extract to identify which
Title VIII provisions that the DARS identified for implementation from
NDAAs from fiscal years 2010-2018, and to identify the cases related to
those provisions. We focused on Title VIII—Acquisition Policy, Acquisition
Management, and Related Matters—of the NDAAs, which contain
acquisition-related provisions. We queried the data extract to identify
cases with notes indicating NDAA provisions from fiscal years 2010-2018
as the source of change in the database synopsis field. We found 180
acquisition-related provisions from Title VIII of the NDAAs from fiscal
years 2010-2018 that the DARS staff had identified for implementation.
For these 180 provisions, we determined the number and types of cases
by year, duration of cases, and duration of select steps for cases. We
verified the validity of provisions and cases that were not in both the
DARS reports that DARS staff manually produced and the Defense
Acquisition Regulations Management Information System data with
DARS officials as of April 19, 2019.

To identify the implementation status of acquisition-related NDAA
provisions from fiscal years 2010-2018, we further analyzed data from the

3
 GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington, D.C.: Sept. 10, 2014).




Page 21                                              GAO-19-489 Defense Acquisitions
Appendix I: Objectives, Scope, and
Methodology




Defense Acquisition Regulations Management Information System and
DARS reports. For the actions associated with the 180 provisions, we
analyzed the status history of each case, associated status dates for
cases, and closed status indicators. We also reviewed DARS reports,
such as the internal stats charts with case duration and closure metrics
that DARS officials told us they manually verify. We reviewed a report that
the DARS staff manually produced for us that showed actions and cases
by provision for the NDAAs from fiscal years 2010-2018.

We independently analyzed the NDAAs from fiscal years 2010-2018 and
determined 36 provisions in Title VIII that expressly directed DOD to
make or consider making an acquisition-related regulatory change, as
well as one provision that directed DOD to issue guidance. We identified
these provisions using a keyword search of individual and combined
terms and criteria, such as “regulation, defense, and acquisition
regulation.” To better understand the Defense Acquisition Regulations
Council’s recommendations and DARS implementation process, we
selected 12 provisions that directed DOD to make or consider an
acquisition-related regulatory change for case studies. The case study
selection criteria included the year of the NDAA from which the provision
originated for a mix of older and newer provisions and time duration for a
mix of shorter and longer cases related to implement the provisions.

We used DARS reports and our analysis of the Defense Acquisition
Regulations Management Information System data to determine the year
and time duration. Since the DFARS Case Standard Timeline is 52
weeks, we selected provisions with cases that were both more and less
than 52 weeks. We also selected provisions with cases that were open
and closed. We created a data collection instrument for the case studies
that captured information, such as which provisions were associated with
the case, to standardize our data collection process. For the 12
provisions, we reviewed the associated case files that are generally a
record of the implementation process and the Defense Acquisition
Regulations Council’s recommendations, and the decisions made by the
DARS staff. We also reviewed available publication folders associated
with the cases that generally document input and decisions from other
agencies, such as the Office of Management Budget’s Office of
Information and Regulatory Affairs. Finally, we used the information in the
files to verify the information in Defense Acquisition Regulations
Management Information System for those specific cases.

We found the Defense Acquisition Regulations Management Information
System data and information in the files that we reviewed to be


Page 22                                        GAO-19-489 Defense Acquisitions
Appendix I: Objectives, Scope, and
Methodology




sufficiently reliable for purposes of reporting on how the DARS staff
implemented NDAA provisions and the time duration to do so.

We conducted this performance audit from August 2018 to July 2019 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




Page 23                                         GAO-19-489 Defense Acquisitions
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Defense



of Defense




             Page 24                                     GAO-19-489 Defense Acquisitions
Appendix II: Comments from the Department
of Defense




Page 25                                     GAO-19-489 Defense Acquisitions
Appendix III: GAO Contacts and Staff
                  Appendix III: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments


                  William T. Woods at (202) 512-4841 or woodsw@gao.gov
GAO Contact
                  In addition to the contact named above, Penny Berrier, Assistant Director;
Staff             James Kim; Holly Williams; Beth Reed Fritts; Gail-Lynn Michel; Emily
Acknowledgments   Bond; Lori Fields; Matthew T. Crosby; Lorraine Ettaro; and Tim Bober
                  made key contributions to this report.




(102978)
                  Page 26                                        GAO-19-489 Defense Acquisitions
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