Defense Acquisitions: DOD Needs to Improve How It Communicates the Status of Regulation Changes
Released: 2019-07-11T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: Congress has pursued acquisition reforms to make DOD's acquisition process more efficient and timely. Some statutes have directed DOD to revise or consider revising its acquisition regulations.

The House Armed Services Committee's report accompanying the NDAA for Fiscal Year 2019 included a provision for GAO to review DOD's regulatory implementation of acquisition-related provisions in the NDAAs from fiscal years 2010 through 2018. This report (1) determines how DOD implements acquisition-related NDAA 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 selected 12 of these provisions as case studies based on factors such as year enacted and time taken for implementation to obtain a mix of older and newer provisions, and shorter and longer implementation timeframes.

section_title: What GAO Found
paragraphs: The staff of the Defense Acquisition Regulations System are responsible for making changes in the Defense Federal Acquisition Regulation Supplement (DFARS)—the Department of Defense's (DOD) regulation augmenting the Federal Acquisition Regulation, which guides government purchases of products and services. They begin their process by first tracking legislation that may affect acquisition regulations before Congress enacts the National Defense Authorization Act (NDAA). After enactment, they identify which provisions to implement through regulatory changes and which to implement through other means. In certain circumstances, rather than change the DFARS, DOD can issue a class deviation, which allows its buying organizations to temporarily diverge from the acquisition regulations. The figure below shows the primary means DOD uses to implement NDAA provisions, and the mechanisms DOD uses to make information on the status of any changes available to the public and others.

Department of Defense's (DOD) Methods to Implement and Report on Actions Taken on National Defense Authorization Act (NDAA) Provisions

DOD does not have a mechanism to clearly communicate to Congress, industry, and other interested parties the status of regulatory or other changes based on NDAA provisions. Using only publicly-available reports and information, it is difficult for an interested party to find the implementation status of any given acquisition-related NDAA provision. This is because no single DOD source 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 information is important for congressional oversight and to industry for planning and compliance purposes. Federal internal control standards state that management should address the communication expectations of external users.

GAO found that DOD has taken action to address 180 acquisition-related provisions since 2010. On average, implementation was completed within 1 year from enactment. Some complicated provisions took more than 2 years to implement. For example, a fiscal year 2016 NDAA provision, directing a regulatory change for commercial item procurements, took more than 2 years to implement because DOD was reconciling a prior year's related but different NDAA commercial item provision into one DFARS change.

section_title: What GAO Recommends
paragraphs: DOD should develop a mechanism to better communicate the implementation status of acquisition-related NDAA provisions, particularly those that direct a change or consideration of a change to the DFARS. DOD concurred with the recommendation.

section_title: Letter
paragraphs: 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. 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  Agency. We compared the DARS rulemaking process with the Standards  for Internal Control in the Federal Government.

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.
subsections: section_title: Background
paragraphs: The Defense Acquisition Regulations Council is responsible for  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,  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. 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:

Defense Contract Management Agency, and

Defense Logistics Agency.

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.

section_title: DOD Has a Process for Implementing Acquisition-Related NDAA Provisions, but Does Not Clearly Communicate Implementation Status to Stakeholders
paragraphs: DOD has a rulemaking process to change the DFARS that includes  implementing acquisition-related NDAA provisions through regulatory  changes or other methods. The DARS staff is responsible for facilitating  the process of making these changes in the DFARS. The staff first  reviews draft legislation that may affect acquisition regulations before  Congress enacts the NDAA. After the NDAA is enacted, DARS staff then  identifies which provisions require action. The DARS staff coordinates  across the department and provides for public notice of implementation  actions when required. However, there is no publicly-available summary  reporting of the status of the regulatory changes or other implementation  methods linked to specific NDAA provisions. Congress and industry  representatives therefore cannot clearly see the status of pending  regulatory changes pertaining to acquisition issues addressed in the  NDAA.
subsections: section_title: DOD Implements Acquisition-Related NDAA Provisions in DFARS and by Other Methods
paragraphs: DOD’s acquisition rulemaking procedures are governed by statute, which  generally requires agencies to issue a proposed rule for each rulemaking  and provide not less than a 30-day public comment period following  publication of the proposed rule in the Federal Register. These  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  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. The time  period for its review is generally limited to 90 days. See figure 1 for an  overview of the DARS’s process to change DFARS rules.

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  changing DFARS Procedures, Guidance, and Information (PGI), a  non-regulatory document that supplements the DFARS.

section_title: DOD Reviews NDAAs to Identify Provisions That Might Require DFARS Revisions or Other Actions
paragraphs: Before annual NDAAs are enacted, DARS staff told us that they review  proposed legislation and committee report language to stay abreast of  provisions they may have to implement after NDAAs are enacted. DARS  staff solicits input on which provisions may require implementation from  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  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. 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. 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.

section_title: The Way the DARS Publicly Communicates Actions Makes It Difficult to Link to NDAA Provisions
paragraphs: DARS staff has different ways of communicating changes to the  regulations and other implementation methods to the public.  “Significant revisions” to the DFARS must be published in the Federal  Register. DARS staff also publishes the progress of DFARS  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.

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.

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.” However, the case reports do not  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.

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. 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  that was not implemented in the DFARS until 2018. 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.

section_title: 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
paragraphs: DARS staff identified 180 NDAA provisions from fiscal years 2010-2018  that potentially required an acquisition-related regulatory change or  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  the provisions had been implemented. The timeframe for implementation  was, on average, just under 1 year. Some implementation efforts took  longer than a year for a variety of reasons, such as reconciling multiple  years of NDAA requirements or dealing with highly complex topics. The  remaining legislative provisions are either in the process of being  implemented or DARS staff determined that a regulatory change was not  needed. DARS staff prioritized those provisions that expressly directed  DOD to change or consider an acquisition-related regulatory change.  DARS documentation showed that some of the implementation deadlines  in statute were shorter than the time periods that DARS generally allows  for the rulemaking process, including public comment and outside agency  review.
subsections: section_title: DARS Staff Identified and Addressed 180 Acquisition-Related NDAA Provisions
paragraphs: Following its process, DARS staff identified 180 NDAA provisions from  fiscal years 2010-2018 that potentially required an acquisition-related  regulatory change or another implementation action. We found that  DARS staff and, in a few instances, other DOD entities have taken action  to address all of those provisions. See figure 3 for the implementation  status of all 180 provisions distributed by NDAA fiscal year.

section_title: DARS Staff Implemented 112 Provisions within 1 Year of NDAA Enactment, on Average
paragraphs: We found that DARS officials opened cases within 30 days of NDAA  enactment, on average, for the acquisition-related NDAA provisions from  fiscal years 2010-2018. For the 112 of 180 provisions that have been  implemented, DOD completed the first implementation actions on  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  taken to complete implementation. See table 1 below for the average time  to complete the first action to implement the 112 NDAA provisions.

Figure 4 shows the distribution of time taken to implement all 112 NDAA  provisions.

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.

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  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.

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  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. 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.

section_title: Conclusions
paragraphs: DARS is responsible for developing and maintaining DOD acquisition  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.

section_title: Recommendation for Executive Action
paragraphs: We are making the following recommendation to the Secretary of  Defense to ensure that the Director of the Defense Acquisition  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)

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD for comment. DOD concurred  with our recommendation to develop a mechanism to better communicate  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.

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.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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. 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. 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.

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. 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  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  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.

section_title: Appendix II: Comments from the Department of Defense

section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Penny Berrier, Assistant Director;  James Kim; Holly Williams; Beth Reed Fritts; Gail-Lynn Michel; Emily  Bond; Lori Fields; Matthew T. Crosby; Lorraine Ettaro; and Tim Bober  made key contributions to this report.

Fast facts: For years, Congress has been trying to improve how DOD buys products and services by enacting annual acquisition reform legislation. DOD implements these reforms through regulations.

We found that DOD has taken actions to address 180 acquisition reforms since 2010. On average, implementation was completed within a year of the legislation being enacted, but some provisions took over 2 years to implement.

However, the status of implementing regulations is not always easy to track. We recommended that DOD better communicate the status of these regulatory changes to Congress and other interested parties.

Question-summary annotations: questions: question: For what is the staff of the Defense Acquisition Regulations System responsible?
answer: The staff of the Defense Acquisition Regulations System are responsible for making changes in the Defense Federal Acquisition Regulation Supplement (DFARS)—the Department of Defense's (DOD) regulation augmenting the Federal Acquisition Regulation, which guides government purchases of products and services.
child_questions: question: What is the process by which the staff of the Defense Acquisition Regulations System work?
answer: They begin their process by first tracking legislation that may affect acquisition regulations before Congress enacts the National Defense Authorization Act (NDAA). After enactment, they identify which provisions to implement through regulatory changes and which to implement through other means.
child_questions: question: How can DOD respond to these recommendations?
answer: In certain circumstances, rather than change the DFARS, DOD can issue a class deviation, which allows its buying organizations to temporarily diverge from the acquisition regulations. The figure below shows the primary means DOD uses to implement NDAA provisions, and the mechanisms DOD uses to make information on the status of any changes available to the public and others.

questions: question: How does DOD communicate to Congress, industry, and other stakeholders the status of regulatory changes?
answer: DOD does not have a mechanism to clearly communicate to Congress, industry, and other interested parties the status of regulatory or other changes based on NDAA provisions.
child_questions: question: In what ways can interested parties learn the implementation status of an acquistion-related NCAA provision?
answer: Using only publicly-available reports and information, it is difficult for an interested party to find the implementation status of any given acquisition-related NDAA provision.
child_questions: question: What is the source of this difficulty?
answer: This is because no single DOD source communicates the status of regulatory or other changes in a manner that links the changes to specific NDAA provisions.

question: What is the result of this communication breakdown?
answer: As a result, interested parties are not always aware of what provisions have been implemented and when.

question: Why is communication regarding regulatory changes important?
answer: This information is important for congressional oversight and to industry for planning and compliance purposes.
child_questions: question: How have federal control standards emphasized the importance of external communication?
answer: Federal internal control standards state that management should address the communication expectations of external users.

questions: question: According to DAO, how many acquisition-related provisions has DOD addressed since 2010?
answer: GAO found that DOD has taken action to address 180 acquisition-related provisions since 2010.
child_questions: question: What is the timeline from enactment to implementation?
answer: On average, implementation was completed within 1 year from enactment. Some complicated provisions took more than 2 years to implement.
child_questions: question: Why do some actions take such a long time?
answer: For example, a fiscal year 2016 NDAA provision, directing a regulatory change for commercial item procurements, took more than 2 years to implement because DOD was reconciling a prior year's related but different NDAA commercial ite	m provision into one DFARS change.

questions: question: How did GAO conduct its review of DOD?
answer: 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.
child_questions: question: How did GAO select certain provisions as case studies?
answer: GAO selected 12 of these provisions as case studies based on factors such as year enacted and time taken for implementation to obtain a mix of older and newer provisions, and shorter and longer implementation timeframes.