17 Jan 2025
đź“ŠNew DoD Regulation on Material Weakness and Business Compliance
Defense Federal Acquisition Regulation Supplement: Definition of Material Weakness (DFARS Case 2021-D006)
Summary
DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement sections of the National Defense Authorization Acts for Fiscal Year 2021 that defines the term "material weakness" for Government evaluation of contractor business systems. The term "material weakness" replaces the term "significant deficiency."
Agencies
- Defense Department
- Defense Acquisition Regulations System
Business Impact
$$ - Med
The regulation introduces the term “material weakness” affecting contractor business systems, which directly impacts compliance requirements for businesses holding DoD contracts. Companies must adjust their systems to align with this new definition to avoid payment withholdings, thus influencing financial management practices.